Probe into BCX sale 'to be lengthy`

By Iain Scott for Telkom
Johannesburg, 23 Jun 2006

The investigation into Telkom`s proposed acquisition of Business Connexion (BCX) could be a lengthy one, the Competition Commission says.

Liz'el Blignaut, the Competition Commission`s divisional manager of mergers and acquisitions, says the deal was filed with the authority last Thursday.

"We have started our investigation, but it`s still at a very early stage," she says.

Blignaut adds that no formal objections have been received, although several companies did request to be notified when the investigation began.

"It`s highly likely that there will be objections. This is a very high-profile case and there are a lot of people critical of Telkom," she says.

The approval of the competition authorities is the final condition of Telkom`s acquisition of BCX. The scheme of arrangement received a High Court nod earlier this week.

Since Telkom resumed takeover talks with BCX in March, the process has moved along smoothly, with all parties thus far approving Telkom`s offer of R9 per BCX share.

However, market observers have commented that the R2.36 billion deal, in line with the fixed-line operator`s stated intention to respond to increasing liberalisation, would further entrench the fixed-line utility`s position of dominance in the market.

Analysts have also commented that the competition authority approval might take quite a while, which is, they say, the likely reason Telkom and BCX gave themselves until mid-December to conclude the deal.

Blignaut says the investigation process begins with the Competition Commission`s receipt of forms and information, which is then checked against information available in the market and from competitors.

Customers and competitors are sent detailed questionnaires, which may simply be answered or returned with additional information.

Once the investigation is complete, the case is referred to the Competition Tribunal, with recommendations.

The Tribunal then holds public hearings, at which witnesses can be called and objectors heard.

"The process can be lengthy, and I think this case will be," Blignaut says.