The South African Competition Commission (Commission) and Competition Tribunal (Tribunal) recently hosted their Annual Competition Law and Economic Policy Conference in Cape Town.
The conference was held shortly before the BRICS International Competition Law Conference, highlighting that South Africa’s competition law is evolving within a complex global geo-political environment.
At the heart of this evolution are three interconnected themes: the need for competition law to adapt to and support local economies, increased cooperation by competition authorities in an uncertain global economy, and sharper scrutiny of digital, financial, and industrial markets.
Large and small businesses, dealmakers and their advisors were able to engage with BRICS authorities on these important competition law issues.
Adapting antitrust principles to serve local needs
Whilst competition principles are increasingly applied around the world, the BRICS authorities highlighted the need to consider the social, cultural and economic context of each country, as well as local needs. For example, a defining feature of South Africa’s Competition Act is the commitment to public interest. Transformation, inclusion, and SME participation are not merely policy preferences, they are constitutional and developmental imperatives that are embodied in the legislation and part of the policy of the Commission’s core mandate.
This means that we are still likely to see some mergers in South Africa being approved subject to public interest conditions, such as the formation of employee share ownership plans (ESOPs) as well as enterprise and supplier development funds.
However, a more nuanced assessment of public interest considerations in mergers is developing, as the country prioritises growth and job creation. Merger remedies are becoming more sophisticated and data-driven, especially in sectors in which competition and public interest issues intersect.
Authorities are increasingly demanding empirical evaluation and access to post-merger data to assess the effectiveness of remedies. For dealmakers and in-house teams, this means adopting a proactive approach to potential public interest impacts, giving early consideration to potential integrated remedy packages, and providing for adequate time for public interest negotiations, even on mergers in which competition concerns are limited.
Merger control: speed and substance
The Tribunal has heeded the concerns being voiced by business about the length of time it takes to decide large mergers and recognises there is a need for greater efficiency, agility and more pragmatism.
It is hoped that the Minister in the Department of Trade, Industry and Competition (Minister) will appoint additional members to the Tribunal Panel soon. In the meantime, the Commission has proposed that the Minister raise the monetary merger notification thresholds, to reduce the number of filings and free up more capacity for dealing speedily with complex, high-impact cases.
Industrial policy and competition: a new symbiosis
Competition law does not operate in a vacuum. Rising protectionism, fractured multilateralism, and volatile geopolitics are reshaping how authorities apply the rules and are increasingly required by Government to support industrial policy goals, such as increasing local production, and lowering costs of critical inputs such as energy, logistics, banking and finance, and telecoms.
Even if there are specific sector-regulators, competition authorities may play a role in assessing the nature and level of competition in these markets and help to shape sector-specific regulations that promote new entry and the ability of smaller firms to participate. There is a strong emphasis on enabling entry and supplier diversification, and removal of supply-side bottlenecks, particularly for black-owned firms.
Competition authorities may play a role via market inquiries as well as exemptions from competition legislation, like that recently implemented to support the South African sugar sector.
Increased co-operation and co-ordination
The BRICS authorities reported on various joint initiatives, including in relation to enforcement of competition law in the pharmaceutical and agricultural sectors.
In Africa, the AfCFTA Competition Protocol is advancing, with new rules on jurisdiction and thresholds designed to provide legal certainty, avoid double notifications, and promote subsidiarity.
Regional Economic Communities such as COMESA and ECOWAS are emphasising ‘one-stop’ handling of genuinely cross-border matters, while national authorities retain control over domestic issue.
Access to finance: Data, competition and inclusion
Access to finance in BRICS remains a critical issue, especially for small businesses. In South Africa, despite entry by challenger banks like Capitec and Tyme and rapid advancements in fintech, the perception remains that the South African banking sector is concentrated.
Policy solutions under discussion include open finance mandates to break data silos creating more opportunities for fintechs and alternative lenders; more support from development finance institutions; and more focus by the public sector on timeous payment of SMME’s accounts. Some proposals to enhance competition and provide more support for SMME’s included:
- mandatory participation by banks in data-sharing regimes and development of SME-appropriate finance products using alternative data and flexible repayment options
- fintechs and non-bank financial companies playing a greater role, as consumer protection and credit regulations evolve
- a market inquiry into the sector by the Commission, which might assist in identifying structural challenges, unnecessary barriers to entry and impediments to participation in markets (for example, as a result of a lack of access to suitable and/or cost-effective finance) and could be helpful in proposing regulatory changes. However, since this sector is highly regulated, the South African Treasury, the Department of Finance and the Prudential Authority would need to play a role.
Digital, data, and AI: raising the bar
The BRICS competition authorities are prioritising competition law enforcement in the digital platform and AI-driven markets, but given the global nature of these markets, coordinated investigations and remedies are required. Sharing intelligence and coordinating remedies to ensure consistency across jurisdictions remain key.
