News and Media

President Ramaphosa has signed the Competition Amendment Bill into Law

14 February 2019|In Competition Briefs eBriefs News and Media Nortons Inc News NortonsInc

In this edition:

  • PRESIDENT RAMAPHOSA HAS SIGNED THE COMPETITION AMENDMENT BILL INTO LAW
  • NORTONS INC ATTENDS ECONOMIC DEVELOPMENT DEPARTMENT FORUM ON DRAFT COMPETITION REGULATIONS IN TERMS OF THE COMPETITION AMENDMENT ACT
  • MINISTER EBRAHIM PATEL MAKES SIGNIFICANT AMENDMENTS TO RULE 15: ACCESS TO INFORMATION IN MATTERS INVOLVING THE COMPETITION COMMISSION
  • COMPETITION COMMISSION APPOINTS JAMES HODGE AS NEW CHIEF ECONOMIST
  • COMPETITION TRIBUNAL ISSUES UNCONDITIONAL APPROVAL IN CTP LIMITED AND COGNITION LIMITED MERGER
  • COMPETITION TRIBUNAL PROHIBITS MEDICLINIC ACQUISITION OF MATLOSANA MEDICAL HEALTH SERVICES
  • COMPETITION TRIBUNAL PROHIBITS MERGER BETWEEN LARGEST STEEL DRUM MANUFACTURERS IN SOUTH AFRICA.
  • COMPETITION TRIBUNAL RULES THAT EVIDENCE PROVIDED BY WHISTLE BLOWER CANNOT BE USED AGAINST IT IN CARTEL CASE
  • POWER CABLE COMPANY FINED R1.3 MILLION FOR PRICE FIXING AND COLLUSIVE TENDERING IN ESKOM TENDERS
  • COMPETITION COMMISSION DECIDES NOT TO PROSECUTE MULTICHOICE AND SUPERSPORT 

PRESIDENT RAMAPHOSA HAS SIGNED THE COMPETITION AMENDMENT BILL INTO LAW

On Wednesday, 13 February 2019, the President assented to the Competition Amendment Act.

In an earlier press statement released by the office of the Presidency it was noted that the Competition Amendment Bill would provide “a clear mandate to the competition authorities to address economic concentration in a balanced manner and to promote economic transformation. The Bill provides greater clarity to firms and investors on prohibited practices and what constitutes abuse of dominance.”

The statement further noted that “the amendments enable a more effective approach to concentration, with a focus on improving outcomes for small and black-owned business, and strengthen the institutions involved in managing competition policy and law.”

While the Competition Amendment Act has now been enacted, it is not clear from when it will become effective.  In remarks which were made by the Minister of Economic Development during his SONA reply, he noted that over the next number of months we’ll implement this law in phases”.

Nortons Inc recently attended a forum into the draft regulations into price discrimination and buyer power which were hosted by the Economic Development Department on Friday, 8 February 2019.  It is understood that a further iteration of these draft regulations will be put out for comment in due course.

Thus, while the Competition Amendment Act has been signed into law, it is unclear whether the Amendment Act will only be implemented once the regulations relating to price discrimination and buyer power have been finalised.

We do understand, however, that the signed Competition Amendment Act will be gazetted today.


NORTONS INC ATTENDS ECONOMIC DEVELOPMENT DEPARTMENT FORUM ON DRAFT COMPETITION REGULATIONS IN TERMS OF THE COMPETITION AMENDMENT ACT

On Friday, 8 February 2019, representatives of Nortons Inc were invited to a forum hosted by the Economic Development Department, which was held at the Industrial Development Corporation offices in Sandton.  The forum was hosted by a panel comprising the Chief Economist of the Economic Development Department, Ms Tanya van Meelis, Chief legal counsel of the Competition Commission, Bukhosibakhe Majenge, and the new appointed Competition Commission Chief Economist, James Hodge.  During the forum the panel presented the draft guidelines, which were first published in December 2018, and more importantly the thinking behind the draft guidelines.

The Forum, also presented an opportunity for stakeholders, such as Nortons Inc, which had prepared submissions on behalf of various of its clients, to engage with the drafters of the current draft regulations.  Nortons Inc provided detailed submissions which sought to highlight certain concerns with the current drafting of the draft regulations. Nortons Inc highlighted various concerns with the complexity of various provisions of the draft regulations, and in particular the difficulties which business would encounter in seeking to apply them.

Nortons also identified areas of the draft regulations where there may be regulatory overreach, and breaches of the separation of powers doctrine.

It is hoped that the contributions which Nortons Inc made during the forum will be taken into consideration when the revised draft regulations are circulated.


MINISTER EBRAHIM PATEL MAKES SIGNIFICANT AMENDMENTS TO RULE 15: ACCESS TO INFORMATION IN MATTERS INVOLVING THE COMPETITION COMMISSION

On 25 January 2019, Minister Ebrahim Patel, the Minister of the Economic Development Department, published the amended Regulation 15 of the Competition Commission Rules.  The rationale put forward for the amendments was to bring Rule 15 in line with section 7 of the Promotion of Access to Information Act.

However, the effect of the amendments to Rule 15 is that it significantly restricts the ability of third parties to obtain information which the Commission relies on as part of its investigation and/or merger assessment and will make the bringing of review applications in the Tribunal more difficult.


COMPETITION COMMISSION APPOINTS JAMES HODGE AS NEW CHIEF ECONOMIST

On 31 January 2019 the Competition Commission announced that James Hodge would be taking over as the new Chief Economist at the Competition Commission, effective from 1 March 2019.  James Hodge will replace Professor Liberty Mncube.

James Hodge brings a significant amount of experience to the Competition Commission.  He is the co-founder of Genesis Analytics and was the managing partner at Genesis Analytics’ Competition and Regulatory Economics practice for the past 14 years.


COMPETITION TRIBUNAL ISSUES UNCONDITIONAL APPROVAL IN CTP LIMITED AND COGNITION LIMITED MERGER

Nortons Inc notified the large merger involving the acquisition by CTP Limited of Cognition Limited. CTP is a printing, publishing and packaging company with operations throughout South Africa, while Cognition is an investment holding company whose subsidiaries provide interactive telecommunication, switching and business services using fixed and mobile networks.

Following the recommendation from the Competition Commission on 23 January 2019 the matter was heard before the Tribunal on 30 January 2019.  The Competition Tribunal, approved the transaction without conditions on 30 January 2019.

Nortons Inc acted on behalf of both parties.


COMPETITION TRIBUNAL PROHIBITS MEDICLINIC ACQUISITION OF MATLOSANA MEDICAL HEALTH SERVICES

The Competition Tribunal of South Africa has announced that it has prohibited the merger between Mediclinic and Matlosana Medical Health Services (Pty) Ltd (MMHS) in the North West province.

In its press release the Competition Tribunal of South Africa noted that on 28 June 2017, the Commission, after investigating the matter, recommended to the Tribunal that the proposed merger should be prohibited on grounds that the joining together of Mediclinic Potchefstroom, Wilmed Park and Sunningdale hospitals would be likely to result in:

  • a significant increase in healthcare prices in the region.
  • diminished incentives to improve on non-price factors, such as patient experience and quality healthcare, and
  • bargaining power to Mediclinic vis-à-vis medical schemes.

The Tribunal noted that despite different proposed remedies put up by the merging parties over several months, no appropriate remedy was tendered that would cure the substantial lessening of competition that would arise as a result of the proposed transaction.

Accordingly, the Competition Tribunal prohibited the proposed transaction on 30 January 2019.


COMPETITION TRIBUNAL PROHIBITS MERGER BETWEEN LARGEST STEEL DRUM MANUFACTURERS IN SOUTH AFRICA

The Competition Tribunal has announced that it has prohibited the merger between Greif International Holding B.V. (“Greif”) and Rheem South Africa (Pty) Ltd (“Rheem”), the two largest steel drum manufacturers in South Africa.  In terms of the proposed transaction, which was notified as an intermediate merger on 17 March 2017, Grief would have acquired a majority interest in Rheem.

Greif and Rheem are suppliers of industrial packaging products which include knock-down drums for export, large steel drums and steel pails.  Rheem has manufacturing facilities in Prospecton (Durban), Alrode (Johannesburg) and Cape Town. Greif’s main production sites are in Vanderbijlpark and in Mobeni.

On 13 June 2017 the Competition Commission prohibited the merger on the grounds that the proposed transaction would have resulted in a near monopoly in the market for the manufacture and supply of large steel drums.  The merging parties subsequently applied to the Competition Tribunal to reconsider the matter.

In an effort to ameliorate the harm identified by the Competition Commission, the Merging Parties proposed several remedies to the Competition Tribunal.  However, the Tribunal decided that the various remedies which were proposed did not in its view cure the substantial lessening of competition which would arise from the proposed transaction.

Accordingly, the Competition Tribunal prohibited the proposed transaction on 31 January 2019.


COMPETITION TRIBUNAL RULES THAT EVIDENCE PROVIDED BY WHISTLE BLOWER CANNOT BE USED AGAINST IT IN CARTEL CASE

On 4 February 2019, the Competition Tribunal issued a decision confirming that an application for leniency (i.e. immunity from prosecution) by Unilever South Africa could not be used as evidence against the company applying for leniency in a subsequent cartel case.

In 2014 Unilever applied for leniency in respect of a cartel which, according to the Commission, it was allegedly involved in with Sime Darby Hudson Knight.  Both parties were involved in the manufacture and supply of bakery and cooking products including edible oils and margarine. In relation to the alleged cartel in question, it has been suggested by the Commission that the two parties had allegedly agreed to divide markets by allocating specific types of goods and customers.  Sime Darby Hudson Knight entered into a settlement agreement with the Competition Commission in 2016 where it paid a penalty of R35 million.

While Unilever had applied for immunity in terms of the Competition Commission’s Corporate Leniency Policy, the Competition Commission did not grant the application for immunity.  Instead, the Competition Commission sought to use the evidence which Unilever had submitted as part of its leniency application against Unilever.

While the reasons for the Competition Tribunal’s decision are still pending, it appears that where firms apply for leniency in cartel cases, the evidence which these whistle blowers provide to the Competition Commission in an attempt to obtain leniency from prosecution, cannot be used against the firms in question, in the event that the Competition Commission decides not to grant an application for leniency and instead elects to prosecute the whistle blowing firm.


POWER CABLE COMPANY FINED R1.3 MILLION FOR PRICE FIXING AND COLLUSIVE TENDERING IN ESKOM TENDERS

On 6 February 2016, the Competition Tribunal confirmed a settlement agreement between Alcon Marepha (Pty) Ltd (“Alcon”), a power cable supplier, and the Competition Commission.

On 16 March 2010, the Competition Commission initiated a cartel investigation against Aberdare, Tulisa, and SOEW.  Subsequently on 28 May 2010 this investigation was expanded to include Alcon, CBI Electric, African Cables (Pty) Ltd, Kewberg Cables and Braids (Pty) Ltd, Malesela Taihan Electric Cable (Pty) Ltd, Phoenix Power Cables (Pty) Ltd, Silcom (Pty) Ltd and the Association of Electric Cable Manufactures of South Africa.

In terms of the conduct in question, Alcon has admitted that, through the auspices of the Association of Electrical Cable Manufacturers South Africa, Alcon discussed and agreed to quotation indices with competitors.  The Competition Tribunal noted that these indices were used to escalate prices when bidding for tenders to supply electric cabling products between 2001 and 2012. This is a form of indirect price fixing which is prohibited in terms of the Competition Act.

In addition, Alcon also admitted to engaging in collusive tendering through the submission of cover prices, in agreement with competitors, for tenders issued by Eskom between 1994 and 2008.

As a result, Alcon has admitted to paying a penalty of R1 378 107.69, which amounts to 1.5% of its 2010 turnover.


COMPETITION COMMISSION DECIDES NOT TO PROSECUTE MULTICHOICE AND SUPERSPORT

In what appears to be a somewhat controversial decision, on 5 February 2019, the Competition Commission decided not to refer to the Competition Tribunal for prosecution, complaints against Multichoice South Africa (Pty) Ltd (“Multichoice”) and Supersport International (Pty) Ltd (“Supersport”).  The conduct in question relates to various complaints of abuse of dominance against Multichoice and Supersport, which the Competition Commission received between 2012 and 2017.

The Competition Commission noted that the decision not to prosecute had been made because it believed that there were no reasonable prospects of success and that in its view a regulatory intervention would be more effective.

Strangely, the Commission noted that its decision not to prosecute Multichoice and Supersport, was notwithstanding its view that there was a potential for what it referred to as a “market failure” owing to several factors.

Indeed, the decision of the Competition Commission is a concerning one when one notes that the factors identified by the Competition Commission are those which one would expect to find in abuse of dominance cases.  In this respect, the factors identified by the Commission included:

  • Highly concentrated subscription television market;
  • High barriers to entry and an inability for smaller firms to expand;
  • Lack of competing buyers for premium sports rights other than Multichoice;
  • Long term exclusive contracts between Multichoice and content suppliers; and
  • A lack of credible alternatives which consumes can switch to other than Multichoice.

Indeed, it is markets which are characterised by a single dominant firm, high barriers to entry, and low levels of alternatives where one is most likely to successfully prosecute an abuse of dominance case.  This is because, absent intervention by competition authorities, such markets would not self-correct to more competitive states. Important examples of such cases include the inducement cases against South African Airways, and the margin squeeze case against Senwes.  These cases all took place in markets with similar characteristics.

While the Competition Commission has noted that it believes that targeted regulatory interventions may foster competition and make the market more competitive, citing the inquiry into subscription broadcasting services currently being conducted by the Independent Communications Authority of South Africa, this does not seem to explain why the Commission itself did not pursue remedial measures.

It will be interesting to see whether the complainants which had initially filed complaints to the Competition Commission, will decide to self-refer the matters to the Competition Tribunal for adjudication.  In terms of Section 51(1) of the Competition Act, complainants have the option of self-referring a complaint to the Competition Tribunal for prosecution should they wish to do so within 20 business days of the Competition Commission having issued a notice of non-referral.

Merger Filing Fees – Amendment to Rule 10(5) of the Competition Commission Rules

7 December 2018|In Competition Briefs eBriefs News and Media NortonsInc Uncategorized

Merger Filing Fees – Amendment to Rule 10(5) of the Competition Commission Rules

On 4 December 2018, the Department of Economic Development promulgated an amendment to the filing fees applicable to intermediate and large mergers, effective 1 January 2019.  These amended filing fees, compared with those currently in force, are set out below:

Current – until 31 December 2018

Effective 1 January 2019

Intermediate Merger

ZAR 150 000.00

ZAR 165 000.00

Large Merger

ZAR 500 000.00

ZAR 550 000.00

Source: Government Gazette No. 42082, Notice 1336 (4 December 2018)

For the sake of completeness, an intermediate merger is one where the value of the proposed merger equals or exceeds ZAR 600 million (calculated by either combining the annual turnover of both firms or their assets), and the annual turnover or asset value of the target firm is at least ZAR 100 million.

A large merger is one where the combined annual turnover or assets of both the acquiring and target firms are valued at or above ZAR 6.6 billion, and the annual turnover or asset value of the target firm is at least ZAR 190 million.

Heineken seeks brewers’ pledge on fridge space and ‘dirty tricks’

23 June 2016|In News and Media

Major rival Heineken on Wednesday (22 June 2016) hit SABMiller and Anheuser-Busch InBev (AB InBev) with a slew of conditions it wants the Competition Tribunal to impose on the $108bn merger.

An end to “dirty tricks” and better access to fridge and shelf space topped Heineken’s list of demands.

It was the first intervention by the Dutch brewer. Its lawyer, Anthony Norton, said the merging parties had previously been “dismissive of its concerns”.

View the full article here: http://www.bdlive.co.za/business/retail/2016/06/23/heineken-seeks-brewers-pledge-on-fridge-space-and-dirty-tricks

Nortons Inc. hosts the first ICC FraudNet Conference on Fraud, Asset Recovery & Cross-Border Cooperation

26 March 2015|In News and Media Nortons Inc News NortonsInc

ICC FraudNet Conference on Fraud, Asset Recovery & Cross-Border Cooperation

  • HOW CAN THE REPUTATION AND REALITY OF CORRUPTION IN AFRICA BE REVERSED?
  • HOW CAN FRAUDSTERS BE PREVENTED FROM USING THE GLOBAL FINANCIAL SYSTEM TO STEAL BY STEALTH AND HIDE THEIR LOOT?
  • INTERNATIONAL EXPERTS PLACE A SPOTLIGHT ON FINANCIAL FRAUD ON THE AFRICAN CONTINENT

CAPE TOWN, South Africa – 26 March 2015

Experts who have tracked down assets stolen in some of the world’s largest frauds, are gathering in Stellenbosch from 25 March to 27 March to put the spotlight on the state of financial crime and asset recovery on the African continent.  The International Chamber of Commerce (ICC) through its Commercial Crimes Division, FraudNet, together with South African law firm Nortons Incorporated, is co-sponsoring this first “ICC FraudNet Conference” ever to be held on the African continent.  Nortons’ leaders in the field, together with other experts from the world’s leading asset recovery legal network, ICC FraudNet, will apply their collective African and international expertise to the following subjects:

  • Fraud and Corruption in Africa
  • A Regional Perspective: Tackling Fraud, Bribery & Corruption in Africa
  • Coordinating International Asset Recovery: Practical Approaches and Case Studies
  • Asset Recovery in Grand Corruption Cases: Approaches, Challenges and Case Studies

Nortons Incorporated is inviting its clients and members of the media to attend this conference which will be held in English and which will feature various well-known CEOs, such as the CEO of the South African Chamber of Commerce and Industry and Corruption Watch, along with anti-corruption officials from Kenya and Nigeria, and FraudNet asset recovery lawyers from South Africa, Nigeria, Angola, Mauritius, and France, Switzerland, Canada and the United States.

About Fraudnet

FraudNet is an international network of independent lawyers who are the leading civil asset recovery specialists in each country. FraudNet’s membership extends to every continent and the world’s major economies, as well as leading offshore wealth havens that have complex bank secrecy laws and institutions where the proceeds of fraud often are hidden. Founded in 2004 by the Paris-based International Chamber of Commerce (ICC), the world’s business organization, FraudNet operates under the auspices of the ICC’s London-based Commercial Crime Services unit. Fraudnet has once once again been ranked as a “Fraud Leading Legal Networks”, Band 1 by Chambers and Global.

Nortons Inc. is a boutique services firm specialising in all aspects of regulatory law, such as competition law, consumer protection, forensic auditing, white collar crime and fraud.  The firm represents a number of high-profile, multinational corporations with Anglo American, Apple, Aspen Pharmaceuticals, BP, Caxton, Scaw Metals, Absa Bank, De Beers, Pick ‘n Pay, Kumba Iron Ore, Netcare, Puma Energy, Tsogo Sun, Daimler, Imperial, Google, Merck & Co, Times Media Limited, PepsiCo, Sasol and Warner Bros. Entertainment being just some of the household names on the firm’s list of clients.

Nortons Inc. appoints Shane Lane as its Head of Forensic Auditing

16 January 2015|In News and Media Nortons Inc News

Nortons Inc. is pleased to announce that we have appointed Shane Lane as Head of Forensic Auditing and investigations, with effect from 1 January 2015. Shane was previously the Head of Forensic Auditing at Alchemy Consulting (Pty) Ltd from 2006 to 2014. Shane obtained his B.Com degree at the University of Natal, and his qualifications include post-graduate qualifications from the Institute of Accounting Technology, Chartered Institute of Management and Management Development Centre.

Almost all businesses in South Africa today are exposed to the risk of white-collar crime industry fraud and/or theft. Shane has assisted various companies in South Africa and abroad with forensic auditing, investigations, prosecution and asset recovery. His experience extends across sectors such as mining, manufacturing, retail, financial services, construction, agriculture and forestry.

Shane’s specialities include:

  • Forensic Auditing:
    • An holistic approach to all aspects of suspected fraud or malpractice audits, investigations, insurance claims and cyber-crimes;
    • The provision of detailed evidence files for disciplinary hearings and ultimately criminal or civil prosecutions;
    • The formulation of insurance claims;
    • Provision of expert testimony and evidence in disciplinary proceedings, criminal and civil courts;
    • Asset recovery;
    • Provision of a proactive, comprehensive internal control report on weaknesses in financial, accounting and operational controls including bookkeeping, tax consulting and payroll;
    • Provision of fraud registers policies and procedures; and
    • Fraud prevention training.
  • Consulting:
    • Implementation of internal control procedures;
    • Implementation of fraud policies and procedures; and
    • Routine internal audits.

At Nortons Inc., we are able to offer clients an integrated, one stop forensic legal and audit service, which is a multi-disciplinary approach to forensic services. We believe that it is costly and inefficient to retain separate legal and auditing services in forensic investigations and are able to offer an in-house integrated offering.

In the event that you require forensic services, please contact Shane at [email protected] or +27 11 666 7573 or Anthony at [email protected] or +27 11 666 7561.

Surprise search and seizure visit at Unilever and Sime Darby in South Africa

3 April 2014|In News and Media

The South African Competition Commission (“Commission”) has confirmed that it has conducted such a dawn raid operation at Unilever South Africa (Pty Ltd) (“Unilever”) and Sime Darby’s respective South African offices during the morning of 03 April 2014.
Unilever is one of the largest fast moving consumer goods companies in South Africa. Unilever’s business activities include laundry, skincare and cleansing, margarine, deodorants, household care, tea, hair care and ice cream. Household names which form part of the Unilever group include Sunlight, Knorr, Lipton, Ola and Omo.

Sime Darby is a Malaysia-based multinational company involved in sectors such as plantation, industrial equipment, motors, property and energy & utilities, with operations in more than twenty countries. Its South African operation, namely Sime Darby Hudson & Knight (Pty) Ltd, is located in Boksburg and it produces and sells premium fats and oils to bakery, food service industry and food manufacturers predominantly in South Africa.

The Commission has indicated that this raid forms part of an ongoing investigation into collusive conduct in the product markets for the manufacture and supply of edible oils and baking fats to both wholesale and retail customers. The Commission has further indicated that it has reasonable grounds to believe that employees of Unilever and Sime Darby have information which is relevant to the investigation.

The last dawn raid was conducted on 06 May 2010 at the premises of four electrical cables manufacturers and suppliers based in Gauteng, South Africa. The various premises were searched by the Commission on suspicions of price fixing, market allocation and collusive tendering. This was done subsequent to a complaint initiated by the Commissioner on 16 March 2010 against Aberdare Cables (Pty) Ltd, Alvern Cables (Pty) Ltd, South Ocean Electric Wire Company (Pty) Ltd and Tulisa Cables (Pty) Ltd.

Sections 46 to 49A of the South African Competition Act of 1998 (“Competition Act”) empowers the Commission to conduct surprise search and seizure visits and to carry out so-called “dawn raids” to a firm’s business premises in order to inspect documents and interview staff where an infringement of competition law is suspected.

The Commission is empowered to enter any such premises when a judge or a magistrate has issued a warrant. Although a warrant is usually an essential requirement to ensure that a dawn raid is conducted in accordance with the law, the Competition Commission does have the power to enter and search a premises without a warrant, in exceptional circumstances.

If the Commission has reason to believe that a firm is in contravention of provisions of the Competition Act, or is in possession of information relating to a matter that is under investigation, the Commission’s investigators have the authority to enter into the firm’s premises in order to inspect and request copies of documents, ask for information in relation to any documents, take notes and interrogate employees, search and examine computer data and remove evidence from the premises. In particular, officials may examine files, reports and emails. The Competition Commission is entitled to confiscate computer hard drives. They may also take copies of documents.

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