VERTICAL MERGERS NOW ON THE RADAR OF COMPETITION REGULATORS
A trend is becoming apparent among competition authorities around the world, including in Southern and East Africa. Many regulators are either starting to take an active interest in vertical mergers or investigations for the first time or intensifying their vigilance in this area.
Vertical mergers or investigations, which involve companies in different parts of the supply chain, have typically not been an area of focus for competition authorities worldwide. That is changing swiftly, says Xolani Nyali, partner at African law firm Bowmans.
‘In Africa, the two regulators that have been most active in the vertical agreements investigations space are the Competition Authority of Kenya, as well as the Competition Commission of COMESA,’ Nyali says. ‘As for South Africa, where the Competition Commission has previously intervened focused on vertical assessments in mergers, developments in behavioural investigations have recently occurred if you look at the retail sector inquiry and the settlement agreement between the Commission and Wesgrow Potatoes in January 2020.’
For the first time in 30 years, the Federal Trade Commission in the US has updated its Vertical Merger Assessment Guidelines, and seems most focused on healthcare, particularly hospital mergers,’ says Nyali. ‘The European Commission, which seems most concerned with vertical mergers in the digital space, has key issues around pricing and platform bans and is also in the process of updating its guidance on vertical agreements.’
Given the cost and efficiency benefits that many businesses perceive in vertical mergers or agreements, it is important to have insight into the reasons for the increased interest on the part of competition authorities, he says.