Catch Up With Competition Law Now - May 2017


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New Development Of Interest

Amendments To The Competition Act Expected In The Near Future

The Minister of Economic Development, Ebrahim Patel, has announced that proposed changes to the Competition Act, 89 of 1998 (Competition Act) are being finalised. During the 2017 Budget Vote Speech, Minister Patel said that the proposed changes will address, "high levels of economic concentration and racially-skewed ownership profiles". A related statement issued by Minister Patel, states that the proposed amendments:

  • will amplify and complement the measures already available to address all forms of anti-competitive conduct;
  • will require the consideration of the concentration, ownership profile and structural impediments to entry or expansion in a market when that market is defined and assessed by the competition authorities in mergers, or where anti-competitive conduct in that market is scrutinised in complaints; and
  • will seek to incentivise firms to develop relationships and adopt strategies that would alter market structure, reduce concentrations by encouraging entry of historically disadvantaged South Africans, reduce barriers to entry, and expand ownership to ensure that more enjoy substantive economic citizenship.

Minister Patel also stated that "to improve resources for the competition authorities, we will gazette an adjustment to the filing fees for mergers" and "to improve actions against collusion and corrupt corporate practices, the Commission will investigate about 100 cases of cartels behaviour in different sectors of the economy, including food, infrastructure, chemicals, financial services and car-parts".

An advisory panel has been established to develop the draft amendments, and it is expected that this panel will submit a report within the next six weeks to the Ministry for consideration. A copy of Minister Patel's speech is available here. It is clear that Minister Patel is trying to drive economic transformation through the proposed amendments to the Competition Act. However many commentators have expressed concerns as to whether it is appropriate to use competition law for these objectives, and the possible unintended consequences of the proposed changes on the competitiveness of South African companies. We will keep you updated on all further developments in this regard.

[Source] and [Source]


Local News

Agribusiness, Food & Beverage: Bayer And Monsanto Merger Conditionally Approved

The Competition Commission (Commission) has conditionally approved the acquisition by Bayer Aktiengesellschaft (Bayer) of Monsanto Corporation (Monsanto). In South Africa, Bayer is active in the crop protection business, and Monsanto is active in the supply of seeds, bio-technology traits and herbicides. In terms of the conditions, the merged entity is required, amongst other things, to divest the entire global Liberty Link trait technology and the associated Liberty branded agro-chemicals business of Bayer to address anti-competitive concerns. The Commission also imposed public interest related conditions specific to South Africa relating to employment and support for emerging farmers.


Engineering & Construction: Updates And Developments

In the engineering and construction sector, there are two developments of interest:

  • The Competition Appeal Court (CAC) has dismissed an appeal by Power Construction (Pty) Ltd and Power Construction (Western Cape) (Pty) Ltd (collectively, Power Construction). The appellants disputed the Commission's jurisdiction and the validity of its investigation into collusive tendering by Power Construction. The CAC upheld the Competition Tribunal’s (Tribunal) decision that the Commission had met all the requirements for a valid initiation and therefore had jurisdiction to investigate the collusion. A copy of the CACs decision is available here.
  • The Tribunal has found Giuricich Coastal Projects (Pty) Ltd (Giuricich Coastal Projects) guilty of collusive tendering and has imposed an administrative penalty of ZAR 900,000 on the company. The tender was for the design and construction of a truck loading building, floor upgrades for automated vehicle use and the civil works necessary for the installation of reel handling conveyers at the Mondi Merebank Mill.

[Source], [Source] and [Source]

Retail: Updates & Developments

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

  • The Commission held its first set of public hearings as part of the Grocery Retail Sector Market Inquiry in Cape Town during May. The purpose of the market inquiry is to examine whether there are features or a combination of features in the grocery retail sector which prevent, distort or restrict competition. Further hearings are scheduled to take place in Gauteng and KwaZulu-Natal in June and July 2017.
  • Further to our January update (available here), the Constitutional Court has dismissed the application for leave to appeal brought by Omnico (Pty) Ltd (Omnico) and Coolheat Agencies (Pty) Ltd (Coolheat) against the decision of the CAC. Earlier this year, the CAC found that Omnico and Coolheat engaged in price fixing. The CAC held that if a firm participates in a collusive meeting, without publicly distancing itself from what was discussed at that meeting, the company would have given other participants in the meeting reason to believe that it agreed to and would comply with what was decided at the meeting.
  • Further to our January update (available here), Corruseal Group (Pty) Ltd has abandoned its proposed merger with Boxlee (Pty) Ltd. The merger was prohibited after the Commission’s investigation revealed that the paper industry and the affected markets have high levels of concentration along the value chain and high barriers to entry, amongst other considerations.
  • The High Court of South Africa has dismissed an application by Farmers Trust CC to set aside the Commission’s search warrant, following a dawn raid conducted at the premises of nine fresh produce market agents in March 2017.

[Source], [Source], [Source] and [Source]

Telecoms, Media & Technology: Updates And Developments

In the telecoms, media and technology sector, there are two developments of interest:

  • As part of Minister Patel's 2017 Budget Vote Speech, the Minister also announced that he will request that the Commission conduct a market inquiry into the high cost of data in South Africa, and work with other regulators to establish the facts, identify measures to reduce data costs and make recommendations to government.
  • A hearing before the Tribunal has taken place in relation to a complaint brought by the Commission against Ster-Kinekor Theatres (Ster-Kinekor) and Nu-Metro Cinemas (Nu-Metro). The Commission has alleged that Ster-Kinekor and Nu-Metro engaged in market allocation with regards to lease agreements at the V&A Waterfront shopping complex. Judgment has been reserved.

[Source] and [Source]

Transport: Commission To Lodge Public Passenger Transport Market Inquiry

The Commission has announced that it will be conducting a market inquiry into the public passenger transport sector. On 10 May 2017, the Terms of Reference (ToR) were published setting out the scope of the inquiry and expected timeframes. In terms of the ToR, the Commission has identified road and rail based public passenger transport as relevant for this inquiry, in particular, minibus taxis, localised taxis, metered taxis, app-based taxi services, Metrorail, Gautrain and buses. The inquiry is expected to commence on 7 June 2017, and is likely to be completed by May 2019. A copy of the ToR can be accessed here.



Africa News

Botswana: Competition Authority Probes Poultry Industry

The Botswana Competition Authority (BCA) has submitted recommendations to the Ministry of Investment, Trade and Industry to address competition concerns in the poultry industry. The recommendations are based on a study which was conducted in the commercial poultry meat industry and revealed that ownership in the poultry sector is concentrated. The study was undertaken in Botswana, Namibia, South Africa and Zambia.

[Source] and [Source]

Comesa: Comesa Competition Commission Continues With Caf Investigation

Further to our March update (available here), the COMESA Competition Commission (CCC) has met with the Council of Southern Africa Football Associations (COSAFA) leaders as part of its on-going investigation of the Confederation of African Football (CAF). The investigation relates to the marketing of broadcast rights and the sponsorship of CAF tournaments, and highlights the CCCs continued drive to become more active in the restrictive practices arena.


Namibia: Namibian Competition Commission Not Investigating The Lawfulness Of The Edgars Club Fees

The Namibian Competition Commission (NaCC) has confirmed that it will not review and/or investigate, whether Edgars has been unlawfully charging its credit customers in Namibia. This follows the South Africa's National Consumer Tribunal ruling that it is unlawful for Edgars to charge its credit customers the Edgars club fee, in terms of the South African National Credit Act 34 of 2005. The NaCC clarified that it is not within its mandate to investigate consumer credit matters.

[Source] and [Source]

Zamibia: Competition Authority Wins 2017 World Bank, Icn Award For Competitive Neutrality

The Zambian Competition and Consumer Protection Commission (CCPC) has won the 2017 World Bank, International Competition Network Award for Competitive Neutrality for the second year running. The CCPC was awarded the recognition for its efforts in levelling the playing field through competitive neutrality in the world and its contribution to bettering markets in Zambia.


Zimbabwe: New Competition Law Expected Soon

Zimbabwean Minister of Industry and Commerce, Mike Bimha, has announced that the government has recently reviewed and drafted a new national competition policy, which was approved by the Zimbabwean Cabinet earlier this year. Mr Bimbha said that the new law seeks to reduce the number of days taken by CTC in merger examinations from 90 to 60 days and also aims to set out clear rules on anti-cartel enforcement as well as anti-competitive conduct in public procurement.



International News

Brazil: Competition Authority's Offices Raided

Brazil’s Federal Prosecution Service and federal police have raided the offices of Brazil's competition authority, the Administrative Council for Economic Defense (CADE), in order to obtain material stemming from an inquiry into a state-owned oil company. CADE has released a statement confirming that it fully cooperated with the authorities and supports the investigation carried out by public prosecutors.

[Source] and [Source]

European Union: Developments And Updates:

In the EU, there are three developments of interest:

  • The EU Court of Justice (ECJ) has dismissed an appeal by Akzo Nobel NV (Akzo Nobel) in terms of which Akzo Nobel argued that a parent company should benefit from the fact that the European Commission (EC) was time-barred from imposing a fine on its subsidiaries. The ECJ dismissed Akzo Nobel's appeal and found that the fact that penalties can no longer be imposed on certain companies because the limitation period has expired, does not preclude another company, which is considered personally responsible and jointly and severally liable with those companies for the same anti-competitive behaviour, and in respect of which the limitation period has not expired, from having proceedings instituted against it.
  • The EC has published its final report on the E-commerce Sector Inquiry. The report identifies business practices that may restrict competition and allows the EC to target its enforcement of EU antitrust rules in e-commerce markets.
  • The EC has fined Facebook EUR 110 million (approximately ZAR 1.5 billion) for providing incorrect or misleading information during the ECs investigation of the merger between Facebook and WhatsApp in 2014. During the investigation, Facebook had informed the EC that it would be unable to establish reliable automated matching between Facebook users' accounts and WhatsApp users' accounts. However, in 2016, Facebook announced that it would be linking WhatsApp user's phone numbers to their Facebook user identities. Accordingly, the EC found that Facebook was aware of this possibility during the 2014 investigation, and provided incorrect and misleading information in the merger notification form and in the reply to the ECs request for information.

[Source], [Source] and [Source]

Italy: Competition Authority Fines Whatsapp

The Italian Competition Authority (ICA) has fined WhatsApp for forcing users to wholly accept new terms and conditions relating to the sharing of personal data with Facebook. In addition, the ICA found that WhatsApp's terms and conditions were oppressive to customers. The ICA imposed a fine of EUR 3.3 million (approximately ZAR 48.5 million).


United States: The Doj Revises Its Policy On Company Leniency Agreements Relating To Employees

The Department of Justice (DOJ) recently revised its Leniency Program Frequently Asked Questions (FAQs) to the effect that employees deemed "highly culpable" under Type B leniency may not all be granted immunity. This is contrary to the DOJs historically offered position in terms of which employees who were very involved in cartel activity would nevertheless be granted Type B leniency. The current position is that the DOJ has discretion to exclude such employees from leniency as the circumstances may require.

[Source] and [Source]


Our Recent Work

Dimension Data (pty) Ltd And The Consumer Facing Internet Access And Ancillary Services Business Of Mweb Connect (pty) Ltd Merger Conditionally Approved

The Tribunal has conditionally approved the large merger in terms of which Dimension Data (Pty) Ltd (Dimension Data) acquired the consumer facing internet access and ancillary services business of MWEB Connect (Pty) Ltd (MWEB) known as MWEB ISP (MWEB ISP).

Desmond RudmanShawn van der MeulenWerner Rysbergen and Andriz​a Liebenberg represented the merger parties.

​In South Africa, Dimension Data operates through a variety of subsidiaries and divisions that specialise in IT communications services and focuses on Network Integration, converged communication, security, data centre and storage, customer interactive solutions and Microsoft solutions. The target is the Consumer Facing Internet Access and Ancillary Business of MWEB. MWEB comprises internet access and ancillary services to consumers for internet access of fixed lines, Wi-Fi hotspots and cellular phones.

The Tribunal approved the merger subject to employment conditions.​​​​​​

Webber Wentzel > News > Catch Up With Competition Law Now - May 2017
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