The Competition Commission has conditionally approved a deal for the sale of certain assets of mobile operator Cell C to special purpose vehicle (SPV) Gatsby.

Recommending the transaction to the Competition Tribunal, the commission found that the proposed transaction is unlikely to result in a substantial prevention or lessening of competition in any relevant markets nor does it raise any other public interest concerns.

"Cell C is pleased that the Competition Commission has given conditional approval of the proposed recapitalisation transaction. This is an important step towards concluding a complex restructuring for the mobile operator," said Cell C CEO Douglas Craigie Stevenson.

"Despite this approval, Cell C remains cautiously optimistic until the deal has been fully concluded and all requirements have been met."

Gatsby SPV, a ring-fenced newly incorporated SPV proposed, will be controlled by a yet-to-be-formed trust that will hold the entire issued share capital of Gatsby SPV and does not provide any services or products.

However, as the merging parties are currently not in a position to confirm who will be appointed as trustees, the Competition Commission placed conditions on the sale as the proposed transaction may raise competition concerns.

“These include, among others, anticompetitive information exchange should the trustees include individuals from firms that compete with Cell C or present undisclosed competitive overlaps,” the Commission said in a statement on May 21.

These concerns were not considered in the assessment of the proposed transaction because the trustees have not yet been appointed.

“To remedy this potential risk, the Commission recommends that the proposed transaction be approved subject to conditions that Gatsby SPV and/or the trust will not be owned/controlled by companies that compete or may compete with Cell C or firms that have a customer-supplier relationship with Cell C, other than a lending relationship,” the Commission concluded.

"We are being diligent and thorough to ensure it is a transaction that meets all conditions and continue to engage with all stakeholders. In our minds it is not done and there is still work to do, but we are pleased with the progress to date," Craigie Stevenson added.

Cell C further clarified that transactions before Competition Commission are called merger filings, the definition of which, in terms of the Competition Act, include acquisitions and equity investment transactions.

"The Competition Commission's use of merger should therefore be understood in this context. It is still a recapitalisation," Cell C noted.