New Development Of Interest
Update on the Competition Amendment Bill
Public hearings to discuss the Competition Amendment Bill, 2018 (the Bill) took place in Parliament on 28 and 29 August 2018. Our recent client alert setting out the key amendments proposed by the Bill is available
here. Comprehensive submissions were made by various stakeholders such as the Law Society of South Africa, the Black Business Council, COSATU, Business Unity South Africa and Section 27. We will keep you updated on all further developments.
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Local News
Engineering & construction: Updates & developments
In the engineering & construction sector, there are two developments of interest:
- The Competition Tribunal (Tribunal) has confirmed a consent agreement entered into between Group Five Construction (Pty) Ltd (Group Five) and the Competition Commission (Commission). The consent agreement follows the Commission's investigation into the alleged collusive conduct in the construction of the 2010 FIFA World Cup stadiums. In terms of the consent agreement, the Commission has granted Group Five conditional immunity from prosecution. A copy of the consent agreement is available
here.
- The Tribunal has confirmed a consent agreement between Edilcon Construction (Pty) Ltd (Edilcon) and the Commission. Edilcon admitted to engaging in price-fixing and collusion in relation to six projects (including the extension of an Edgars branch and refurbishment of a cinema at Centurion Mall). Edilcon agreed to pay an administrative penalty of ZAR 10,510,680. A copy of the consent agreement is available
here.
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Financial services: Assupol merger approved
The Tribunal has conditionally approved a merger in terms of which Portfolio 1 (Pty) Ltd (IEP) will increase its shareholding in financial services provider Assupol Holdings Ltd. IEP is a wholly owned subsidiary of the IEP Group. The IEP Group is majority held by Investec Bank Ltd (IBL), Steinhoff International Holdings Ltd (Steinhoff), the Saad Trust, as well as a number of management staff. Assupol is a financial services provider that offers funeral cover, life cover, and savings and retirement annuity products. Given IBL's ownership of Investec Life Ltd, the merger was approved subject to a number of conditions relating to information exchange and cross-directorships.
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Industrials: Fabric manufacturer fined for colluding on government uniform tender
The Tribunal has confirmed a consent agreement between Berg River Textiles, a division of Sargas (Pty) Ltd (Berg River), and the Commission. Berg River admitted to colluding with Eye Way Trading (Pty) Ltd when bidding for tenders to manufacture uniforms. The tenders were issued by the Department of National Treasury for the supply of fabric to the Department of Correctional Services and the South African Military Health Services. Berg River agreed to pay an administrative penalty of ZAR 6,170,045. A copy of the consent agreement is available
here.
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Hospitality & tourism: Outcome of HCI case may impact merger process
The Constitutional Court (CC) recently considered an appeal by the Commission against the Competition Appeal Court's (CAC) judgment relating to Hosken Consolidated Investments Ltd's (HCI) merger with Nivues Investment Ltd and Tsogo Sun Ltd - see our November 2017 update (available
here) for a summary of the factual background. The Commission took the matter on appeal after the CAC found that the proposed transaction did not require approval by the competition authorities. Significantly, the CC's judgment will determine whether merger parties could directly approach the CAC for rulings on mergers, without first notifying the competition authorities.
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Retail: Seardel fined for prior implementation
The Tribunal has confirmed a consent agreement between Trade Call Investments Apparel (Pty) Ltd (Trade Call) and the Commission. The Commission discovered that Trade Call had implemented its merger with Seardel Group Trading (Pty) Ltd (Seardel), prior to approval from the Commission. The Commission found that Trade Call had access to strategic information and interacted with customers and suppliers of Seardel Apparel. Trade Call has agreed to pay an administrative penalty of ZAR 1 million. A copy of the consent agreement is available
here.
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Rest Of Africa News
COMESA: CCC pledges to increase enforcment efforts
The COMESA Competition Commission's (CCC) Chief Executive, George Lipimile, has committed to developing a system which will allow the CCC to take "into account the realities on the ground" so it can manage anti-competitive behaviour in Member States. Mr Lipimile indicated that one of the most common forms of anti-competitive behaviour is the protectionist measures put in place by national governments which are aimed at shielding companies from competition. The CCC also mentioned that the banking sector is one of the industries being scrutinised.
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Egypt: Clay brick companies face prosecution
The Egyptian Competition Authority (ECA) has referred 70 clay brick factories to public prosecution. The ECA has alleged that the factory owners intentionally raised the prices of clay bricks when fuel prices increased. It is reported that there was a 30% to 40% increase in the prices of building materials. The ECA has also announced that it is currently conducting a comprehensive study on stabilising the prices of clay bricks.
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Kenya: CAK calls for joint oversight on telecoms sector
The Competition Authority of Kenya (CAK) has requested that Parliament enact laws to compel various regulatory agencies to work together. The Director General of the CAK, Wang'ombe Kariuki, noted that although the law does allow for Memoranda of Understanding (MoU) between regulators, it does not clearly state what happens if these MoUs are not honoured. Mr Kariuki was making submissions at the National Assembly Communication, Information and Innovation Committee's inquiry into legislative and regulatory gaps affecting competition in the telecommunication sub-sector.Article Heading
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Malawi: Regulators commit to fighting corruption
The Competition and Fair Trading Commission and Anti-Corruption Bureau have signed a MoU. The MoU is expected to facilitate cooperation between the regulatory authorities and provides for information sharing and collaboration when conducting investigations in relation to anti-competitive business practices that are of interest to both parties.
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Namibia: Taxi operators warned against increasing fares
The Namibian Competition Commission has released a statement warning taxi operators not to increase their fares in the absence of an endorsement by the Transport Board. The statement explains that such conduct would amount to price-fixing and that competition law prohibits competing undertakings from jointly colluding on prices charged to consumers.
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Tanzania: FCC calls for changes to competition law
The Head of the Fair Competition Commission's (FCC) Consumer Protection and Anti-counterfeit division has called for a review of the law to give the FCC powers to hear and determine consumer complaints. Currently consumer related issues are adjudicated in the courts. The FCC has also called for changes to the legislation to deal with vertical mergers, the misuse of market power and dominance.
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Zambia: CCPC holds half yearly media briefing
The Executive Director of the Competition and Consumer Protection Commission (CCPC), Chilufya Sampa, has highlighted some of the key activities of the CCPC in the first half of 2018. Mr Sampa noted that the CCPC had received 51 merger notifications and that 9 of these pertained to the agricultural sector. He also highlighted that 2 000 direct and indirect jobs were created and that over 500 jobs were maintained through the transactions. In relation to cartels, the CCPC handled a total of eight cases in the wholesale and retail, services, agriculture and livestock sectors.
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Zimbabwe: Agricultural merger prohibited
The Competition and Tariff Commission (CTC) has confirmed that it has not approved the merger between National Foods Ltd and Profeeds (Pvt) Ltd. According to the CTC, the merger was prohibited "as it was likely to substantially prevent or lessen competition or create a monopoly situation that may be contrary to public interest in the production and distribution of stock feed market".
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International News
Brazil: Authority considers investigating Google
The Brazilian competition authority, CADE, is considering launching an investigation into Google. The President of CADE, Alexandre Barreto, reportedly indicated during a recent interview that CADE is considering whether to formally probe Google, depending on the results of an on-going evaluation. Mr Barreto confirmed that CADE is examining the European Union's (EU) decision to determine if it has grounds to act against Google in Brazil.
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European Union: Multi-billion dollar merger approved subject to divestment
The European Commission (EC) has conditionally approved the proposed merger between Praxair, Inc. (Praxair) and Linde AG (Linde). Praxair and Linde are two of the four largest companies worldwide which are active across the entire supply chain of industrial gases, medical gases, specialty gases and helium. The EC concluded that the proposed transaction, as originally notified, would have significantly reduced competition in a number of markets in the European Economic Area (EEA) and approved the merger subject to a number of conditions, including the divestment of Praxair's entire gas business in the EEA. The merger is also being assessed in a number of other jurisdictions. In the United States, the Federal Trade Commision has recently requested extensive divestment commitments.
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United Kingdom: Updates & developments
In the United Kingdom, there are two developments of interest:
- The Road Haulage Association (RHA) is pursuing a damages claim on behalf of UK road hauliers at the Competition Appeal Tribunal. In July 2016, the EU found that four truck manufacturers colluded on prices and imposed a record fine of EUR 2.4 billion (approximately ZAR 41 billion) on the companies. The RHA said that it is pursuing the claim to seek compensation for operators that paid increased prices for their trucks.
- The Office of Communications (Ofcom) has imposed a record-breaking fine of GPB 50 million (approximately ZAR 957 million) on Royal Mail plc (Royal Mail) for breaching competition law. Ofcom found that Royal Mail had abused its dominant position by discriminating against its only major competitor. Royal Mail intends to appeal the finding, claiming that the decision was without merit and fundamentally flawed.
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United States of America: Expert panel to review competition in the digital economy
The government have constituted a panel of experts to review competition in the digital economy. The panel will be led by former US President Barack Obama's chief economic adviser, John Furman. The panel is expected to examine tools and frameworks that will ensure effective competition in the markets for data. Mr Furman has said that the focus of the panel needs to be on "ensuring that consumers continue to benefit from these new technologies while maximising the innovative potential from the economy”.
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Our Recent Work
Aisin Seiki and TAP merger approved
The Commission has unconditionally approved the proposed transaction whereby Aisin Seiki Co., Ltd (Aisin Seiki) intends to acquire sole control over Toyota Autoparts Philippines, Inc. (TAP)
Desmond Rudman and
Cara du Plessis represented the merger parties.
Aisin Seiki is a Japanese company that manufactures and supplies components and systems for the automotive industry. In .the South Africa, the Aisin Seiki Group supplies automatic transmissions and brakes for motor vehicles. TAP is a company incorporated in the Philippines and is involved in the manufacturing and supply of motor vehicle parts and accessories. In South Africa, TAP supplies manual transmissions for motor vehicles.
The Commission found that the merger is unlikely to substantially lessen or prevent competition and does not raise any public interest concerns.
International Flavors & Fragrances and Frutarom merger approved
The Commission has unconditionally approved the proposed transaction whereby International Flavors & Fragrances Inc. (IFF) intends to acquire Frutarom Industries Ltd. (Frutarom).
Robert Wilson,Werner Rysbergen and
Cara du Plessis represented the merger parties.
In South Africa, IFF is active in the development, manufacture and supply of flavour components that are used in various consumer goods industries. IFF also supplies fragrance compounds used for fine perfumes and consumer products. In South Africa, Frutarom manufactures and supplies flavours, savoury solutions and beverage bases. Frutarom also supplies consumer fragrances, aroma chemicals and consumer active ingredients.
The Commission found that the merger is unlikely to substantially lessen or prevent competition and does not raise any public interest concerns.
SA Water Works merger unconditionally approved
The Commision has unconditionally approved the proposed transaction whereby SA Water Works (Pty) Ltd (SAWW), intends to acquire Sembcorp Utilities South Africa (Pty) Ltd (SUSA) and Sembcorp Siza Water (RF) Pty Ltd (Siza Water).
Robert Wilson,Burton Phillips and
Andriza Liebenberg represented the merger parties.
SAWW is a special purpose vehicle and does not currently trade. SUSA controls the concessionaire appointed to provide water and sanitation services, infrastructure, and administration to the residents of the Mbombela District municipality in Mpumalanga. Siza Water provides water and sanitation services to the Illembe District municipality located in KwaZulu-Natal.
The Commission found that the merger is unlikely to substantially lessen or prevent competition and does not raise any public interest concerns.
