By Julius Baumann

Sun International gambling executive Tristan Kaatze yesterday told the Competition Tribunal that the merger of rivals Gold Reef Resorts and Tsogo Sun would not pose a major threat to his group.

“Sun does not expect any major competition in Gauteng or in any other province resulting from the merger of Tsogo Sun and Gold Reef Resorts,” said Mr Kaatze under cross-examination from Jerome Wilson, the attorney acting for Tsogo Sun. Mr Kaatze, head of Sun’s northern gaming operations, confirmed Sun’s Carnival City’s closest rival was Peermont’s Emperors Palace.

Mr Kaatze was the Competition Commission’s first witness in the five-day hearing where Tsogo is disputing the commission’s recommendation that the merger be approved on condition that the new group dispose of Silverstar Casino on the West Rand.

The commission is arguing the merger could lessen competition within the Gauteng casino market, alleging that Silverstar, in particular, offered a competitive alternative to Montecasino and that the merger would lead to the elimination of Silverstar as a competitor.

It said that in the absence of effective competition, this would give the new merged entity an incentive to raise prices or degrade its product offering in Gauteng after the merger.

Tsogo disputes that contention claiming casinos in Gauteng competed with other leisure options such as restaurants and cinemas. It also contended the competition between casinos was strongly regulated with casinos serving specific geographic parts of the province.

Mr Wilson argued that those with a weak propensity to gamble could be lured away from casinos by other leisure options while more dedicated gamblers were already less likely to switch from the casino closest to them. “While these players may travel to another casino, the distance between them may be an impediment to switching,” he said.

The commission declined to cross- examine Mr Kaatze. The commission also called Peermont’s Leon Kok as its second witness. Mr Kok told the tribunal that Emperors Palace had been prejudiced by the launch of Silverstar in 2008.

The commission is likely to call economist Trudi Makhaya today. Tsogo will call Tsogo executive Jacques Booysen followed by economist Simon Baker from RBB later in the week.

A decision from the tribunal remains the biggest obstacle to the companies gaining full regulatory approval for the merger.

Last month, the deal was given unconditional approval by the KwaZuluNatal Gambling Board, while the Gauteng Gambling Board approved the merger pending the approval of competition authorities.

Last week, the Mpumalanga Gambling Board and the Western Cape Gambling and Racing Board gave the transaction the nod, pending approval from the competition authorities. The remaining provincial boards are expected to give their approval early in the new year.

Source: Business Day