Catch Up With Competition Law Now - August 2019

Local News

Agribusiness, food & beverages: Mosstrich / Klein Karoo merger approved

The Competition Tribunal conditionally approved the merger between Mosstrich (Pty) Ltd and Klein Karoo International (Pty) Ltd. The merger was initially prohibited by the Competition Commission. The merged entity has agreed to a number of conditions, including - a moratorium on retrenchments for a three year period, a commitment to comply with certain annual volume conditions in relation to their supply of ostrich meat in South Africa and an obligation to offer at least 40% of its slaughter line ostrich feathers on tender in each financial year.

Healthcare: Updates & developments

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

  • The health market inquiry (HMI) panel issued a notice to inform stakeholders that the HMI is in the final stages of review and analysis of stakeholder input. The panel is also in the process of drafting the final findings and recommendations report (Final Report). The Final Report will be released on 30 September 2019 at a media conference to be held in Johannesburg.
  • Mediclinic Southern Africa (Pty) Ltd confirmed that it has lodged an appeal against the Tribunal's decision to prohibit its merger with Matlosana Medical Health Services. The appeal is expected to be heard on 14 and 15 October 2019. In January 2019, the Tribunal prohibited the merger after finding that the proposed transaction would reduce competition and increase prices.

Regulatory: Updates & developments

There are three regulatory developments of interest:

  • Ms Mondo Mazwai has been appointed as the new Competition Tribunal chairperson by President Ramaphosa. Ms Yasmin Carrim, Mr Andreas Wessels and Ms Andiswa Ndoni have been reappointed, while Mr Thando Vilakazi has been appointed as a new member of the Tribunal.
  • The Minister of Trade, Industry and Competition formed a national committee to develop action plans in relation to the African Continental Free Trade Agreement. The committee was constituted at a session between the Ministry and social partners at the National Economic, Development and Labour Council (Nedlac).
  • The African Competition Forum has welcomed the publication of a report titled, “Assessing Regional Integration in Africa: Next Steps for the African Continental Free Trade Area” (ARIA Report 2019). The ARIA Report was published in July 2019 and is a joint publication by the United Nations Economic Commission for Africa, the United Nations Conference on Trade and Development, the African Union Commission and the African Development Bank.

Telecommunications, media and technology: Vodacom / IoT.nxt merger

The Commission conditionally approved the acquisition by Vodacom Group Ltd (Vodacom) of IoT.nxt B.V (IoT.nxt). To address concerns that Vodacom may have an incentive to bundle its offerings of voice, data and IoT services post-merger to the exclusion of non-vertically integrated rivals, the merger was approved subject to the conditions that IoT.nxt’s products and services will continue to be made available to all customers on non-discriminatory terms and that IoT.nxt’s customers will not be required to buy connectivity services from Vodacom when procuring services from IoT.nxt post-merger.

Transport: Case against Robben Island Museum ferry boat operators dismissed

The Competition Tribunal dismissed a case involving price-fixing and collusive tendering against Ferry Charters (Pty) Ltd and Heritage Charters CC. The companies ferry passengers between Robben Island and the V&A Waterfront in Cape Town. Following a complaint lodged by the Robben Island Museum, the Commission alleged that five companies had engaged in tender collusion. Three companies elected to enter into settlement agreements with the Commission but Ferry and Heritage contested the matter. The Tribunal found that, based on the evidence taken as a whole, the Commission had failed to show the existence of an agreement or concerted practice on the part of the respondents.

 

Rest of Africa News

COMESA: Updates & developments

There are two developments of interest relating to COMESA:

  • The COMESA Competition Commission (CCC) announced that its Board of Commissioners has approved and published three guidelines prepared in accordance with the COMESA Competition Regulations and Rules. Guidelines on market definition, restrictive business practices and abuse of dominance.
  • The COMESA Court of Justice and the CCC recently participated in a conference held by the Law Society of Kenya. The COMESA Court used the conference as a platform to publicise its digital evidence management system launched earlier this year. The Registrar of the COMESA Court presented a session titled "Embracing technology – a case study of the COMESA Court" and explained that the complex dynamics of a regional court prompted the decision to adopt a digital system.

Botswana: Milco / Clover merger conditionally approved

The Botswana Competition Authority (BCA) conditionally approved the acquisition of Clover Industries Ltd by Milco SA (Pty) Ltd. In terms of the conditions imposed, the merged entity agreed to use all its powers to ensure that the business of Clover Botswana is maintained in Botswana to retain business continuity with the local based dairy input suppliers - in the event that the merged entity is compelled to change the Botswana business model, such intentions must be communicated to the BCA. It was also agreed that there will be no retrenchments as a result of the merger.

Ghana: Cabinet urgently considers draft competition law

The Ghanaian Minister of Trade and Industry announced that a draft Competition Bill and its accompanying policy are ready for urgent consideration by the Cabinet. The Minister has indicated that one of the fundamental issues to be addressed is aligning Ghana's competition law with the ECOWAS Competition Policy. The implementation of competition law is one of Ghana's 2020 objectives and must be achieved in order to comply with the second phase of the Africa Continental Free Trade Area agreement.

Mauritius: Alleged chemical fertiliser cartel targeted

The Executive Director finalised an investigation into the supply of chemical fertilisers in Mauritius. In terms of the findings, it is alleged that Mauritius Chemical & Fertilizers Industry Ltd (MCF) and United Investments Ltd (UIL) engaged in price-fixing, market allocation and collusive tendering. The Executive Director recommended a financial penalty totalling Rs 76.4 million (approximately ZAR 32 million) be imposed on the companies concerned. The report has been submitted to the Commissioners of the Mauritian Competition Commission for determination.

Zimbabwe: Milling price monitoring programme suspended

It has been reported that the Grain Millers' Association of Zimbabwe (GMAZ) has suspended a programme to monitor prices in the industry and has terminated 200 price monitor contracts. This decision was taken after the Competition and Tariffs Commission indicated to the GMAZ that the programme was restrictive. The General Manager of the GMAZ has said that in the absence of price monitors, the prices of mealie-meal, flour, salt and rice are expected to increase.

 

International News

European Union: Updates & developments

In the European Union, there are two developments of interest:

  • The European Commission (EC) issued Statements of Objections to O2 CZ, T-Mobile CZ and CETIN to inform the companies of its preliminary view that their network sharing agreement restricts competition and harms innovation. The companies are large operators in the Czech retail mobile telecommunications market.
  • In a questionnaire sent out in early August, the EC has indicated that it is investigating potential anti-competitive behaviour related to Facebook's Libra digital currency project. Concerns have been raised that Libra may create possible competition restrictions on the information that will be exchanged and the use of consumer data.

United Kingdom: Aspen fined for anti-competitive conduct

The United Kingdom National Health Service (NHS) has fined Aspen Pharmacare GBP8 million (approximately ZAR150 million). This follows an investigation by the Competition and Markets Authority (CMA) of Aspen and two rival pharmaceutical companies. The CMA alleges that Aspen was able to set prices by paying competitors to stay out of the market. Although the CMA confirmed that Aspen has approached it with a settlement offer, the CMA's investigation is still in progress.

United States of America: Facebook's acquisitions probed

Facebook confirmed that the Federal Trade Commission (FTC) has opened an investigation into areas of social networking or social media services, digital advertising and/or mobile online applications. It has been reported that the main focus of the probe is Facebook's acquisitions of potential competitors over the last few years. Earlier this year, the FTC announced that it is conducting a broad investigation of large digital technology firms.

 

Our Recent Work

BATSA / Twisp

The Tribunal has conditionally approved the acquisition of Twisp (Pty) Ltd (Twisp) by British American Tobacco Holdings South Africa (Pty) Ltd (BATSA). Robert Wilson, Burton Phillips and Andriza Liebenberg acted for BATSA.

The Commission initially recommended that the merger be prohibited. However, prior to the hearing of the matter before the Tribunal and after the filing of factual witness statements and expert reports, the Commission decided to recommend to the Tribunal that the transaction be conditionally approved.

Subsequently, Gold Leaf Tobacco and Philip Morris South Africa applied for and were granted leave to intervene in the merger proceedings and make submissions on a limited number of issues.

The Tribunal approved the merger subject to a number of conditions relating to the merger parties' engagements with retailers, as well a moratorium on retrenchments for two years.

KIC / Whirlpool

The Commission has unconditionally approved the transaction whereby KIC SA (Pty) Ltd (KIC) intends to acquire the business for the manufacture and supply of consumer appliance products under the KIC brand from Whirlpool South Africa (Pty) Ltd. Shawn van der Meulen and Clare-Alice Vertue represented the merger parties.

KIC is a newly formed entity for the purposes of acquiring the proposed merger and does not conduct any activities in South Africa.

The Commission found that the merger is unlikely to substantially lessen or prevent competition or raise any public interest concerns. The transaction was also unconditionally approved by the Competition Authority of Botswana.

King Price / Standard General Insurance

The Commission has unconditionally approved King Price Financial Services' (Pty) Ltd (King Price) proposed acquisition of Standard General Insurance Company Ltd (Stangen). Desmond Rudman and Andriza Liebenberg represented the merger parties.

King Price is involved in the provision of short-term insurance products, while Stangen provides long-term insurance products.

The Commission found that the merger is unlikely to substantially lessen or prevent competition or raise any public interest concerns.

Mondi plc / Mondi Ltd

The Tribunal has conditionally approved a merger entailing an internal restructure of the Mondi Group (comprising Mondi plc and Mondi Ltd). Daryl Dingley and Cara du Plessis acted for the Mondi Group.

Mondi plc will acquire the entire share capital of Mondi Ltd and once the merger is implemented, Mondi Ltd will be a wholly owned subsidiary of Mondi plc. The transaction serves to simplify the Dual Listed Company Structure of the merger parties.

The merger was approved subject to a number of conditions relating to employment and investment commitments.

Solena / Motifprops

The Commission has unconditionally approved Solena Property (Pty) Ltd's (Solena) acquisition of Motifprops 77 (Pty) Ltd (Motifprops 77). Desmond Rudmanand Andriza Liebenberg represented the merger parties.

Solena was a dormant company prior to the merger and did not conduct any business activities. Motifprops 77 is a light industrial property in City Deep, Johannesburg.

The Commission found that the merger is unlikely to substantially lessen or prevent competition or raise any public interest concerns.