Tribunal issues reasons for dismissing eMedia’s application for
interim relief against Multichoice
The Tribunal has released the reasons for its decision to dismiss an application for interim relief by eMedia Investments (Pty) Ltd (“eMedia”) against Multichoice (Pty) Ltd (“Multichoice”).
eMedia sought an order for Multichoice to be interdicted from removing the E.tv Extra, eToonz, eMovies and eMovies Extra channels (“the discontinued channels”) from the bouquets of channels on the DStv platform. eMedia sought the interim relief for a period of six months or pending the final determination of its complaint lodged with the Competition Commission (“the Commission”) in March 2022 against Multichoice, whichever occurs first.
In the alternative, eMedia sought an order directing MultiChoice to carry the abovementioned channels on the bouquets of channels on the DStv platform on the same terms and conditions as they were carried by MultiChoice prior to 1 April 2022.
Multichoice had, since 2017, acquired, marketed and distributed the discontinued channels on DStv in terms of an agreement. According to eMedia, Multichoice had refused to renew the agreement. The agreement was for a period of five years commencing in March 2017, ending March 2022.
Both eMedia and Multichoice are vertically integrated in the value chain which comprises the upstream production (and aggregation) of content, and the downstream retail distribution of content through various means including Direct-to-Home (DTH) services, Over-the-Top (OTT) services (delivered through the internet) and Digital Terrestrial Television (DTT) services.
DTH satellite television services require viewers to have a satellite dish to receive the digital satellite signal, a digital set top box to decode the signal and a television set to receive and display the signal from the set top box. In this market, MultiChoice and eMedia compete through DStv and Openview respectively. StarSat is currently the only other player in this market.
Arguments in brief
eMedia submitted, among others, that MultiChoice’s refusal to carry the discontinued channels amounted to conduct in contravention of section 8(1)(d)(ii) alternatively section 8(1)(c) of the Competition Act (“the Act”) i.e. abuse of dominance. eMedia argued that MultiChoice’s decision was driven by anti-competitive motives to remove it as a small but growing competitor to DStv in the market for the supply of basic satellite television services.
Multichoice argued that the decision not to renew the channels was for commercial reasons and further submitted that eMedia had a number of options – like Openview – through which to distribute its content.
Evidence relating to the alleged prohibited practice
The Tribunal found, on the evidence before it, that eMedia had not established, prima facie, that a prohibited practice under section 8(1)(d)(ii) or 8(1)(c) had occurred.
In its reasons, the Tribunal notes that in order to establish whether the alleged conduct is an exclusionary act as defined in section 8(1)(d)(ii): (1) there must be a refusal to supply goods or services to a customer or competitor; (2) the refusal to supply is in respect of scarce goods or services; and (3) it is economically feasible to supply. In this regard, the Tribunal concluded the following:
- While the parties had identified the provision of basic satellite television services as a relevant market, there was a dispute regarding what the ‘service’ to be supplied is.
- eMedia had not, prima facie, established that Multichoice’s behaviour could be said to be a refusal to supply an input to a downstream competitor or customer since Multichoice was not a supplier of inputs to eMedia;
- eMedia had not, prima facie, established that Multichoice’s behaviour could be said to be a horizontal refusal to supply (i.e. a refusal to supply a competitor) access to the DStv platform since Multichoice argues that it does not provide access to the technical platform services and is only obligated to carry the public broadcasting services channels.
- eMedia had not, prima facie, established that “basic satellite television services” were scarce; and
- Since eMedia had not, prima facie, established that there had been a refusal to supply a ‘service’ or that the ‘service’ was scarce, the assessment of whether it was economically feasible to do so was redundant.
Furthermore, the Tribunal was not persuaded, on the evidence before it, that the non-renewal of the discontinued channels had, prima facie, an anticompetitive effect resulting in foreclosure or harm to consumer welfare, as contemplated in section 8(1)(c) of the Act.
This is, inter alia, because consumers would still be able to view the discontinued channels on other platforms, such as eMedia’s own Openview platform.
The Tribunal found that eMedia had not established, on a prima facie basis, that there will be harm to competition rather than financial harm to eMedia.
The need to prevent serious or irreparable damage to the applicant
The Tribunal found that eMedia had not demonstrated, prima facie, that the financial harm it will suffer was sufficient to establish competitive harm.
The balance of convenience
The Tribunal concluded that granting interim relief (without the benefit of a full investigation and implications of the requirement under the Electronic Communications Act on subscription television services licensees to carry public broadcasting services licensees, such as the SABC, on the state of competitiveness in the market as whole) may unduly alter the state of competition in the market in favour of eMedia to the exclusion of other competitors in the market. This would not be consistent with the Tribunal’s role to intervene to prevent damage to competition in the market as a whole, rather than damage to a competitor.
Section 49C(2)(b) of the Act empowers the Tribunal to grant interim relief “if it is reasonable and just to do so”. In the exercise of its discretion under section 49C, the Tribunal concluded that it is not reasonable and just to grant interim relief in favour of eMedia.
Interim relief is a procedure to temporarily protect and maintain competition while the Commission is investigating and is decided on the basis of evidence before the Tribunal without the benefit of a full investigation and oral evidence. A full investigation may or may not confirm evidence of harm.