Media buyout raises monopoly worries

CONCERNS over a lack of competition in the newspaper industry were raised yesterday at the Namibia Competition Commission’s (NaCC’s) public hearing on the buyout of Desert Trade Investment, owner of newspaper group Democratic Media Holdings (DMH), by Stimulus Investments.

Besides the daily newspapers Republikein, Namibian Sun and Allgemeine Zeitung, DMH also owns NewsPrint, the only newspaper printing press in the country.The NaCC is worried about NewsPrint’s market control and DMH’s distribution of newspapers. NaCC secretary Mihe Gaomab II said the commission’s investigation into the transaction ‘triggered’ the need for a public conference on the matter.Vitalis Ndalikokule, the technical secretary for mergers and acquisitions at the NaCC, said the commission contacted stakeholders during its investigation and that ‘some concerns’ were raised. In the absence of competition, NewsPrint might be able to determine pricing, while DMH’s distribution of newspapers throughout the country also raised anti-competitive concerns, Ndalikokule said. Stimulus managing director Monica Kalondo told Gaomab that the NaCC’s submission about DMH’s distribution business was ‘patently not true’. The company doesn’t control the market as far as distributing newspapers is concerned, she said.DMH only distributes its own three dailies and then just up to certain point. From there, contracted small and medium enterprises (SMEs) handle the distribution. The company also distributes a portion of state-owned New Era, but only to Keetmanshoop.As far as NewsPrint’s market dominance is concerned, Stimulus director Sisa Namandje told the NaCC that the printers had held this position for a long time and that it had nothing to do with the proposed merger.’It has had a dominant position whether you approve or not,’ Namandje said.Kalondo said printers have come and gone in Namibia. It is an expensive business and for players to be profitable, they need the necessary printing volumes.’NewsPrint is not keeping players out of the market. What is keeping them out is simple economics,’ she said.Kalondo further said that even if NewsPrint enjoyed market dominance, the market wouldn’t allow the printers to abuse it.’NewsPrint’s biggest vulnerability is its reliance on a single client. It would be absolute suicide to abuse market power by overcharging or compromising quality,’ she said.The Stimulus team was upset by the fact that the NaCC didn’t produce concrete evidence of stakeholders’ concerns about the proposed merger. Gaomab said the NaCC wouldn’t do it, as it guaranteed confidentiality. He however assured Stimulus that the NaCC wasn’t out on a ‘fishing expedition’ and that it did a ‘fit and proper due diligence’.Kalondo hit back saying that virtually nobody showed up for the public conference, which was advertised in the media. Besides The Namibian, only one member of the public attended the meeting and he kept quiet the entire time.The NaCC’s board of commissioners now have to decide whether the merger can go ahead or not.Gaomab said the NaCC’s submission to the board was at an advanced stage and that it would soon be handed over for a final decision.The current managing director of DMH, Chrisna Greeff, said it would be good to get a decision soon, as there was a lot of uncertainty at the company.’There is a lot of uncertainty about what is going to happen. It would be nice to put the matter to rest so that we can deal with the concern of the employees and that 300-odd people can start settling down and accept it,’ she said.In his presentation, Ndalikokule said the proposed merger would have no negative effect on employment at DMH. Stimulus is an investment company which focuses on cash-generating Namibian businesses and the reason it was interested in acquiring DMH was to ‘further the ordinary course of business’, he said.