Johannesburg - The Competition Tribunal will next week hold a hearing into the proposed merger between casino operators Tsogo Sun and Gold Reef Resorts [JSE:GDF].
In terms of the proposed transaction, Tsogo Sun will acquire Gold Reef Resorts.
The Competition Commission assessed the merger to determine if the tie-up would substantially lessen competition in the casino gaming market in Gauteng.
The Commission alleges that Tsogo's Silverstar, in particular, offers a competitive alternative to Montecasino and the merger would lead to the elimination of Silverstar as a competitor.
The Commission said that in the absence of competition, this would give the new merged entity an incentive to raise prices or degrade its product offerings.
The Commission has therefore recommended that the Tribunal approve the merger between Tsogo Sun and Gold Reef Resorts on condition that Tsogo Sun sell off Silverstar Casino.
The two parties have argued that the casinos draw customers from their local catchment areas and therefore do not compete with each other.
They have opposed the disposal of Silverstar and said the merger would not result in a reduction of competition.