LEGAL 500: COMPARATIVE GUIDE TO MERGER CONTROL LAWS AND REGULATIONS IN SOUTH AFRICA
This country-specific Q&A, by competition law partner Iona Dhladhla and associate Andrew Fisher, provides an overview to merger control laws and regulations that may occur in South Africa.
It covers jurisdictional thresholds, the substantive test, process, remedies, penalties, appeals as well as the author’s view on planned future reforms of the merger control regime.
The Competition Act, 1998 regulates mergers having an effect in South Africa. It applies to all economic activity within, or having an effect within, South Africa. Accordingly, transactions between parties in a foreign jurisdiction, which has an effect in South Africa(e.g. by way of sales into the country) is subject to the merger control provisions of the Act.
The Competition Commission (Commission) is the primary interface with the public. It is responsible for the investigation and evaluation of mergers. It has the power to approve, prohibit or impose conditions in the case of small and intermediate mergers and is obliged to make recommendations to the Competition Tribunal (Tribunal) in relation to large mergers.
The Tribunal is the primary adjudicative body. It is responsible for the approval of large mergers. It is the entity that adjudicates on conduct prohibited in terms of the Competition Act and is responsible for the imposition of penalties under the Act. Appeals and reviews in respect of decisions of the Commission are referred to the Tribunal. The Competition Appeal Court consists of three High Court judges and shares exclusive appellate jurisdiction with the Tribunal in relation to most aspects of the Competition Act, although there is a right of appeal, with special leave, to the Constitutional Court.
No party may implement an intermediate or large merger without the prior approval of the competition authorities. The South African authority is well regarded on the continent as an effective and sophisticated regulator. Its approach to substantive competition issues and formal notification requirements is generally in line with international best practice. From a timing perspective, mergers are generally approved within three months or less.
However, complex, large mergers can take significantly longer. On factor that distinguishes the South African regulator from many others is the specific requirement to consider public interest effects alongside competition effects. This has led to particular challenges where mergers are likely to result in job losses or other negative public interest outcomes.Read further