New development of interest: Data Services Market Inquiry publishes provisional findings
The Competition Commission published its provisional report on the Data Services Market Inquiry (the Data Inquiry). The purpose of the Data Inquiry, launched in August 2017, is to understand what factors or features of the market(s) and value chain may cause or lead to high prices for data services in South Africa. The provisional report sets out the Commission's preliminary findings and recommendations based on its analysis of the market and stakeholder submissions. The Summary of Provisional Findings and Recommendations is available here. Stakeholders are required to make further submissions on the findings and recommendations by 14 June 2019.
Agribusiness, food & beverage: International grain commodities merger approved
The Tribunal unconditionally approved the transaction whereby 2667980 Ontario Inc. (Ontario) seeks to acquire AGT Foods and Ingredients Inc. (AGT). The companies are active in the market for the supply of grain commodities and pulse seeds including beans, oil seeds, barley, corn, sorghum and wheat in South Africa. Ontario is a special purpose vehicle controlled by Fairfax Financial Holdings (FFH). Both AGT and FFH are public companies and are listed on the Toronto Stock Exchange.
Engineering & construction: Updates & developments
In the engineering & construction sector, there are two developments of interest:
- The Tribunal dismissed the Commission's complaint referral against WBHO Construction Ltd (WBHO). The Commission alleged that WBHO engaged in collusive conduct with a competitor in relation to a SANRAL (South African National Roads Agency) tender. The Tribunal found that the Commission had failed to discharge its onus of proving, on a balance of probabilities, that the conduct of the companies had constituted an agreement directly or indirectly fixing a trading condition, or collusive tendering. A copy of the decision is available here.
- The Tribunal dismissed an application by the Commission to amend and supplement a complaint referral in a collusive tendering case relating to a SANRAL tender. In August 2018, the Commission applied to extend the scope of a complaint referral such that Power Construction (Pty) Ltd would be cited as having contravened the Competition Act by engaging in collusive conduct. A copy of the decision is available here.
Healthcare: Health Market Inquiry hosts seminars
- In April 2019, the Health Market Inquiry (HMI) held a series of seminars focussed on facility and funder market concentration, and excessive utilisation and supply induced demand. Copies of presentations by stakeholders are accessible here.
Industrials: Updates & developments
In the industrials sectors, there are three developments of interest:
- The Commission has referred Mpact Ltd and New Era Packaging (Pty) Ltd to the Tribunal for prosecution. The companies have been charged with fixing prices, dividing markets by allocating customers and collusive tendering in the market for the manufacture and supply of corrugated packaging paper products.
- The Tribunal has dismissed an application by the Commission in the matter involving Much Asphalt (Pty) Ltd (Much Asphalt) and Roadmac Surfacing (Pty) Ltd (Roadmac). The Commission filed a condonation application for the late filing of a revised trial bundle, which included an additional 1221 pages. The application was opposed by Much Asphalt and Roadmac. A copy of the decision is available here.
- The Tribunal issued an order granting the Commission a postponement in the cartel case involving two panel beating companies, Eldan Auto Body CC and Precision and Sons (Pty) Ltd. The Commission applied for a postponement when its key witness, a Zimbabwean asylum seeker in the United States of America, was prevented from boarding a plane to South Africa to testify in the matter. A copy of the decision is available here.
Oil & gas: Petroleum Industry Association exemption extended
The Commission extended the exemption granted to the South African Petroleum Industry Association (SAPIA) for a period of three months (starting from 1 April 2019 and ending on 30 June 2019). The exemption covers a wide range of agreements and practices, which according to SAPIA, are required to ensure the continuity and stability of liquid fuels supply to various sectors and geographic locations of the South African economy. Such agreements and practices would ordinarily constitute cartel conduct. SAPIA has been granted a number of exemptions by the Commission in this regard since January 2016.
Retail: IDC / Celrose merger conditionally approved
The Tribunal conditionally approved a proposed transaction whereby the Industrial Development Corporation SOC Ltd (the IDC) seeks to acquire Celrose (Pty) Ltd (Celrose). The IDC is government-owned and provides financial support to businesses. Edcon Ltd (Edcon) is a majority shareholder in Celrose. Celrose owns Eddels Shoes (Pty) Ltd (Eddels) and supplies clothing and footwear to the Edcon group. The Tribunal approved the merger subject a number of conditions, including that Celrose shall not retrench any employees as a result of the merger for a period of five years, and that Edcon continue to procure products from Celrose and Eddels post-merger.
Telecommunications, media and technology: Vumatel merger conditionally approved
The Tribunal has conditionally approved the proposed merger whereby Community Investment Ventures Holdings (Pty) Ltd (CIVH) seeks to increase its shareholding in Vumatel (Pty) Ltd (Vumatel). The Tribunal has approved the transaction subject to conditions which require that the merged entity retains an open access service provision model for certain of its services post-merger, as well as increased transparency mechanisms and an obligation not to discriminate against its customers who compete with Vumatel. The Tribunal also imposed two public interest conditions - one of which is confidential due to business sensitivity. The other provides for the merging parties to provide free uncapped fibre services to public and private schools that its networks bypass.
Transport: Updates & developments
In the transport sector, there are four developments of interest:
- The Competition Appeal Court (CAC) dismissed an appeal by the Commission in the case involving Pickford Removals (Pty) Ltd (Pickford). The appeal primarily concerned the correct interpretation of the section in the Competition Act relating to prescription. The Commission argued that the three year time bar runs from the date the Commissioner or complainant acquired knowledge of the prohibited practice, alternatively that the Tribunal has discretion to exercise its powers under the Competition Act to condone non-compliance with the three year period for a valid initiation. The CAC concluded that section 67(1) of the Competition Act is a limitation or expiry period, and that a knowledge requirement cannot be read into it.
- The Commission has referred fleet management solutions suppliers, Mix Telematics Africa (Pty) Ltd (Mix Africa), Fleetco South Africa CC, Hyper Auto CC, Soltrack CC and Tectra Telematics (Pty) Ltd to the Tribunal for prosecution. Following an investigation initiated by the Commissioner in November 2016, the firms have been charged with market division by allocating customers in the market for the provision of value added fleet management solutions.
- The Commission has referred network maintenance companies, K.F Computers CC and SAAB Grintek Defense (Pty) Ltd to the Tribunal for prosecution. Following a complaint from the State Information Technology Agency (SITA), the Commission found that the companies engaged in collusive tendering in relation to a SITA tender.
- The Commission has referred Compania Sud Americana De Vapores S.A (CSAV), a Chilean car shipping company, to the Tribunal for prosecution. CSAV is accused of colluding with Mitsui OSK Lines Limited (MOL) in the shipment of Ford motor vehicles from South Africa to Europe and the Mediterranean.
Rest of Africa News
Botswana: Updates and developments
In Botswana, there are two developments of interest:
- The Botswana Competition Authority (BCA) conditionally approved the proposed acquisition of 50% of the issued shares in Dennis Service Station (1976) (Pty) Ltd (the Dennis Service Station) from Gavin Blackbeard by Ngami Motors (Pty) Ltd. The BCA approved the merger subject to the condition that the merged entity ensure that the shareholding of the Dennis Service Station is 51% and 49% for citizen(s) and non-citizen(s) respectively. According to the Ministry of Investment, Trade and Industry, the operation of petroleum products through filling stations is reserved for citizens of Botswana through the Trade Act, 2003. The BCA also required that Halfway Ngami Toyota concludes the ongoing process of transferring 10% of its shares to a local citizen.
- The BCA conditionally approved the acquisition of Bank of India (Botswana) Ltd by First Capital Bank Ltd. The BCA approved the merger subject to the condition that there shall be no merger specific retrenchments that may affect the local employees of Bank of India, and that these employees shall be transferred to First Capital on terms and conditions substantially no less favourable than their current terms and conditions of employment.
Gambia: Authority to focus on competition law enforcement
The Gambia Competition and Consumer Protection Commission (GCCPC) recently validated its third strategic plan, 2019-2021 (Strategic Plan). The Strategic Plan is expected to inform the work of the GCCPC, and specifically focuses on enforcement and the mainstreaming of consumer protection and competition issues into national policies and programs.
European Union: Updates & developments
In the European Union, there are four developments of interest:
- Idealo Internet GmbH (Idealo), an online price comparison service, has filed a damages claim against Google. The Idealo claim follows a 2017 European Commission (EC) decision which found that Google had illegally promoted its own comparison shopping service ahead of its rivals. This is one of the first claims against Google pursuant to the EC's findings and it is expected that more may follow.
- Further to the above, Google has announced that users of Android devices in Europe will now be given the option to choose rival browsers and search engines. The announcement follows Google's EUR 4.34 billion fine (approximately ZAR 69 billion) and an EC order that Google present a proposal which would grant its rivals a fair chance in the market.
- The Netherlands Authority for Consumers and Markets has announced that it will investigate whether Apple is abusing the market position it has attained with its App Store. The investigation follows a market study which revealed that app providers depend on the app store in order to reach users on their mobile phones, and that for numerous apps, no realistic alternatives to the App Store and Play Store exist.
- The EC recently published two significant reports. The first report titled, “EU loan syndication and its impact on competition in credit markets” (available here), identifies important safeguards to ensure competitive outcomes in the loan syndication process. The second report titled, "Competition Policy for the digital era" (available here), explores how competition policy should evolve to continue to promote pro-consumer innovation in the digital age.
United Kingdom: Updates & developments
In the United Kingdom, there are three developments of interest:
- The Competition and Markets Authority (CMA) has made recommendations that the Big Four accountancy firms namely: EY, Deloitte, PwC and KPMG separate their auditing and consulting operations. The CMA's report further recommends that mandatory joint audits be implemented, and that there be more stringent regulation of audit committees.
- The CMA has secured the disqualification of two former directors of construction company CPM Group Ltd (CPM). As part of a settlement process, CPM admitted to participating in an alleged cartel and has agreed to pay a fine (to be determined at the end of the CMA’s investigation). The CMA has secured legally binding undertakings from the former directors, which disqualify them as directors and prevent them from being involved in the management of any company based in England, Scotland and Wales.
- The CMA has prohibited a merger between Sainsbury and Asda, two of the country's largest supermarkets. Following an in-depth investigation, the CMA found that the deal would lead to increased prices, reduced quality and choice of products and would result in a substantial lessening of competition at both a national and local level for people shopping in supermarkets.
Burton Phillips recently wrote an article titled, "Higher penalties on the cards for failing to notify mergers". The article discusses the Commission's recently published Guidelines for the determination of administrative penalties for failure to notify mergers and implementation of mergers contrary to the Competition Act. The article is available here.
Our Recent Works
Experian SA / CSH Group
The Commission has conditionally approved the proposed merger in which Experian South Africa (Pty) Ltd intends to acquire CSH Group.
Robert Wilson, Werner Rysbergen and Cara du Plessis acted for the shareholders of CSH Group (also known as Compuscan).
The Experian Group is a global data analytics business and a credit bureau business. Its South African operations provide consumer credit services, business credit services, credit decisioning analytics, credit decisioning software, marketing services, and direct to consumer services. Compuscan is active in the market as a credit bureau, which started its services primarily serving the micro-lending industry.
The merger was approved subject to a range of conditions relating to employment, providing support to new market entrants, and investment commitments.
We are delighted to announce that our team has once again been ranked Tier 1 for Competition by Legal 500.