Business Day Live have reported that the Competition Commission on Wednesday, for the first time, entertained possible conditions which could lead to the approval of the horse racing merger in the Western Cape, but ultimately maintained its prohibition of the transaction.
Earlier this year it prohibited the merger whereby Kenilworth Racing and the Thoroughbred Horseracing Trust would acquire the Western Cape business of Gold Circle, arguing that it would lead to a substantial lessening of competition in the markets for horse racing operators and the horse racing betting markets.
The Competition Tribunal on Wednesday heard closing arguments after the merging parties took the commission’s prohibition on review. The merging parties argued the commission did not make out a case that the transaction would substantially lessen competition. It also proposed certain conditions after initially asking for an unconditional approval
The role of JSE-listed Phumelela Gaming and Leisure in the transaction had been a huge bone of contention for the commission. Phumelela would be responsible for the management of the Western Cape business if the transaction was approved. The commission said it would be like Vodacom managing MTN.
Mike van der Nest SC, appearing for the commission, argued that the philosophy of Phumelela was that one tote operator was the way to go. It would therefore not be in its interest to grow the Kenilworth business.
He said the philosophy would be entrenched through the board of Kenilworth Racing. The trust holds a stake of 35% in Phumelela and the trust will appoint six of the nine directors to the board of Kenilworth Racing.
Alfred Cockrell SC, appearing for Kenilworth and the trust, said he could not understand the anxiety caused by Phumelela as the manager of the business. He also questioned the proposition that the Kenilworth board would not operate independently from Phumelela, saying it implied that the directors would flagrantly breach their fiduciary duties.
Yasmin Carrim, a member of the tribunal, asked how the tribunal would deal with the transaction if they did find that Phumelela was a party to the transaction and had a material influence on the strategic direction of the business.
Mr Cockrell said it could still invite Phumelela to the transaction and sanction it for not filing earlier.
He said it would not change the merger analysis since all the evidence had been put to the tribunal during the public hearings.