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Catch Up With Competition Law Now - Webber Wentzel April 2018

- 26 April 2018

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CATCH UP WITH COMPETITION LAW NOW

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In this April Issue

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Local News

Africa News

International News

Our Recent Work

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LOCAL NEWS


Agribusiness, Food & Beverage: Citrus producers exemption refused

The Competition Commission (Commission) has refused to grant the Western Cape Citrus Producers Forum (known as Summer Citrus) an exemption. The exemption, which had been previously granted to Summer Citrus, relates to agreements or practices concluded by Summer Citrus' member growers to coordinate their export activities to the United States of America. In considering the appropriate conditions for the exemption, the Commission raised concerns regarding transformation within Summer Citrus' membership.


 

Competition Amendment Bill update

The Economic Development Department (EDD) recently presented its Strategic Plan and Annual Performance Plan 2018/19 to Parliament's Portfolio Committee on Economic Development. In the EDD's presentation, it is noted that in the current year, Cabinet will review the Competition Amendment Bill 2017 following submissions received during the public consultation phase.


Engineering & Construction: Construction company settles with Commission

The Competition Tribunal (Tribunal) has confirmed a consent agreement between Rodio Geotechnics (Pty) Ltd (Rodio) and the Commission. Rodio admitted to engaging in collusive tendering, market division and price fixing in a number of markets involving nine projects including the Gautrain Rapid Link and Lesotho Highlands Project. Rodio has agreed to pay an administrative penalty of ZAR 885,963. A copy of the consent agreement is available here.


Industrials: Updates & developments

In the industrials sector, there are two developments of interest:
  • The Tribunal has confirmed a consent agreement between Motseng Trading (Pty) Ltd (Motseng) and the Commission. Motseng is one of three companies alleged to be involved in bid-rigging tenders for the supply of fabric used to manufacture uniforms for the Department of Correctional Services, South African Air Force, South African Army and the South African Military Health Services. Motseng has agreed to pay an administrative penalty of ZAR 200,000. A copy of the consent agreement is available here.
  • The Tribunal has unconditionally approved a merger whereby Mondi Ltd (Mondi), will acquire the Draycott and Greytown Timber Plantations (currently operated by World Hardwood (Pty) Ltd (World Hardwood)). Mondi is a JSE-listed paper and pulp producer and World Hardwood is active in harvesting, processing and pressure-treating wooden poles

Oil & Gas: Implementation of LPG recommendation leads to favourable outcomes

Puregas (Pty) Ltd (Puregas), a supplier of propellants, has decided to withdraw its complaint against Shell Downstream (Pty) Ltd (Shell). Puregas initiated its complaint after Shell cancelled its supply contract with Puregas for propane and butane. The Commission's investigation revealed that Shell had divested its liquefied petroleum gas (LPG) business to Easigas (Pty) Ltd (Easigas), and had arranged to exclusively supply LPG to Easigas. In an attempt to comply with the recommendations made by the Commission following its LPG Market Inquiry, Shell has renegotiated its supply contract to exclusively supply 90% of the total production to Easigas and allocate the remainder to small wholesalers. Puregas has subsequently secured a supply agreement with Easigas on favourable terms.


Regulatory: Updates & developments

There have been three developments of interest pertaining to the Commission:

  • The Commission has been awarded "Agency of the Year in Asia-Pacific, Middle East & Africa" at the 8th Annual Global Competition Review Awards (GCR), held in Washington. GCR is a well-known competition law news service and policy journal which monitors competition enforcement worldwide. The Competition Commissioner, Tembinkosi Bonakele, said that the Commission was honoured to receive the award and expressed gratitude to GCR for their work in promoting the importance of competition enforcement.
  • The Commission recently presented its 2018 Annual Performance Plan (APP) to Parliament's Portfolio Committee on Economic Development. The APP notes that the Commission's 2018/2019 priority sectors are: food and agro-processing, infrastructure and construction, healthcare, banking and financial services, energy, intermediate industrial inputs, and information and communication technology. The APP states that the Commission will initiate eight new cartel investigations in 2018/19. This decline from the 2017/18 commitment of 25 initiations has been attributed to resource constraints, coupled with high case volumes. The Commission has also undertaken to initiate two new abuse of dominance investigations and one market inquiry in 2018/19. The APP presentation can be accessed here.
  • President Cyril Ramaphosa has appointed former Deputy Competition Commissioner, Trudi Makhaya, as his new economic adviser. Between 2010 and 2014, Ms Makhaya was an executive committee member and the principal economist at the Commission. In this new role, Ms Makhaya's responsibilities will include coordinating the work of investment envoys attempting to attract at least USD 100 billion (approximately ZAR 1.2 trillion) in new foreign direct investment to the economy over the next five years.

Retail: Updates and developments

In the retail sector, there are two developments of interest:

  • The Commission has conditionally approved the acquisition of Billabong International Ltd (Billabong) by Boardriders Inc. (Boardriders). Boardriders is a global branded apparel business that operates through the Quiksilver, Roxy and DC brands. Billabong is also a global active lifestyle apparel business, whose portfolio of brands includes Billabong, RVCA, Element and Xcel. The merger approval is subject to the condition, amongst others, that there is a moratorium on job losses.
  • The Commission has referred a complaint against Aranda Textile Mills (Pty) Ltd and Mzansi Blanket Supplies (Pty) Ltd to the Tribunal for prosecution. The complaint involves possible collusive tendering. The Commission initiated an investigation, after receiving information from the National Treasury that a tender for the supply of blankets to the Department of Correctional Services may possibly have been rigged.

Transport: Penalty imposed on moving company

The Tribunal has confirmed a consent agreement between A&B Movers CC (A&B Movers) and the Commission. A&B Movers is the first of 11 companies to admit that it entered into an agreement with 10 other removal companies to charge a ZAR 350 e-toll levy on the Gauteng highways. A&B Movers has agreed to pay an administrative penalty of ZAR 208 121. A copy of the settlement agreement is available here.

AFRICA NEWS

Angola: Competition law approved by Parliament
The Angolan Parliament has approved a new competition law to address "existing situations of market imperfection". The new competition law also provides for the creation of a "Regulatory Competition Authority" charged with the responsibility of defending the public interest as well as promoting and defending competition. The Minister of Finance has indicated that after the final vote on this new law, approval will be given to the respective regulation[s].


COMESA: Somalia and Tunisia to join COMESA

It has been reported that Somalia and Tunisia will be admitted into the Common Market for Eastern and Southern Africa (COMESA) after fulfilling the terms and conditions of accession to the COMESA Treaty. This development follows the signing of the African Continental Free Trade Area (AfCFTA) in March 2018, which aims to break down trade barriers across Africa. While Tunisia does have an active competition law regime, there is no domestic competition law in Somalia.

Kenya: Updates & developments

In Kenya, there are three developments of interest:

  • The Competition Authority of Kenya (CAK) has initiated a market inquiry into the leasing sector. The purpose of the market inquiry is to safeguard and promote leasing as an alternative to financing capital goods. The CAK's Government Gazette notice states that leasing has significant potential for expanding SME finance and that a regulatory framework is necessary to exploit this opportunity.
  • Telkom Kenya Ltd has announced its plans to merge with Bharti Airtel Ltd's local unit in Kenya in order to establish itself as a stronger competitive opponent to Kenya's market leader Safaricom Public Ltd Company (Safaricom). The two operators have a combined market share of 23%, whereas Safaricom holds a market share of 71.9%.
  • The CAK has received a World Bank award for its recent work in the telecommunications sector. The CAK was a co-winner with the United Kingdom’s Competition and Markets Authority (CMA) at the 2018 Competition Advocacy Contest. The regulators were recognised for their role in "promoting structural reforms in key sectors".


Malawi: Textbook suppliers accused of cartel behaviour
Malawi’s Competition and Fair Trade Commission’s (CFTC) has announced its investigation involving suppliers of textbooks to the Ministry of Education, Science and Technology. The CFTC confirmed that investigations are underway, and that it had received a number of complaints regarding allegations of collusion and other procurement malpractices.

Zambia: Hatcheries fined for collusion

The Board of Commissioners of the Competition and Consumer Protection Commission (CCPC) has imposed a fine of 7% of the annual turnover of four hatcheries in Lusaka. The hatcheries were found to have fixed trading conditions and set production quotas. The investigation revealed that the hatcheries, competitors in the production of day old chicks, had through the Poultry Association of Zambia agreed to develop and implement a common policy known as a ‘Chick Order Policy’ that required poultry farmers to book day old chicks four weeks in advance. The CCPC has directed the hatcheries to terminate any agreements and independently set a time requirement for pre-booking.

INTERNATIONAL NEWS

Australia: Start-up company takes on Google
An Australian start-up company, Unlockd, has sought an injunction to prevent Google from reportedly removing its app from the Play Store. It is reported that Google also stated that Unlockd would no longer receive advertising revenue from Google's AdMob service. Unlockd has said that Google's actions amount to an abuse of a dominant position and breach of Australia's competition law rules.

European Union: Updates & developments

In EU, there are three developments of interest:

  • The European Commission (EC) has carried out dawn raids in several Member States at the premises of companies active in the distribution of media rights, and related rights pertaining to sports events and/or their broadcasting. The EC is concerned that these companies may have violated EU antitrust rules that prohibit cartels and restrictive business practices.
  • The EC has fined Altice N.V. (Altice) EUR 125 million (approximately ZAR 1.8 billion) for implementing its acquisition of PT Portugal (a Portuguese telecommunications operator) before notification or approval by the EC. The EC concluded that certain provisions of the purchase agreement resulted in Altice acquiring the legal right to exercise decisive influence over PT Portugal. Altice has subsequently appealed the EC's decision.
  • The EC has decided to open an in-depth investigation to assess the acquisition of Shazam Entertainment Ltd by Apple Inc. The EC has expressed concern that the merger could reduce choice for users of music streaming services. The EC now has until 4 September 2018 to make a decision.


United Kingdom: Directors disqualified for cartel conduct
The CMA has secured the disqualification of two directors of a company that was found to have engaged in anti-competitive practices. The company, Abott and Frost Agents Ltd, was one of a group of estate agents who agreed to fix their minimum commission rates at 1.5%. As a result of its investigation, the CMA secured legally binding undertakings from the two directors which have the effect of disqualifying them as directors and preventing them from managing any UK registered company.

United States: No-poaching agreements scruntinised

The Department of Justice (DOJ) has announced that it has reached a settlement with two rail equipment suppliers, who allegedly maintained agreements not to compete for each other's employees. The DOJ said that the no-poach agreements restrained competition, deprived rail industry workers of important opportunities, information and the ability to negotiate better terms of employment.

OUR RECENT WORK


PIC merger with solar energy supplier approved

The Tribunal has unconditionally approved a transaction in terms of which the Public Investment Corporation SOC Ltd (PIC), on behalf of the Government Employees Pension Fund (GEPF), will acquire control of a special purpose vehicle, CPV Power Plant No 1 Equity SPV (RF) (Pty) Ltd (Equity SPV), wholly owned by German company Soitec Solar GmbH. Equity SPV controls CPV Power Plant No.1 (RF) (Pty) Ltd (CPV), a company established for the sole purpose of designing developing, constructing and operating a solar energy operation in Touwsrivier, Western Cape.

Burton Phillips represented the merger parties.

The PIC on behalf of the GEPF and other clients, has non-controlling interests in a number of independent power producers (IPPs) supplying solar power to the Eskom national grid. The Tribunal found that the merger is unlikely to substantially lessen or prevent competition given that competition between IPPs take place at the bidding stage and all IPPs in which the PIC has invested have already concluded long-term energy supply contracts with Eskom. The Tribunal also found that the transaction raises no public interest concerns.


PRIF Namibia and Sedgeley Solar Management merger approved

The Namibian Competition Commission (NACC) has unconditionally approved the merger between PRIF Namibia Holdings (Pty) Ltd (PRIF Namvest) and Sedgeley Solar Management (Pty) Ltd (SSM).

Shawn van der Meulen and Sarah Manley represented the merger parties.

PRIF Namvest is jointly controlled by Pembani Remgro Infrastructure Mauritius Fund I LP and Pembani Remgro Infrastructure SA Fund. These private equity funds focus on equity, quasi-equity and equity-related investments in infrastructure in Africa. SSM operates a corporate and industrial rooftop solar photovoltaic business in Namibia.

The NACC found that the proposed transaction is not likely to prevent or lessen competition in Namibia, as envisaged by section 47(2) of the Competition Act, 2003


To keep updated on new competition law developments and news, follow us on Twitter @webberwentzel. Our next newsletter will be available towards the end of May.


CONTACT US

Elisha Bhugwandeen | Professional Support Lawyer
Tel: +27 11 530 5309 | elisha.bhugwandeen@webberwentzel.com.