Beyond competition: the prominent role of public interest conditions in financial sector mergers

​​​​​​​​The competition authorities are increasingly imposing public interest conditions when approving mergers, including on employment, and broadening ownership.

Financial sector mergers, which are becoming more frequent, have far-reaching implications for industry players and the general public. In the 2021/2022 financial year, the financial sector had the fourth-highest number of mergers.

Of growing significance in our merger control regime are public interest considerations. As with many other industries, several mergers in the financial sector have been approved subject to significant public interest-related conditions. The industry will also be closely scrutinised during merger investigations following the Competition Commission's dawn raids on the premises of eight prominent long-term insurance companies late last year.

The Competition Act 89 of 1998 (the Act) mandates the Competition Commission to consider the impact of a merger on both competition and public interest grounds. Public interest refers to the consideration of factors beyond competition concerns, such as economic growth, employment, and the interests of historically disadvantaged persons (HDPs). These factors have been expanded by amendments to the Act in recent years, and conditions aimed at fulfilling these broader socio-economic objectives have become the norm.

If a merger adversely affects the public interest, even a pro-competitive merger or one without significant competition implications, it can be prohibited by the competition authorities. Conversely, an anti-competitive merger may be approved if it serves the public interest. In some instances, a merger may be approved subject to several extensive public interest-related merger conditions.

The public interest provisions in the Act have wide-ranging implications but are confined to five specific grounds. These are: (i) employment, (ii) sector or regional impact; (iii) promoting the participation of small businesses or firms controlled by HDPs in markets; (iv) enabling national industries to compete internationally; and (v) promoting a broader ownership base, particularly for HDPs and workers in markets.

In financial sector mergers where public interest concerns arise, the competition authorities may impose conditions to address or eliminate those concerns. Many financial sector mergers have recently been approved subject to employment conditions, particularly moratoriums on retrenchments for specific periods and re-employment opportunities.

For example, in the merger between JF Mouton Familietrust and PSG Group Ltd, the Commission imposed a moratorium on retrenchments for two years from the implementation date of the transaction. In the merger between NET 1 Applied Technology and Ovobix and Luxiano 227, the Commission imposed a preferential re-employment condition, obliging the merging parties to give preference for two years to the retrenched employees when vacancies become available. Other examples of public interest conditions concerning employment include the alignment of certain employment benefits, the payment of fair wages, the establishment of workers’ trusts that will benefit HDP employees and the imposition of positive employment obligations (ie, commitments to employ a certain number of individuals).

In addition, the competition authorities have recently imposed conditions promoting a greater spread of ownership in the financial sector. In the merger between Telesure Investments Holdings and Renasa Holdings (Pty) Ltd, Concourse Holdings (Pty) Ltd, the merging parties were required to establish a ZAR 5 million development fund that will provide education funding for historically disadvantaged learners. Other public interest conditions relating to the spread of ownership have required merger parties to:

  • contribute towards small and medium enterprises/HDP supplier and enterprise development initiatives and socio-economic development investments;
  • establish employee share ownership schemes;
  • introduce HDP shareholders;
  • promote skills development and participation by HDPs (women and youth in particular) in firms in the relevant industry.

It is evident that the evolving merger control landscape has significantly shifted towards public interest considerations beyond traditional competition concerns. With an increased focus on mergers within the financial sector, a proactive approach is recommended. Firms should consider whether a merger may impact any of these public interest aspects during the early stages of transactions and obtain guidance from competition law experts.


These materials are provided for general information purposes only and do not constitute legal or other professional advice. While every effort is made to update the information regularly and to offer the most current, correct and accurate information, we accept no liability or responsibility whatsoever if any information is, for whatever reason, incorrect, inaccurate or dated. We accept no responsibility for any loss or damage, whether direct, indirect or consequential, which may arise from access to or reliance on the information contained herein.

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Webber Wentzel > News > Beyond competition: the prominent role of public interest conditions in financial sector mergers
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