The relevant merger control legislation in South Africa is the Competition Act 89 of 1998, as amended (the Act) and the regulations promulgated in terms of the Act. Merger control is regulated under Chapter 3 of the Act.

All foreign transactions where both the definition of a “merger” and the relevant merger control thresholds are met are subject to the provisions of the Act for merger control purposes. See 2.4 Definition of “Control” and 2.5 Jurisdictional Thresholds.

In addition, the Competition Amendment Act 18 of 2018 (the Amendment Act) requires mergers involving a foreign acquiring firm, which may adversely affect the national security interests of South Africa, to be notified to a committee to be constituted by the President. The list of national security interests has not yet been published, and the relevant provision is, as such, not yet operative.

The committee will be required to consider and decide whether the merger may have an adverse effect on the national security interests of South Africa within 60 business days of receiving the relevant notice (this period can be extended by the President).

Any decision made by the competition authorities would be automatically revoked should the committee prohibit such merger.

The Act also grants the Minister of Finance the power to withdraw the Competition Commission’s (the Commission) jurisdiction to assess a merger that involves an acquisition of a bank in terms of the Banks Act 94 of 1990, generally where the Minister of Finance considers it in the public interest to do so. When the Commission receives notification of a merger relating to an acquisition of a bank, the Commission must send formal correspondence to the Minister of Finance so that the Minister can determine whether he or she wishes to exercise this power.

In addition to the Act, certain sector-specific legislation requires additional notifications for mergers in particular sectors, including mining, gambling, telecommunications, insurance, private healthcare and others.

The Act is enforced by the Commission, the Competition Tribunal (the Tribunal) and the Competition Appeal Court (the CAC). The Commission is the primary body that investigates mergers (prohibited practices and conducting market inquiries). The Commission is the decision-maker in the case of intermediate mergers. The Tribunal is the adjudicative body that hears appeals or reviews and is the decision-maker in the case of large mergers (and in relation to prohibited practices). The CAC is the appellate court to which decisions of the Tribunal may be taken. The CAC is the court of final instance, other than in relation to constitutional matters or matters that raise an arguable point of law of general public importance, which may then be heard by the Constitutional Court of South Africa (if leave to appeal is granted).

The relevant categories of mergers are set out in 2.5 Jurisdictional Thresholds.

Notification to the Commission is mandatory where the definition of a “merger” and the relevant thresholds are met. The Act requires a party to a large or intermediate merger (see 2.5 Jurisdictional Thresholds) to notify the Commission of that merger and prevents the parties from implementing that merger until it has been approved by either the Commission or the Tribunal (or the CAC), as the case may be.

Transactions that do not meet the thresholds (ie, small mergers) are only notifiable in limited instances (see 2.5 Jurisdictional Thresholds).

Failure to notify the Commission of a merger or implementing a notifiable merger before approval has been obtained from the competition authorities is a contravention of the Act, and may attract an administrative fine of a maximum of 10% of a firm’s annual turnover in South Africa and its exports from South Africa. The fine may be imposed on all parties to the transaction. The Tribunal also has the power to order a party to the merger to sell any shares, interest or other assets it has acquired pursuant to the merger implemented without the approval of the competition authorities as a remedy. However, this would typically be a remedy of last resort.

The Commission has published guidelines on how it approaches the imposition of a fine for a failure to notify. The Commission’s approach to determining an appropriate administrative penalty involves five steps:

• Step 1 – the Commission will assess whether the failure to notify was wilful or deliberate or a bona fide mistake;
• Step 2 – the Commission will determine the base amount with reference to the category of the merger (intermediate or large merger) and the filing fee for such merger (ZAR165,000 in the case of an intermediate merger and ZAR550,000 in the case of a large merger; small mergers attract no fee). The base amount will be an amount equal to double the applicable merger filing fee;
• Step 3 – the Commission will then consider the duration of the contravention and add an amount to the base amount for each month of the contravention;
• Step 4 – once the Commission has determined the amount in Step 3, the Commission will then take into account any mitigating or aggravating factors to adjust the amount upwards or downwards, as the case may be; and
• Step 5 – the Commission will consider the 10% limit imposed by the Act.

The Act also contains criteria to be taken into account when imposing an administrative penalty, including the behaviour of the respondent and any level of profit derived from the contravention.

The Commission’s power is limited to recommending or proposing a penalty to the Tribunal, and only the Tribunal and CAC are empowered by the Act to impose an appropriate penalty.

The administrative penalties imposed by the Tribunal vary and depend on the facts of the case. Recent penalties imposed by the Tribunal have ranged between ZAR30,000 and ZAR2 million. The administrative penalties or fines imposed by the Tribunal are made public on its website. For confidentiality reasons, the percentage of the fine of the turnover of the respondent is generally not published.

For a transaction to be notifiable, both the financial thresholds (see 2.5 Jurisdictional Thresholds) and the definition of a “merger” must be met. A merger occurs where one or more firms (or persons) acquire or establish direct or indirect control over the whole or part of the business of another firm. The Act provides that the establishment of this control could be as a result of the purchase or lease of shares, interest or assets, by amalgamation, or by any other means. Notably, the Act does not provide a closed list of how “control‟ may be achieved.

Moreover, the Act notes that a merger may be achieved in any manner. This includes by way of contract (eg, an extensive management or voting pool agreement) or by way of asset acquisition where those assets constitute the whole or part of the business of another firm, eg, where they have market share or productive capacity attributable to them.

Internal restructurings have generally not been regarded as giving rise to a merger, as defined, where the ultimate control remains unchanged. However, in Mondi Limited and Mondi PLC v the Competition Commission, an internal restructuring was found to be notifiable on the facts of that particular case (which involved the undoing of the dual-listed structure of Mondi). As such, practitioners assess internal restructurings on a case-by-case basis.

Section 12 of the Act provides that a party enjoys control over a firm if that party:

• beneficially owns more than half the issued share capital of the firm;
• is entitled to a majority of the votes that may be cast at a general meeting of the firm or has the ability to control the voting of a majority of those votes, either directly or through a controlled entity of that party;
• is able to appoint or veto the appointment of a majority of the directors of the firm;
• is a holding company, and the firm is a subsidiary of that company;
• is a trust and has the ability to control the majority of the trustees or appoint or change the majority of the beneficiaries of the trust;
• in the case of a close corporation, owns the majority of members’ interests or controls directly or has the right to control the majority of members’ votes in the close corporation; or
• has the ability to materially influence the policy of the firm in a manner comparable to a person who, in ordinary commercial practice, can exercise an element of control referred to in the categories above.

The last item is a “catch-all” provision intended to catch minority and other interests, but only to the extent that the minority interest grants the party the ability to materially influence the policy of the firm. The competition authorities have found that a party that can influence the strategy of the firm through, inter alia, having the ability to veto a business plan, a budget or the appointment, firing or remuneration of key management personnel can be regarded as exercising control over the firm.

There are two categories of mergers that require mandatory notification and approval prior to lawful implementation in South Africa. These are “intermediate” and “large” mergers. The categorisation is determined according to certain asset and turnover thresholds, which are set out below.

For an intermediate merger:

(1) the target firm must have assets in or turnover in, into or from South Africa of at least ZAR100 million (Target Threshold); and

(2) the value in (1), combined with the entire acquiring group’s assets in or turnover in, into or from South Africa, must be at least ZAR600 million (Combined Threshold).

For a large merger, the values above are replaced by ZAR190 million (Target Threshold) and ZAR6.6 billion (Combined Threshold).

Note that small mergers (ie, where the thresholds are not met) do not in the ordinary course require notification. These small mergers may, however, be voluntarily notified; or notifiable at the request of the Commission (within six months of implementation); or notifiable in limited circumstances in accordance with the Commission’s 2009 Guideline on Small Merger Notification (the Guideline). The Guideline states that the Commission will require notification of a small merger if, at the time of entering into the transaction, any of the firms involved are:

• subject to an investigation by the Commission for prohibited conduct (such as cartel conduct, resale price maintenance or abuse of dominance); or
• respondents to pending proceedings referred by the Commission to the Tribunal. The Guideline is merely a policy document; it does not have the force of law.

On 1 December 2022, the Commission implemented revised Small Merger Guidelines which expanded the criteria under which a small merger may be notifiable. The Commission indicated that a revision was necessary following concerns that mergers in the digital space were escaping regulatory scrutiny due to acquisitions taking place at an early stage in the life of the target, and before sufficient turnover had been generated to trigger the thresholds for mandatory merger notification. In terms of the revised guidelines, the Commission requests that it also be informed of all small mergers and share acquisitions where (a) the acquiring firm’s annual turnover or asset value exceeds ZAR6.6 billion in the preceding financial year; and (b) the consideration (or purchase price) for the acquisition or investment exceeds ZAR190 million, or the consideration for the acquisition of a part of the target firm is less than ZAR190 million but ‘effectively values’ the target firm at ZAR190 million or more.

The Determination of Merger Thresholds and Method of Calculation Notice (the Notice) sets out the method of calculation of thresholds. The Notice provides that the assets in and the turnover of a firm in, into or from South Africa must be calculated in accordance with the International Financial Reporting Standards (IFRS) (or, in practice, any other applicable recognised accounting standard, eg, GAAP).

The Notice provides that the asset value of a firm is based on the gross value of the firm’s assets as recorded on the firm’s balance sheet for the end of the immediately previous financial year prior to the merger. In relation to revenue, the annual turnover of a firm considered will be the gross revenue of that firm from income in, into or from South Africa, arising from the following:

• sale of goods;
• the rendering of services; and
• the use by others of the firm’s assets yielding interest, royalties and dividends, and events as recorded on the firm′s income statement for the immediately previous financial year before the merger.

The value of foreign sales or assets should be calculated using the average exchange rate of the relevant currency, ie, ZAR, for a 12-month period up to the end of the previous financial year.

Note that:

• any combination of assets or turnover can be used to arrive at the thresholds – essentially, the larger of each of the parties’ South African assets or turnover is used in the calculation;
• the acquiring group needs to be considered on a consolidated basis, ie:
1. the acquiring firm itself;
2. every firm that the acquiring firm controls, both directly and indirectly; and
3. every firm controlling the acquiring firm, directly or indirectly, together with all firms controlled by those firms (again, directly or indirectly); and
• the values used to calculate the thresholds are usually those as reflected in the relevant firms’ most recent audited financial statements or, where these do not exist, management accounts. However, in the instance where audited financials exist, if more recent management accounts or draft financials exist that cover the full financial year, consideration should be given to these – provided that they have been prepared in accordance with IFRS or any other applicable recognised accounting standard.

See 2.6 Calculations of Jurisdictional Thresholds.

The Act applies to all economic activity within or having an effect within South Africa. By implication, foreign-to-foreign transactions may be subject to merger control in South Africa should the companies’ activities have an effect within South Africa. However, the notification of mergers is dependent on the thresholds being met, and these are calculated in relation to combined turnover and/or assets attributable to South Africa only. Accordingly, the merger control provisions in the Act are applicable to foreign-to-foreign mergers to the extent that the parties have assets in South Africa or turnover generated in, into or from South Africa that meet the prescribed thresholds. Note that where a target has no sales in, into or from South Africa or assets in South Africa, no merger notification can be triggered.

South Africa does not have a market share threshold and uses a financial threshold test, as explained in 2.5 Jurisdictional Thresholds.

The Act does not specifically refer to joint ventures; however, joint ventures are not exempted by any provision of the Act. To the extent that a joint venture constitutes a “merger‟ as defined, the merger control provisions of the Act will apply. Generally, “greenfield‟ joint ventures will not be caught by the Act, but a combination of existing operations may be.

The Commission has published a non-binding practitioners’ note to help determine whether a joint venture is caught. To the extent that a joint venture is not a “merger‟, the prohibited practices provisions of the Act may nevertheless apply.

See 2.5 Jurisdictional Thresholds.

The Act does not provide a time limit or statute of limitations for merger control as it relates to mandatory notifiable mergers.        

Parties cannot lawfully implement a notifiable merger without the approval of the competition authorities in South Africa.

Penalties may be imposed for any notifiable mergers, including foreign-to-foreign transactions, that are implemented before clearance is obtained from the competition authorities. See 2.2 Failure to Notify.

There are no general exceptions to the suspensive effect of a notifiable merger; all mergers require approval from the competition authorities before they can be implemented in South Africa. Mergers of failing firms, where there may be an imminent loss of employment, are often approved on an expedited basis. For example, the competition authorities approved a series of mergers (three separate mergers) involving Ellerines Furniture (Pty) Ltd, which was under business rescue proceedings, within two to three weeks to prevent the anticipated loss of employment.

It is possible to put in place hold-separate and/or ring-fencing arrangements to allow merging parties to close a transaction outside South Africa if this can be done without implementing the merger in South Africa (such that the status quo in South Africa is maintained pending approval by the South African competition authorities). While the competition authorities have not provided an official statement in support of this, hold-separate and ring-fencing arrangements have been put in place previously. It is generally advisable to inform the Commission of this.

There are no deadlines for the notification of a merger in South Africa, and notification can be made at any time prior to the implementation of the transaction.

Parties are permitted to submit the merger notification without a signed agreement and may submit the merger on the basis of another written document setting out the essential terms of the transaction, such as a letter of intent, offer letter, term sheet or draft agreement. This is provided that the material terms of the transaction are settled and recorded on such document and not subject to material change.

The applicable merger filing fee depends on the category of the merger. The filing fee for an intermediate merger is ZAR165,000, and the filing fee for a large merger is ZAR550,000. Should the Commission require parties to notify a small merger, there will be no filing fee payable.

The filing fee must be paid prior to filing the merger, and proof of payment must be submitted as part of the merger filing bundle.

The Act does not stipulate which party is responsible for payment of the fees, and this is generally a matter of commercial negotiation between the parties.

The Act places an obligation on the “parties to the merger‟ to file the merger. In practice, the primary acquiring and primary target firms jointly submit a single merger filing to the competition authorities. However, the Act makes provision for parties to request the Commission to accept the submission of a separate merger filing in the case of hostile takeovers.

South Africa has prescribed merger forms that detail the type of information and documents required for a complete merger filing. These forms are accompanied by declarations that confirm the accuracy of the information submitted. Generally, parties submit a report assessing the effect of a transaction as part of the notification. Various documents relating to the transaction must be submitted, such as the merger agreement, board documents, the parties’ financial statements and most recent budgets/business plans. Depending on the complexity of the transaction, parties may also file expert economic reports in support of their merger filing.

The Commission may issue a notice of incomplete filing (within five business days in the case of a large merger or ten business days in the case of an intermediate merger) if the filing is deemed incomplete. This notice has the consequence of stopping the investigation period until the parties submit the outstanding information to the Commission. Once the parties submit the outstanding information, the investigation period will restart on day one.

If, at any time, the Commission believes that a document filed in respect of a merger contains false or misleading information, it may issue a notice to demand corrected information. This notice has the consequence of stopping the investigation period until the parties submit the corrected information to the Commission. Once the parties submit the corrected information, the investigation period will restart on day one.

In addition to the above consequences, it is also an offence in terms of the Act to knowingly provide false information to the Commission. This offence attracts a fine not exceeding ZAR10,000, imprisonment not exceeding six months, or both a fine and imprisonment.

For intermediate mergers, the Commission is the decision-maker and has an initial 20 business days to consider the merger. The Commission may extend this period by a further 40 business days. This means that the Commission has a maximum of 60 business days to finalise its investigation of an intermediate merger and determine whether the transaction is approved (with or without conditions) or prohibited. This period cannot be extended.

For large mergers, the Commission makes a recommendation to the Tribunal, which acts as the decision-maker. The Commission has 40 business days to consider a large merger and make a recommendation to the Tribunal. This period may be extended by tranches of 15 business days at a time with the consent of the parties. Where the parties refuse, the Tribunal may, on application by the Commission, extend this by one or more periods of no more than 15 business days at a time. Within ten business days of the Commission submitting its recommendation to the Tribunal, the Tribunal must issue a notice of set-down for a hearing to decide on the merger. The hearing is subject to the availability of the Tribunal but usually occurs a week or two after the recommendation. Decisions in non-contentious cases are generally issued on the day of the hearing, with reasons for the decision following. The Tribunal has the power to approve, approve with conditions, or prohibit a merger.

Contested merger proceedings will generally take longer to be decided.

Parties may engage in pre-notification discussions with the authorities, but this is not common. The process can be treated as confidential.

Information requests are common in South Africa, and the level of detail of the requests depends on the complexity of the transaction and/or public interest concerns. Information requests do not stop the clock.

There is no short-form, fast-track or accelerated procedure in South Africa. The parties may request the Commission to review the transaction on an expedited basis and the Commission typically endeavours to conduct an expedited review on transactions with time pressures, such as those involving financial distress. See 2.14 Exceptions to Suspensive Effect.

The test applied to a merger is whether it is likely to substantially prevent or lessen competition and, if so, whether any technological, efficiency or other pro-competitive gains may result from the merger that may offset the lessening of competition. Relevant factors to be considered are:

• the strength of competition in the market;
• the probability that firms in the market will behave competitively following the merger;
• the actual and potential level of import competition;
• the ease of entry into the market, including tariff and regulatory barriers;
• the level and trends of concentration and history of collusion in the market;
• the degree of countervailing power in the market;
• the likelihood of the merged firm having market power;
• the dynamics of the market, including growth, innovation and product differentiation;
• the nature and extent of vertical integration;
• whether the business of a party has failed or is likely to fail; and
• whether the merger will result in the removal of an effective competitor.

The competition authorities must also determine whether a merger can or cannot be justified on public interest grounds by considering the effect that the merger will have on:

• a particular industrial sector or region;
• employment;
• the ability of small and medium-sized businesses, or firms controlled or owned by historically disadvantaged persons, to effectively enter into, participate in or expand within the market;
• the ability of national industries to compete in international markets; and
• the promotion of a greater spread of ownership, in particular, to increase the levels of ownership by historically disadvantaged persons and workers in firms in the market.

These public interest factors carry equal weight to the competition assessment. Before a merger can be filed with the Commission, a non-confidential version needs to be served on the parties’ South African employee representatives (being trade unions that represent a substantial number of the relevant employees and, where those do not exist, employee representatives), which enjoy automatic rights of intervention in the merger process. The Department of Trade, Industry and Competition is also provided with a full copy of the merger notification by the Commission, and the responsible Minister enjoys automatic rights of intervention on public interest grounds.

The Commission conducts the ordinary market definition assessment by assessing demand- and supply-side substitutability for both the product and geographic markets. There is no de minimis threshold.

Where there is no local precedent, foreign precedent may be considered. European (including the European Commission), US and UK decisions are most often considered.

The competition authorities assess all of the above. The general standard of assessment is set out in 4.1 Substantive Test, ie, whether the merger is likely to substantially prevent or lessen competition, and if so, whether any technological, efficiency or other pro-competitive gains are likely to result from the merger that may offset that adverse outcome.

The Act provides that the assessment of efficiencies will only be relevant once it is established that the merger substantially prevents or lessens competition.

The South African competition authorities tend to recognise three types of efficiencies:

• dynamic efficiencies (innovation);
• pecuniary or commercial benefits; and
• productive efficiencies (plant level, multi-plant level, research development, capital cost, etc).

However, pecuniary efficiencies are not considered pro-competitive gains in defence of an anti-competitive merger. The Tribunal has held that the efficiencies or pro-competitive gains claimed must be merger-specific, verifiable and real.

The Tribunal has also found that an efficiency gain may include “new products or processes that will flow from the merger of the two companies, or that identifies new markets that will be penetrated in consequence of the merger, markets that neither firm on their own would have been capable of entering, or that significantly enhances the intensity with which productive capacity is utilised”. The Tribunal stressed that this is by no means a closed list.

As set out in 4.1 Substantive Test, public interest issues (non-competition issues) are part of the substantive test of merger analysis in South Africa. Public interest considerations have equal weight to competition considerations.

The competition authorities have a particular focus on the impact of mergers on the greater spread of ownership by historically disadvantaged South Africans and workers in firms in the market. There has been a recent trend where the competition authorities impose conditions that seek to introduce a greater spread of ownership by historically disadvantaged persons, especially where a transaction results in a diminution in this regard. That said, an emerging trend in 2022/2023 is that the competition regulators are no longer satisfied that a merger has a neutral impact on public interest – the requirement rather is that a merger contributes something positive towards the public interest. Loss of employment and job preservation is another key focus, and moratoriums on job losses are often imposed.

There are no rules for FDI. However, see 1.2 Legislation Relating to Particular Sectors.

Joint ventures are subject to the ordinary substantive test set out in 4.1 Substantive Test.

The Act provides the competition authorities with the power to approve a merger, approve a merger with conditions, or prohibit a merger.

The competition authorities prohibit the implementation of a merger if they find that the merger substantially prevents or lessens competition and/or cannot be justified on public interest grounds. The competition authorities would ordinarily only prohibit if there are no appropriate remedies to mitigate the competition or public interest concerns identified.

A significant majority of mergers notified with the competition authorities are approved. During the 2021/2022 year, the Commission prohibited five out of the 295 mergers notified that year.

Parties can negotiate remedies with the competition authorities. These may be behavioural or structural in nature.

The ordinary process in merger investigations is that the Commission formally communicates to the parties the competition or public interest concerns identified by the investigation and provides the parties with an opportunity to make submissions and offer remedies to the concerns identified by the Commission. The parties and the Commission must reach an agreement on remedies prior to the Commission making its final decision in the case of a small or intermediate merger because the Commission cannot reverse its decision, and it becomes functus officio. In the case of a large merger, remedies are typically negotiated prior to the recommendation but may also be negotiated before the Tribunal decides on the matter, eg, during the hearing or the period leading up to it.

There is no express legal standard that the remedies imposed by South African competition authorities must meet to be acceptable. However, the competition authorities impose remedies that are tailored to mitigate the harm identified and capable of being implemented, monitored and enforced.

The remedies imposed by the competition authorities are dependent on the harm identified. The competition authorities ordinarily impose behavioural conditions to address the harm if feasible and only order a divestment as a remedy of last resort, should the behavioural remedies not be appropriate to address the harm identified.

The competition authorities regularly impose remedies to address public interest issues identified by the investigation. These public interest remedies are generally also imposed on large international transactions. These include moratoriums on job losses and, more recently, transactions to promote ownership by historically disadvantaged persons, the establishment of employee share ownership schemes (in line with 4.6 Non-competition Issues), investment commitments, social upliftment conditions, etc. It cannot be overemphasised how prominent public interest features in merger analysis in South Africa.

Parties can begin negotiating remedies as soon as the Commission formally communicates the concerns identified by its investigation; however, discussions on potential remedies should take place prior to the Commission making its final decision/recommendation. In certain circumstances, parties may file with upfront proposed remedies, ie, where they know concerns may arise.

The competition authorities in South Africa ordinarily attempt to agree on remedies with parties and do not unilaterally impose remedies without the “buy-in” of the parties. However, in small and intermediate mergers, the Commission has the power to impose conditions on a merger, and the Act does not require the Commission to obtain the consent of the parties prior to imposing a condition. In large mergers, the Commission has the power to recommend conditions to the Tribunal, and the Tribunal will be the decision-maker.

The Act does not set out a procedure for the negotiation of conditions between the Commission and the parties. The general procedural steps followed by the Commission with respect to remedies involve the following:

• The Commission formally communicates to the parties the competition concerns or public interest concerns identified by the investigation and provides the parties with an opportunity to make submissions.
• The Commission then invites the parties to offer remedies to the concerns identified by the Commission. The parties and Commission would engage in a negotiation process to find practical and agreeable remedies.
• Should the parties and the Commission agree to the remedies, these will be made subject to the merger approval/recommendation.
• Should the parties and the Commission not agree on a set of remedies, the Commission may choose to impose the remedies on the merger approval insofar as small or intermediate mergers are concerned. In large mergers, the Commission would make those remedies part of its recommendations to the Tribunal, and these remedies will be ventilated as part of the Tribunal hearing process.
• The parties have the option to “appeal” the remedies imposed by the Commission before the Tribunal and by the Tribunal to the CAC.

The Commission requires divestment to take place in a short period (usually no longer than 12 months) and will generally insist that an independent trustee be appointed to oversee the process and take over the divestiture process should the parties fail to divest the business within a specified period.

The merger can be implemented prior to complying with the remedies if the remedies require compliance after the implementation of a merger (which is almost always the case). Most remedies imposed by the competition authorities specify periods for compliance.

The Act provides that the Commission can revoke a merger approved by it if there has been a breach of conditions and/or request the Tribunal to impose an administrative penalty. The Tribunal can also revoke a merger approved by the Tribunal upon application by the Commission if there has been a breach of conditions. This has never happened, to the best of the authors’ knowledge.

In the case of small and intermediate mergers, the Commission either issues a Form CC 15 Clearance Certificate approving the transaction with or without conditions or a Form CC 16 Prohibition Notice prohibiting the transaction, together with its reasons for the decision. The Commission’s decision is also published in the Government Gazette (ie, it is made public).

In the case of large mergers, the Tribunal issues the approval certificate in the Form CT 10 (within ten business days of the hearing, but usually on the day) and thereafter issues written reasons for its decision (and a non-confidential version is published on its website) and publishes a notice of its decision in the Government Gazette, within 20 business days after issuing the Form CT 10 (although it sometimes takes longer). In instances of a prohibition, the Tribunal will issue a prohibition notice in the Form CT 11 and will thereafter issue written reasons for its decision (and a non-confidential version is published on its website) and publishes a notice of its decision in the Government Gazette, within 20 business days after issuing the Form CT 11.

The competition authorities’ approach to requiring remedies is the same in foreign-to-foreign mergers as it is in mergers involving local companies, and the Commission has recently imposed remedies in respect of foreign-to-foreign transactions.

The competition authorities do consider ancillary restraints as part of their review if they are part of the merger agreement or brought to the attention of the Commission during the merger review process. The Commission may impose remedies to amend a restraint if it has concerns with the duration or scope of the restraint in the main merger agreement. For example, in the merger between Afrique Pet Food (Pty) Ltd and Phil Africa Foods (Pty) Ltd, and Martin and Martin (Pty) Ltd, the Commission approved the merger subject to the merged entity reducing the restraint of trade from five years to three years. The Commission has imposed similar types of remedies in various mergers.

Any person may voluntarily file any relevant information in respect of the merger.

That said, the Commission ordinarily contacts third parties such as customers, competitors, suppliers, industry associations or other market participants as part of its merger investigation process. These third parties are then afforded an opportunity to provide their views on the merger and provide any information to the Commission, which the Commission will consider as part of its review process. In practice, the Tribunal also allows such third parties to make oral representations before it during the hearing.

Should a third party wish to formally participate in a Tribunal hearing, eg, through questioning witnesses and inspecting books, documents or items presented at the hearing, the third party must file a substantive application to be recognised as a participant in the merger proceedings. Sometimes, parties may simply allow such participation to curtail the process.

In addition to the above, trade unions or employee representatives of the parties’ employees and the Minister of Trade, Industry and Competition have an automatic right to participate in merger proceedings on public interest grounds (see 4.1 Substantive Test).

The Commission ordinarily contacts third parties (see 7.1 Third-Party Rights) through written information requests as part of its merger investigation process. The Commission also conducts telephonic meetings with third parties. The Commission generally requests formal written submissions by competitors and customers, particularly where serious competition concerns are raised.

The Act requires parties to serve a copy of the non-confidential version of the merger notification on trade unions representing a substantial number of South African employees (or to an employee representative should there be no such trade unions) prior to filing with the Commission. Proof of service must be included in the merger notification bundle. As such, notification of the transaction will invariably be in the public domain, given this requirement. In addition, the Commission publishes merger activity updates and a list of pending cases it is investigating on its website.

The Act provides a framework wherein the parties can claim certain information as confidential, and the competition authorities will treat that claimed information as confidential. The Act defines confidential information as “trade, business or industrial information that belongs to a firm, has a particular economic value, and is not generally available to or known by others”.

There is no legal obligation on the Commission to co-operate with other regulators or to recognise any determinations made by other competition authorities. The Commission does, however, generally engage with other regulators in international transactions through the memoranda of understanding it has concluded with various regulators such as, inter alia, the Director-General Competition of the European Commission, BRICS competition authorities, the Competition Commission of Kenya, and the Federal Competition and Consumer Protection Commission.

Prior to engaging other authorities, the Commission informs the parties that it intends to have engagements with various jurisdictions where the merger is notified, and it requests the parties to waive confidentiality and sign the necessary waivers to enable such engagements.

See 1.3 Enforcement Authorities.

The Commission is also an administrative body and is subject to the provisions of the Promotion of Administrative Justice Act 3 of 2000. It must ensure that it provides fair administrative action to parties before it.

The parties must file a request for consideration of the Commission’s decision in a small or intermediate merger within ten business days after the Commission issues its decision.

The parties are required to file an appeal of the Tribunal’s decision with the CAC within 20 business days of the Tribunal’s decision.

Appeals are generally heard relatively quickly (within a few weeks) unless highly contested. Parties can also request an expedited hearing of an appeal or review where there is urgency, and directions will be provided as to future conduct of the appeal.

There are a number of prohibitions that have been successfully appealed at the Tribunal and/or CAC. These include, inter alia, the merger between the JSE Limited and Link Market Services South Africa (Pty) Ltd, the merger between Cape Karoo (Pty) Ltd and Klein Karoo International (Pty) Ltd and Mosstrich (Pty) Ltd, and the Joint Venture of Nippon Yusen and Mitsui O.S.K.

The only third parties that can appeal a clearance are the Minister and the trade union or employee representatives of the employees of the parties (provided the trade unions had been a participant in the proceedings of the Commission). The Amendment Act permits the Minister to apply for leave to appeal even if he or she did not participate. Again, this is on public interest grounds.

In the Wal-Mart/Massmart merger, the Commission found that the merger did not raise any competition concerns and, therefore, would not substantially prevent or lessen competition in South Africa. Noting the absence of competition concerns, the Commission unconditionally approved the merger. The Commission’s decision was met with objections and was taken on appeal to the Tribunal by the Minister and the South African Commercial, Catering and Allied Workers Union (SACCAWU), who both raised issues on public interest concerns, such as the effect of the merger on employment, local manufacturers, local suppliers and small and medium-sized businesses. Although the Tribunal approved the merger, it altered the Commission’s decision from an unconditional approval into a conditional approval wherein the Tribunal imposed public interest conditions related to employment and requiring the merged entity to establish a programme to develop local suppliers and SMMEs by investing ZAR100 million and train local suppliers in how to do business with the merged entity.

The Tribunal’s decision was taken on further appeal to the CAC by the Minister and SACCAWU. The Minister sought a review of the Tribunal’s decision, and SACCAWU sought for the merger to be prohibited outright. The CAC confirmed the approval and revised two of the conditions imposed by the Tribunal.

Recent amendments to the Act introduced a national security provision in terms of which authorisation must be sought for notifiable mergers involving a “foreign acquiring firm” and impacting a designated list of national security interests from a committee to be constituted by the President in addition to being sought from the regulator. The list of national security interests has not yet been published, and the committee tasked to review such transactions has not yet been constituted by the President. The relevant provision is therefore not yet operative and there is no indication from authorities as to when the provision will come into effect.

The Competition Act was substantially amended in 2019, as indicated in 1.2 Legislation Relating to Particular Sectors. The new provision of the Amendment Act relating to mergers involving a national security interest is yet to come into effect, and there is no indication at this stage when the provision will become operational.

The majority of mergers are approved in the ordinary course, and we have not observed trends relating to the prohibition of transactions in South Africa. Large international investments into South Africa are usually approved subject to conditions relating to investment, social upliftment and the like – this stems from the general policy as opposed to any merger-specific harm.

As noted, the Amendment Act introduced a new provision related to public interest, which requires the Commission to consider the impact of the merger on the promotion of a greater spread of ownership, in particular, to increase the levels of ownership by historically disadvantaged persons and workers in firms in the market. The Commission has previously communicated that its position is that this new provision requires that any transaction must promote the greater spread of ownership by historically disadvantaged persons or workers in South Africa.

The Commission’s above position has not been tested before the Tribunal, and parties have resisted conditions in this regard where there is no diminution in such shareholding and especially in foreign-to-foreign transactions.

The Commission continues to focus on all competition concerns in merger regulation. In December 2021, the Commission published a Concentration Report highlighting concentration levels in sectors, and the report found that concentration persists in numerous sectors, such as farming, agro-processing, healthcare and financial services. The report indicates that although merger activity has not necessarily contributed to growing concentration by highly concentrated industries, there is a need to pre-emptively address the trend towards higher levels of concentration through merger creep in sectors increasingly characterised by oligopolistic structures.

Public interest considerations in merger regulation continue to be the focus of the Commission.

On 1 December 2022, the Commission implemented revised Small Merger Guidelines which expanded the criteria under which a small merger may be notifiable. The revised Small Merger Guidelines seek to capture mergers in digital markets that escape regulatory scrutiny due to acquisitions taking place at an early stage in the life of the target and thus failing to meet the financial thresholds for mandatory notification. This signals the Commission’s intention to focus on digital markets at present and going forward.