IT WOULD APPEAR THAT THE SOUTH AFRICAN COMPETITION COMMISSION (THE COMMISSION) CONTINUES WITH ITS RO

It would appear that the South African Competition Commission (the Commission) continues with its robust approach to horizontal mergers as it has recently recommended that Pepkor’s sale of the Building Company (BUCO) for 1.1 billion rand to Cashbuild be blocked. The Commission argues that the merger will create a dominant supplier of building material and related products in many townships and would post merger be able to use its buyer power to squeeze the margins of its suppliers.

Since the recent amendment of the Competition Act it has become apparent that the Commission has also become increasingly more robust in introducing public interest considerations into its assessment of mergers. The Competition Act now explicitly requires the Competition Authorities to place equal weight on the public interest considerations and has also added certain additional public interest factors which the Competition Authorities are required to consider in assessing notified mergers. The two main areas which the Competition Authorities tend to focus on from a public interest perspective are (i) the potential impact on employment and (ii), in more recent times, the promotion of a greater spread of ownership, in particular to increase the levels of ownership by historically disadvantaged persons and workers in firms in the market.

Merger parties should also be cognisant of the importance of evidence based approaches to merger analyses and the fact that the Commission will be likely to scrutinise the public interest considerations involved in transactions. This is evident from recent transactions in which Nortons Inc was involved.

For example, the Commission recommended that the large merger between Senwes and Suidwes be prohibited. However, the merger parties were able to demonstrate through evidence based analysis that the merger would not substantially reduce competition and it was ultimately approved by the Competition Tribunal.

The WeBuyCars and Naspers merger was also recently prohibited due to the fact that the Competition Authorities concluded that the merger would have a negative effect on smaller players, such as Weelee.

Nortons Inc successfully represented the merger parties in the Senwes/Suidwes transaction and also the opposing party (Weelee) in opposing the WeBuyCars/Naspers merger.