Local News
Agribusiness, food & beverages: Updates & developments
In the agribusiness, food & beverage sector, there are two developments of interest:
- The Competition Tribunal (Tribunal) confirmed a settlement agreement between the Competition Commission (Commission), Wesgrow Potatoes (Pty) Ltd (Wesgrow) and HZPC Holland B.V. (HZPC). In 2019, the Commission alleged that the companies had engaged in anti-competitive conduct in relation to the exclusive supply of the Mondial seed potato varietal in South Africa. HZPC and Wesgrow did not admit to infringing the Competition Act and no administrative penalty was proposed. However, in terms of the settlement agreement, the parties have made several undertakings which seek to address the contractual conditions Wesgrow had concluded with customers.
- The Tribunal heard closing arguments in the matter involving alleged cartel conduct by Irvin & Johnson (I&J). The Commission has accused the company of dividing markets in the supply of processed beef products. In 2018, the other company involved in the alleged conduct, Karan Beef, entered into a settlement agreement with the Commission. I&J argued that there was no division of the market between the two companies and that the matter has prescribed. The Tribunal has reserved judgement.
Financial services: Bidvest's merger with Eqstra conditionally approved
The Tribunal conditionally approved Bidvest Bank Ltd's (Bidvest Bank) acquisition of Eqstra Investment Holdings (Pty) Ltd (Eqstra). Bidvest Bank offers financial service and banking products. Relevant to the proposed transaction is Bidvest Bank’s fleet management services. Eqstra provides fleet consulting, fleet acquisition and other fleet related services. The Tribunal approved the merger subject to conditions addressing employment concerns.
Industrials: Fabric company fined for resale price maintenance
The Tribunal confirmed a settlement agreement between the Commission and Stuart Graham Furnishing Fabrics CC (Stuart Fabrics). In 2015, Sandton Fabrics lodged a complaint with the Commission in relation to Stuart Fabrics’ pricing policy. The Commission found, among other things, that Stuart Fabrics had demanded that Sandton Fabrics increase its prices by at least 50% or its account would be terminated. In terms of the agreement, Stuart Fabrics admits that it engaged in the practice of minimum resale price maintenance and has agreed to pay an administrative penalty of ZAR150,000.00.
Regulatory: Commission continues collaborative efforts
The Commission entered into a memorandum of understanding (MOU) with the Botswana Competition and Consumer Protection Authority. In terms of the MOU, the two agencies will exchange views on substantive competition policy issues, work jointly on the development of research, render technical assistance to each other and exchange expert studies, staff and non-confidential information. The Commission has also entered into a Joint Consent Agreement with the Federal Antimonopoly Service of Russia.
Retail: Updates & developments
In the retail sector, there are two developments of interest:
- The Commission conditionally approved Wipro Unza Holdings Ltd's (WUHL) acquisition of Canway (Pty) Ltd (Canway). WUHL’s only interest in South Africa is in respect of the export of soap bars. The Canway Group is involved in the manufacturing, marketing and distribution of personal care products (i.e. body lotions, soap bars and shampoos) and sells its products under different brands such as Oh So Heavenly, Dr Sole and Iwori. The merger was approved subject to conditions that the merged entity continues procuring packaging products from local suppliers and does not undertake merger-related retrenchments for two years post-merger.
- The Commission announced that it is intensifying efforts to ensure that school uniforms become affordable through extensive advocacy efforts targeted at parents, governing bodies, retailers and schools. In 2019, the Commission published school uniform guidelines aimed at preventing anti-competitive behaviour in the school uniform industry. The Commission has urged parents to monitor conduct at schools and insist that the governing bodies implement the uniform guidelines.
Transport: Updates & developments
In the transport sector, there are two developments of interest:
- The Tribunal dismissed a case of alleged price-fixing against several furniture removal companies. The case involved 11 furniture removal companies and the association to which they belong. The Commission alleged that the companies had engaged in price-fixing in relation to the e-toll levy imposed on customers transporting goods on Gauteng highways. Three of the implicated companies admitted liability and settled with the Commission. The Tribunal held that, although the companies did enter into an agreement in this regard, the companies cannot be liable because the agreement was concluded three years prior to the initiation and that the complaint had prescribed.
- The Tribunal dismissed a case against Tourvest Holdings (Pty) Ltd (Tourvest) and Trigon Travel (Pty) Ltd (Trigon). The Commission alleged that the companies had engaged in collusive tending when bidding for a government tender in 2015. The tender was for the supply of certain administrative and management services in respect of domestic airplane flight tickets and accommodation for members of Parliament. The Tribunal found that the Commission had not discharged the onus of enabling it to draw an inference that an agreement existed between the two companies, or that the companies had engaged in a concerted practice.
Rest of Africa
Botswana: Restructured authority commences operations
On 2 December 2019, the Minister of Investment, Trade and Industry published the Competition Act and the Consumer Protection Act (Date of Commencement) Orders. In terms of the Orders, the Botswana Competition and Consumer Authority (BCCA) has commenced operations. The BCCA combines the mandates of the old competition authority and the Consumer Protection Unit.
COMESA: CCC enters into cooperation agreement with Sudanese authority
In December 2019, the COMESA Competition Commission (CCC) met with the Sudanese Ministry of Industry and Trade to assist with the establishment of the national competition authority in Sudan. In an effort to bolster collaboration, the CCC also entered into a Cooperation Agreement with the Sudan Competition and Prevention of Monopoly Practices Council with the aim of enhancing the enforcement of competition law.
Egypt: Uber / Careem merger conditionally approved
The Egyptian Competition Authority (ECA) conditionally approved the merger between Uber Technologies Inc. and Careem Inc. In 2018, the ECA warned the parties that they could be liable for a fine, if the merger was implemented without approval. The parties proceeded to submit a formal notification and the merger was approved subject to a number of commitments in December 2019. These commitments include, among other things, Uber agreeing to - remove exclusivity provisions in its contracts, place a cap on annual total organic fare increases, increase investment in innovation and ensure that there is no exclusionary tying between products.
Ghana: Calls for competition law to be finalised
CUTS Ghana, a research and policy think tank, has urged government to prioritise the passing of competition law in the country before the 2020 elections. The Country Director for CUTS pointed out that although legislation had been drafted, the bills have not yet been tabled for consideration.
Kenya: Updates & developments
In Kenya, there are three developments of interest:
- The Competition (General) Rules 2019 (the Rules) became effective on 6 December 2019. Importantly, the Rules revise the Kenyan merger notification thresholds and filing fees. The Rules also recognise the jurisdiction of the CCC and introduce amendments to the merger notification forms.
- The National Assembly's Committee on Finance and National Planning has rejected Safaricom's petition to remove a provision of the Kenyan competition law which requires companies to file business reports with the Competition Authority of Kenya (CAK). Safaricom argued the rule would subject firms to onerous reporting obligations and interfered with the freedom of contract. The committee chair indicated that the proposal was rejected because the provision provides a means for the CAK to assess whether a company is abusing its buyer power.
- The CAK conditionally approved the proposed merger between Airtel Kenya and Telkom Kenya. The merger was approved subject to the condition that the merged entity is restricted from entering into any form of sale agreement within the next five years and must honour existing contracts with government bodies. The merged entity is also required to ensure that at least 349 employees of the target are retained in accordance with specific arrangements.
Zambia: CCPC investigates cement price increases
The Competition and Consumer Protection Commission (CCPC) announced that it has been investigating the simultaneous increases in the prices of cement in Zambia over the last six months. The CCPC expressed concerns regarding the collective and synchronised increase in the price of cement and has emphasised that stakeholders should approach it first with information in relation to collusion in any sector of the economy.
International News
Australia: Updates & developments
In Australia, there are two developments of interest:
- The Australian Competition and Consumer Commission (ACCC) intends creating a code of conduct to ensure substantial market power is not used to lessen competition in media and advertising service markets. The guidelines are aimed at addressing digital and social media platforms and the Australian government has reportedly indicated that technology companies would need to agree to the new rules by November 2020.
- The ACCC accepted a court enforceable undertaking from ANZ Roofing Pty Ltd (ANZ), a commercial roofing business. The ACCC had expressed concerns that the company used social media as a means to collude, after ANZ posted a picture on two industry Facebook accounts promoting roofers to increase prices following a hailstorm. The post resulted in discussions between roofers about the prices they should charge for different roofing services. In terms of the undertaking, ANZ, among other things, has committed to ensure that the conduct is not repeated.
India: Updates & developments
In India, there are two developments of interest:
- The Competition Commission of India (CCI) has released a report detailing the results of its e-commerce market study. The study was initiated by the CCI with a view to better understanding the functioning of e-commerce and to assess impediments to competition. A number of core issues identified in the study relate to the bargaining power imbalance and information asymmetry between e-commerce marketplace platforms and their business users. In an effort to address some of these concerns, the CCI has urged the e-commerce platforms to put in place several transparency measures.
- The CCI has ordered an investigation against Amazon and Flipkart. The investigation will look into whether exclusive arrangements, deep discounting and preferential listing by e-commerce marketplaces have an adverse effect on competition.
United Kingdom: Updates & developments
In the United Kingdom (UK), there are four developments of interest:
- The Competition and Markets Authority (CMA) released a statement clarifying its role post the UK's withdrawal from the European Union (EU). The government has confirmed that the UK will enter a transition period until the end of December 2020, following its departure from the EU on 31 January 2020. At the end of that transition period, on 1 January 2021, the CMA is expected to take on responsibility for larger and more complex merger, cartel and competition enforcement cases that were previously reserved to the European Commission. The CMA has published
guidance to explain how it will conduct its work during the transition period.
- In December 2019, the CMA published an
interim report as part of its online platforms and digital advertising market study. The interim report raises concerns about the market position of companies such as Google and Facebook and the lack of transparency in the way that businesses operate on these platforms. The interim report also sets out initial findings and potential interventions.
- The CMA has acknowledged a court decision indicating that two disqualified directors may continue to act as directors and carry out certain limited functions during their term of disqualification. In 2019, the CMA ordered that the directors in question be disqualified for engaging in collusive conduct in the construction sector. The CMA reiterated that, while the underlying director disqualifications remain in place, the directors may not take on directorship at any other company and welcomed the court's views that permission to continue to act as a director should not be given readily.
- The CMA issued a fine of EUR 4.5 million (approximately ZAR 71 million) on Fender Europe for preventing online discounting for its guitars. This is the largest fine imposed in the UK for resale price maintenance. Fender has admitted to following a policy aimed at restricting UK retailers from discounting their online prices. From 2013 to 2018, Fender required its guitars to be sold at or above a minimum price.
United States of America: Draft Vertical Merger Guidelines published
The Department of Justice, together with the Federal Trade Commission, released
new draft 2020 Vertical Merger Guidelines (draft guidelines) and for public comment. The draft guidelines describe how the federal antitrust agencies review vertical mergers to evaluate whether the mergers violate antitrust law and outline the agencies’ principal analytical techniques, practices, and enforcement policy for vertical mergers.
Our Recent Work
Tribunal dismisses cartel case against NPC
The Tribunal has dismissed a decade-long case of price-fixing and market division against Natal Portland Cement Cimpor (Pty) Ltd (NPC). The case stemmed from a Commission investigation launched in 2008, which probed alleged anti-competitive conduct in the cement industry between 1995 and 2009. The Tribunal concluded that the collusive discussions between the other cement producers in the market regarding markets shares, costs and profits did not relate to NPC. The Commission has filed an appeal with the Competition Appeal Court against the Tribunal's order.
Robert Wilson and
Andriza Liebenberg represented NPC.
Altron / Gydan Investments
The Commission has unconditionally approved Altron TMT SA Group (Pty) Ltd's (Altron) proposed acquisition of the entire share capital of Gydan Investments (RF) (Pty) Ltd (Gydan).
Daryl Dingley and
Cara du Plessis represented the merger parties.
Altron is active in the telecommunications, multi-media and information industries. Through its Cybertech division, Altron provides managed cyber security services. Gydan is the holding company of Ubusha Technologies, an identity security provider which provides its clients with identity security solutions for their workforce, suppliers and customers.
The Commission found that the merger is unlikely to substantially lessen or prevent competition and does not raise any public interest concerns.
ASK Chemicals / SI Group
The Commission conditionally approved ASK Chemicals GMBH's (ASK) acquisition of SI Group South Africa (Pty) Ltd (SI South Africa).
Shawn van der Meulen and
Makati Seekane represented the parties.
ASK produces a wide range of auxiliaries and chemicals for the foundry industry. SI South Africa is an industrial resins supplier to South African and export markets. The merger was approved subject to the condition that ASK extends an existing license agreement with ChemSystems.
The Commission found that the merger is unlikely to substantially lessen or prevent competition and does not raise any public interest concerns.
Cash Connect / Main Street 1723
The Commission has unconditionally approved Cash Connect Managements Solutions Proprietary Limited's (Cash Connect) acquisition of Main Street 1723 (Pty) Ltd (Main Street 1723).
Shawn van der Meulen,
Andriza Liebenberg and
Makati Seekane represented the merger parties.
Cash Connect is a cash management and payment solutions provider, which provides end-to-end cash management solutions including automated cash vaults and cash-in-transit solutions in South Africa. Main Street 1723 is a new special purpose vehicle company incorporated for the purposes of this transaction.
The Commission found that the merger is unlikely to substantially lessen or prevent competition and does not raise any public interest concerns.
Comair Ltd / Star Air Cargo and Star Air Maintenance
The Tribunal has unconditionally approved Comair Ltd's (Comair) acquisition of the entire share capital of Star Air Cargo (Pty) (SAC) Ltd and Star Air Maintenance (Pty) Ltd (SAM).
Martin Versfeld and
Cara du Plessis acted for Comair.
Comair is a South African aviation group, offering scheduled passenger airline services and operates under the British Airways and Kulula brands. SAC and SAM provide aircraft leasing and maintenance services.
The Tribunal found that the merger is unlikely to substantially lessen or prevent competition and does not raise any public interest concerns.
Mr Sven Thieme (Sven Thieme) / the assets and identified liabilities of the Werner List Trust
The Commission has unconditionally approved Mr Sven Thieme's acquisition of the assets and identified liabilities of Werner List Trust (the WLT Business).
Daryl Dingley,
Cara du Plessis and Nadia Dhorat represented the merger parties.
Sven Thieme is a Namibian citizen and the Executive Chairman of Ohlthaver & List Finance and Trading Corporation Ltd (O&L). The WLT Business controls O&L, a group operating in various sectors in the economy including beer and soft drinks, fishing, fresh produce, retail and hospitality.
The Commission found that the merger is unlikely to substantially lessen or prevent competition and does not raise any public interest concerns.
Packing Solutions Africa and Masimong Chemicals / Rolfes
The Commission has unconditionally approved Packing Solution Africa (PSA) and Masimong Chemicals (Pty) Ltd's (Masimong) acquisition of joint control over Rolfes Holding Ltd (Rolfes).
Burton Phillips and Andriza Liebenberg represented the merger parties.
PSA is a special purpose vehicle incorporated for the purposes of the proposed transaction and is wholly-owned by Phatisa Food Fund 2 LLC (PFF2), which is managed by Phatisa Fund Managers 2 Ltd (PFM2). PFM2 is ultimately controlled by Phatisa Group Ltd, an African private equity group and specialist investor within the African food value chain and affordable housing. Masimong is a wholly owned subsidiary of Masimong Holdings, an investment holding company.
Rolfes is a chemical specialist provider and is a supplier of agricultural, food, industrial and water chemical management solutions for local and international markets.
The Commission found that the merger is unlikely to substantially lessen or prevent competition and does not raise any public interest concerns.
RCS Cards / certain Edcon cardholders book debts owned by Edcon and Absa
The Tribunal unconditionally approved two large merger transactions through which RCS Cards (Pty) Ltd (RCS) will acquire a portion of Edcon Ltd cardholders book debt owned by Edcon (first transaction) and a portion of Edcon cardholders book debt owned by Absa Bank Ltd (second transaction).
Robert Wilson and
Sarah Manley represented the merger parties.
The RCS Group provides consumer finance services, focusing on unsecured credit including retail credit card facilities and insurance products in South Africa. The book debts refer to all claims and entitlements arising from the use of the Edcon store card by the cardholders, or recorded in the revolving credit facility agreements concluded between Absa / Edcon and the debtors.
The Tribunal found that the merger is unlikely to substantially lessen or prevent competition and does not raise any public interest concerns.
