The Competition Authority (CA) has unconditionally authorised the acquisition of Cezar Hotel in Jwaneng by Cresta Marakanelo although some critics will argue it will set bad precedence.
However, the authority headed by Thula Kaira said the hotelier’s decision to buy a peer behind the regulator’s back has disappointed the competition body.
In a statement issued this week, the competition regulator said that it has noted that this transaction was implemented in contravention to section 55 of the Competition Act. “It is therefore in this regard that the Authority would like to express great concern and regret that a company of Cresta’s calibre would implement such a transaction without following the law”.
CA’s Acting Chief Executive, Tebelelo Pule, said however, the authority did not apply section 63(2) of the Competition Act and has determined to unconditionally authorise the proposed transaction on the ground that the facts, analysis and conclusions of the assessment of this merger have shown that there are no substantive competition concerns that will arise in the hotel facilities market in Jwaneng.
The authority says that proposed transaction is not likely to result in substantial lessening of competition, nor endanger the continuity of the service, due to the absence of geographical overlap between the activities of the merging parties in Jwaneng.
It also noted that even though Cresta Marakanelo is regarded as a dominant enterprise in the hotel facilities market in Jwaneng as defined under section 2 of the Competition Act read together with Regulation 4 of the Competition Regulations, this position was not attained as a result of the implementation of the merger.
The two companies, Cresta Marakanelo and United Promotional Enterprises trading as Cezar Hotel, did not notify the Competition Authority (CA) prior to the takeover of certain assets and liabilities belonging to United Promotional Enterprises by Cresta Marakanelo earlier this year.
The authority, upon reading about the transaction on the local media then brought the two companies to its books to answer for their failure to comply with the law. The transaction resulted in Cresta Marakanelo renting out Cezar Hotel’s premises in Jwaneng for conducting its business which effected in June this year.
The hotel has since been rebranded as the Cresta Jwaneng Hotel and it is expected to benefit from the continuing investment in the Jwaneng diamond mine, thus making a positive contribution to the Group profits in future periods.