The Dominance Of Multichoice and Supersport May Lead To Market Failure

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The Competition Commission has decided not to prosecute a complaint against Multichoice and Supersport for abuse of dominance.

In a statement, the commission said it also decided not to refer the complaint to the Competition Tribunal.

Following its investigation, the commission said it has decided not to prosecute because there are no reasonable prospects of success and a regulatory intervention would be more effective.

The commission received various complaints of abuse of dominance against
Multichoice and Supersport between 2012 and 2017.

However, the commission said there is still a potential market failure in this market owing to the following factors, amongst others:

  • The highly concentrated nature of the subscription television market;
  • High barriers to effectively enter the market and the inability of other existing firms to expand in the market;
  • A lack of credible alternative buyers for premium sports rights other than the incumbent
    (Multichoice);
  • Overly long and exclusive contracts between the incumbent (Multichoice) and some content suppliers; and
  • A lack of credible alternatives to which individual consumers can turn to should they wish to switch away from the incumbent (Multichoice).

“Whilst the commission is concerned of the likely market failure, it is of the view that there can be more targeted regulatory interventions to foster competition and make this market competitive,” said the commission.

In this regard, the commission said it has taken note of the inquiry into subscription broadcasting services currently being conducted by the Independent Communications Authority of South Africa (ICASA), which covers a greater scope than the complaints received by the commission.

The Commission will continue to contribute to the inquiry and support the work of ICASA in line with the terms of the existing Memorandum of Understanding between the two regulators.

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