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Gabz FM takes Mmegi, Jamali and Competition Authority to court

Local Private Radio Station, Gabz FM has instituted legal proceedings against Competition Authority (CA), Mmegi Newspaper and Universal House, a company which belongs to businessman, Seyed Jamali.

Gabz Fm’s reasons for taking the three entities to court emanates from the failure or reluctance by CA, which has been cited as the first respondent – to implement a February 2017 court decision, demanding that Jamali dispose off the 28.73 shares he acquired in Mmegi.

The background of the matter is that, in 2016, Jamali, through his company, Universal House (Pty) Limited, acquired a stake in Mmegi which consequently made him the single largest shareholder in the media house.

Mmegi on the other hand holds 17 percent shareholding in Gabz FM.

At the time Jamali made an acquisition of shares in Mmegi, he also owned shares in another private radio station, Duma FM, which is a director competitor of Gabz FM.

In his founding affidavit, Gabz FM director and Chairperson, Edward Komanyane says in essence this made Jamali to have cross ownership of two of the three private radio stations in the country.

In July 2016, Gabz FM wrote a letter to CA requesting it to investigate the transaction of shares by Jamali in Mmegi to determine whether the transaction was not competitive.

On the 17th of February 2017, CA made its decision on the matter and resolved not to approve the acquisition, which however had already occurred.

Since the transaction had already been implemented, the Authority directed Jamali and Mmegi to dispose off the 28.73 percent already acquired to an entity or person with no business ties to Jamali within a period of three months from the decision date.

This means the shares should have been disposed off on or before the 17th of May, 2017.

However, it is now more than 2 years since the deadline for the implementation of the court order, which compelled Gabz FM to approach the High Court to order the enforcement of the decision reached in 2017.

Gabz FM argues that the failure by CA to enforce its decision is prejudicing the radio station in the running of its business affairs because as long as the matter remains unresolved, Gabz FM has faced and will continue to face difficulties in obtaining credit facilities from financial institutions due to non-compliance with Know Your Customer (KYC) requirements.

Komanyane states that they have not received any update from CA since the 6th of September last year.

In responding to the radio station enquiry to give update on the implementation of the decision, CA had stated that it was not in position to divulge any information as it was still carrying out investigations on non-compliance.

As a result, Gabz FM has recently filed an application with the High Court to compel or direct CA to enforce its decision, alternatively that the court directs Mmegi and Jamali to dispose of the shares already acquired in Mmegi by Jamali to an entity or person(s) without business ties to the latter, within three months of making an order of court.

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