The judge president of the Competition Appeal Court (CAC) has been asked to give a directive on whether non-parties to a merger have a legal standing to appeal against a Competition Tribunal’s decision because the court’s rules are silent on this.
Phindi Kema, a businesswoman and a thoroughbred horse breeder, and her company, Africa Racing Group (ARG), want to appeal against the merger of Kenilworth Racing and Gold Circle, in the Western Cape.
The merger was approved by the tribunal in November, having earlier been prohibited by the Competition Commission.
Kema and ARG objected to the proposed merger on the basis that it was in reality one between Phumelela and Kenilworth.
The first transaction is a demerger of the assets and operations of Gold Circle from the horse racing company to Viacor Trade 72, trading as Kenilworth Racing.
The second transaction is a sale of the shares of Kenilworth to the Thoroughbred Horseracing Trust, a private company that owns 35.26 percent of the listed Phumelela Gaming and Leisure.
The tribunal approved the merger subject to the condition that Kenilworth will ensure there are no retrenchments resulting from the measure for two years from the effective date of the proposed transaction.
Golden Circle is one of only two horse racing operators in the country, the other being Phumelela.
Gold Circle operates all the racing assets in KwaZulu-Natal and the Western Cape, while Phumelela controls all those in the other seven provinces.
Kenilworth would enter into a management agreement with Phumelela, if the merger was approved.
Phumelela owns the Arlington Race Course in Port Elizabeth, which Kema and ARG were interested in buying.
Kema says negotiations went fairly well but hit a snag when Phumelela applied to the Eastern Cape Gambling Board to amend the Arlington licence so that race meetings get transferred to Fairview, also in Port Elizabeth, and also owned by Phumelela.
Phumelela allegedly further insisted ARG must use Phumelela’s totalisator licence and betting platforms to run the horse racing at Arlington.
ARG objected to this, saying it would lose control over its racing fixtures, and lucrative television and betting rights.
Judge Dennis Davis, judge president of the CAC, asked Kema and ARG to make written submissions on their legal standings in the appeal.
Kema’s and ARG’s attorney, Urmila Soni, has now entered written submissions made by Omphemetse Mooki, an advocate, to the CAC.
The submissions say Kema and ARG should have been subpoenaed by the tribunal as witnesses but were not.
The Competition Act provides a general right to a person affected by a decision of the tribunal to appeal to the CAC against a decision where that decision is final.
It says the only people permitted to appeal against the decision are any party to the merger and a registered trade union that represents a substantial number of a merger party’s employees.
The lawyers for Kenilworth and Golden Circle maintain Kema and ARG do not qualify to appeal, based on the criteria mentioned.
However, they have asked for a directive from Judge Davis because the rules of the court are silent on a matter such as this.
The rules do say that the judge president “may give any directions that are considered just and expedient in matters of practice and procedure”.