Paarl Media and Primedia are astounded by the decision by the Competition Commission yesterday (6 December 2011) to reverse the unconditional approval it gave in January 2011 regarding the acquisition by Paarl Media of Primedia@Home.
“Our legal teams are studying the decision, but the likelihood is that we will refer the matter to the Competition Tribunal to reconsider the Commission’s decision,” said Stephen van der Walt, CEO of Paarl Media and Geraint Crwys-Williams, Group Commercial & Legal Executive at Primedia.
In a joint statement the representatives of the respective companies said: “When the Competition Commission completely reverses its own decision on the same set of facts, the resulting commercial anarchy bodes ill for economic growth and jobs in future. Any attempt to undo the merger will mean the loss of over a thousand jobs. With this inexplicable reversal the reputation of the Competition Commission suffers a grievous blow.”
The companies said the Competition Commission has now prohibited a merger which has already been fully implemented, with the knowledge and approval of the Competition Tribunal. As the Tribunal recognised in its ruling in July 2011, Paarl Media was legally entitled to integrate Primedia@Home into its Shoppers Friend operation after voluntarily notifying the transaction to the Commission and receiving unconditional approval from the Commission in January this year.
Paarl Media and Primedia do not believe it is practically possible to reverse a merger process which has been completed, and even if a reversal were possible, Primedia has no intention of resuscitating the Primedia@Home operation.
“We have already implemented the merger, and the considerable investments we have made have been a success. How does the Commission expect us to undo this, and who will compensate the affected employees for the loss of their jobs and us for the expense we have incurred legally, and with the endorsement of the Competition Tribunal, after the Commission gave us unconditional approval? ” asked Van der Walt.
“In our view the Commission’s decision is incapable of being implemented – you cannot unscramble an omelette.
“This illogical and incomprehensible ruling is going to make business question the validity of every decision the Competition Commission has made in the past as well as the permanence of decisions made in the future. In the space of 10 months the Commission has delivered completely opposite decisions on the same facts.
“The Commission’s decision will cost more than 1 000 jobs if it is implemented. It is a waste of resources, it is bad for business and it does great damage to the public good.
“This transaction was below the financial thresholds where notification was required. We did so voluntarily because it was good corporate governance. The way the matter has been handledis likely to make other companies do everything they can to avoid South Africa’s competition procedures.
“It will be up to the Competition Tribunal to restore confidence in our competition authorities.”
Van der Walt assures staff and clients that it would be “business as usual” at Shoppers Friend while the legal process continued.
Crwys-Williams confirmed potential job losses if the merger was reversed.
“We will close Primedia@Home if it is handed back to us. This means the loss of between 1 200 and 1 400 jobs.
“The only other potential buyer for the operation is Caxton, who objected to this merger. If Caxton bought Primedia@Home, significant competition issues would come up. It’s a non-starter,” he said.