Update on the Competition Amendment Act
On 13 February 2019, President Cyril Rhamaphosa assented to the Competition Amendment Act 18 of 2018 (Amendment Act) - a copy is available
here. The Amendment Act will come into operation on a date to be declared by the President by means of a proclamation in the Government Gazette. Read our e-alert
here for more about this significant development.
New decision of interest: Merger control is a once-off affair
In the Competition Commission and Hosken Consolidated Ltd (HCI) case, the Constitutional Court confirmed that the approval of a merger is a once-off affair if sole control is acquired. The Court also confirmed that there is no time bar on the Commission to investigate whether parties to a merger have complied with assurances made during the investigation or conditions imposed in the approval of the merger. A copy of the decision is available
here.
Local News
Agribusiness, food & beverage: Updates & developments
The Competition Tribunal has ordered that the leniency application of Unilever South Africa (Pty) Ltd (Unilever) cannot be used as against it as evidence in a market division case. In 2014, Unilever applied for leniency, however, the Commission denied the application and elected to proceed with the case. The Commission subsequently brought an application to have Unilever’s application for immunity included as evidence in the main case. Full reasons for the Tribunal's decision have not yet been published.
Construction & engineering: Company fined for cartel conduct
The Tribunal confirmed a settlement agreement between GD Irons Construction (Pty) Ltd (GD Irons) and the Commission. GD Irons has admitted to engaging in price fixing, market division and collusive tendering and will pay an administrative penalty of ZAR4 million.
Energy & infrastructure: Tribunal confirms Alcon settlement
The Tribunal confirmed a settlement agreement between Alcon Marepha (Pty) Ltd (Alcon) and the Commission. Alcon is required to pay an administrative penalty of ZAR1.3 billion for its involvement in price fixing and collusive tendering. Alcon further admits to fixing prices of power cables through the Association of Electric Cable Manufacturers of South Africa.
Healthcare: Updates & developments
In the healthcare sector, there are two developments of interest:
- The Tribunal has prohibited the merger between Mediclinic South Africa and Matlosana Medical Health Services. In June 2017, the Commission recommended to the Tribunal that the proposed merger should be prohibited on grounds that the merger would likely result in a significant increase in healthcare prices in the North West region.
- The Commission gazetted amended terms of reference for the Healthcare Market Inquiry. In terms of the amendment, the Final Report will be completed by 30 September 2019. A copy of the Gazette is available
here.
Industrials: Tribunal prohibits drum manufacturers' merger
The Tribunal prohibited the proposed merger between Greif International Holding B.V and Rheem South Africa (Pty) Ltd. In June 2017, the Commission prohibited the merger on the grounds that the merger would constitute a near monopoly in the market for the manufacture and supply of large steel drums. The Tribunal agreed with the Commission and concluded that no adequate remedy was tendered which could address the substantial lessening of competition.
Regulatory: Leadership changes at the Commission
Effective from 1 March 2019, James Hodge takes over from Professor Liberty Mncube as the Commission's Chief Economist. James held the position of Managing Partner of Competition and Regulatory Economics at Genesis Analytics. The Commission has also reassigned two executive members - Makgale Mohlala has been reassigned to Head of Mergers and Acquisitions while Lebo Mabidikane will take over as Head of Cartels.
Retail: Tribunal confirms school uniform settlement agreements
The Tribunal confirmed settlement agreements between the Commission and several firms involved in the manufacture of school uniforms. In terms of the agreements, the respondents commit, among others, to contract school uniform suppliers through a transparent and competitive bidding process and to enter into these contracts for limited periods. The Commission did not seek to impose any administrative penalties.
Sports: Football agents admits to price fixing
The Tribunal confirmed settlement agreements between the Commission and two separate football agents, Quality Talent Sports (Pty) Ltd (QTS) and Bidvest Media (Pty) Ltd t/a MSC Sports (MSC). Both agents admitted to fixing prices and/or trading conditions. QTS has agreed to pay a fine of ZAR 114,158.84 and MSC has agreed to pay a fine ZAR 90,013.17.
Rest of Africa news
Kenya: Updates & developments
In Kenya, there are three developments of interest:
- The Competition Authority of Kenya (CAK) fined an online betting company, KES 15 million (approximately ZAR 2.1 million) for entering into a merger without the authority's approval. The CAK found that Betway sold the majority of its shares to a company called GM Gaming.
- The CAK ordered Total to strike out anti-competitive clauses in its agreements with dealers. The CAK's investigations revealed that the firm had a clause in its dealership agreements that forbid dealers from operating a competitor’s outlet within a radius of 20 kilometres.
- The CAK announced in its 2017/18 annual report that it has approved 146 mergers over the financial year. The CAK reported that the value of the mergers and acquisitions considered contributed a total of KES 66.1 billion (approximately ZAR 9 billion) to the Kenyan economy. The CAK also issued financial penalties totaling KES35 million (approximately ZAR 4.9 million) on undertakings that violated competition law.
Nigeria: President assents to Competition and Consumer Protection Act
On 5 February 2018, the Nigerian President signed the Federal Competition and Consumer Protection Act into law. The new Act provides for the establishment of the Federal Competition and Consumer Protection Commission and the Competition and Consumer Protection Tribunal, and repeals certain section of the Investments and Securities Act, 2007 applicable to mergers. The Securities and Exchange Commission, the body previously tasked with merger control, has noted that there is a transitional period of three months for the new competition authority to become operational.
Namibia: Competition authority seeks input on petroleum exemption
The Namibian Competition Commission (NaCC) has invited interested parties to provide input on an exemption application by the National Petroleum Corporation of Namibia (Pty) Ltd (NAMCOR). NAMCOR has applied to be exempted from certain provisions of the Competition Act in respect of the proposed reinstatement of NAMCOR’s mandate to import 50% of Namibia’s petroleum needs. NAMCOR seeks an exemption for a period of ten years.
Zimbabwe: Updates & developments
In Zimbabwe, there are two developments of interest:
- The Grain Millers Association of Zimbabwe applied to the Competition and Tariff Commission (CTC) to be allowed to set the prices of products that its members produce including maize meal, flour, self-raising flour, rice and salt. The association contends that the absence of a collective price review mechanism will result in unrestrained price hikes and food insecurity.
- The CTC announced that it will be commissioning a market inquiry into the school uniforms sector. The inquiry was launched after the CTC became aware of allegations of anticompetitive practices in the supply and distribution of school uniforms, including, among others, compelling parents / guardians to buy from a specific supplier, tying and bundling.
International news
European Union: Updates & developments
In the European Union, there are two developments of interest:
- The European Commission (EC) carried out raids in several member states at the premises of companies in the sector for farmed Atlantic salmon. The EC has expressed concern that the companies may have violated EU anti-trust rules that prohibit cartels and restrictive business practices.
- The EC prohibited the merger between Siemens and Alstom. The EC concluded that the merger would have harmed competition in markets for railway signalling systems and high-speed trains, and that the parties did not offer sufficient remedies to address these concerns.
Germany: Authority imposes restrictions on Facebook
The German Federal Cartel Office imposed restrictions on Facebook in relation to the processing of user data. The authority found that Facebook’s terms of service and the manner and extent to which it collects and uses data, are in violation of the European data protection rules to the detriment of users. Facebook has one month to appeal the decision.
India: Google fined for abuse of dominance
The Competition Commission of India (CCI) imposed a fine of USD21.17 million (approximately ZAR 297 million) on Google. In its order, the CCI stated that Google was abusing its dominant position in online web search and online search advertising markets, and was found to be indulging in search bias practices.
United Kingdom: Updates & developments
In the United Kingdom, there are two developments of interest:
- The UK's Financial Conduct Authority (FCA) found that three asset management firms breached competition law by swapping information ahead of a share listing. The FCA has imposed fines on two of the firms, and the third firm received immunity under the competition leniency programme.
- The Court of Appeal dismissed Balmoral's challenge against a fine imposed by the Competition and Markets Authority in 2016. Balmoral was fined for exchanging competitively sensitive pricing information with competitors. The judgment confirms that the exchange of competitively-sensitive, confidential information, even at just one meeting, can in itself be a breach of competition law under certain circumstances.
Our recent work
SAA agrees to pay Comair ZAR1.2 Billion
The Supreme Court of Appeal on 15 February confirmed a settlement agreement between South African Airways and BA Comair, in which SAA agreed to pay Comair ZAR 1.2 billion (plus interest and costs). The settlement follows almost 16 years of litigation and represents only the second successful damages claim brought pursuant to a breach of the Competition Act. The damages action arose following the Competition Tribunal's finding that SAA's travel agent incentive schemes amounted to an exclusionary abuse under the Competition Act.
The Comair team at Webber Wentzel was led by
Martin Versfeld and included
Damian Wright,
Shelley Efthymiades,
Belinda Tonono and Kayleigh van Vuuren
African Equity Empowerment Investments / Saab Grintek Technologies
The Tribunal unconditionally approved the acquisition by African Equity Empowerment Investment Ltd (AEEI) of 100% of the issued shares of Saab Grintek Technologies (Pty) Ltd (Saab).
Robert Wilson and Burton Phillips acted for the merger parties.
AEEI is a JSE listed company controlled by Sekunjalo Investment Holdings (Pty) Ltd. Saab specialises in the design, supply, deployment, commissioning and maintenance of multi-technology telecommunication systems for mobile broadband and coverage solutions.
The Tribunal found that the merger is unlikely to substantially lessen or prevent competition or raise any public interest concerns.
Holdco / Axios
The Commission unconditionally approved the proposed merger whereby Holdco intends to acquire The Innovation Group, through Axios Bidco Ltd (Axios).
Shawn van der Meulen and Sarah Manley acted for the target firm.
Holdco is a special purpose vehicle. It does not have any business operations. Axios, through The Innovation Group, manages critical incidents in the car and home insurance industry on behalf of insurers, brokers and fleet managers.
The Commission found that the merger is unlikely to substantially lessen or prevent competition or raise any public interest concerns.
LetterOne / BASF
The COMESA Competition Commission unconditionally approved the proposed formation of a full-function joint venture between LetterOne Holdings S.A. (LetterOne) and BASF S.E. (BASF) which will combine their oil and gas activities. The joint venture company will be named Wintershall DEA Holding GmbH and will be principally active in the exploration and production of oil and gas, and to a limited extent, in gas transportation.
Robert Wilson, Werner Rysbergen and
Cara du Plessis acted for the merger parties.
LetterOne is a private investment holding company focusing on investments, through its subsidiaries, in the energy sector. BASF is a European stock corporation mainly active in the chemical sector.
The CCC found that the merger was unlikely to lessen competition in the Common Market and/or negatively affect trade between Member States.
Liberty Group / Khora Investment's 30% undivided share in the Botshabelo Mall
The Tribunal unconditionally approved the proposed merger whereby Liberty Group Ltd (LGL) and 2 Degrees Properties (Pty) Ltd (2 Degrees) intend to acquire Khora Investments (Pty) Ltd's (Khora) 30% undivided share in Botshabelo Mall properties and the business conducted thereon (the Target Business).
Desmond Rudman and Cara du Plessis acted for the merger parties.
LGL is a long term insurance provider in the financial services sector. 2 Degrees is indirectly controlled by LGL and, together with LGL, owns undivided shares in LGL's property portfolio. Khora's involvement in the proposed merger is in respect of its 30% undivided share in Botshabelo Mall properties and the letting business conducted thereon. The Botshabelo Mall is a mall situated in the Botshabelo area of the Free State Province. It leases out rental space to a number of different tenants including Pick n Pay, Shoprite, Cashbuild and Truworths.
The Tribunal found that the merger is unlikely to substantially lessen or prevent competition or raise any public interest concerns.
