Agribusiness, food & beverages: Updates & developments
In the agribusiness, food & beverage sector, there are three developments of interest:
- Mosstrich (Pty) Ltd and Klein Karoo International (Pty) Ltd have approached the Competition Tribunal (Tribunal) to reconsider their proposed merger which was prohibited by the Competition Commission (Commission) on the basis that it would eliminate competition between the two companies and result in a near monopoly of the merged entity in the market for ostrich meat and feathers. The parties, however, argue that the proposed merger is aimed at stabilising the ostrich industry, which is currently in a state of decline.
- The Commission has recommended that the Tribunal conditionally approve the proposed merger whereby the South African Breweries (Pty) Ltd (SAB) will acquire the rights to a range of products and related assets of Diageo South Africa (Pty) Ltd (the Licensed Brands). The Commission has recommended that the merger be approved subject to a condition requiring SAB to make a commitment not to engage in any bundling or tying strategies of its flavoured alcoholic beverages (FABs) and beer products and that the merger parties are required to allow competing third party FABs to obtain access to Diageo fridges acquired by SAB and to ensure that there is no exchange of competitively sensitive information as a result of the merger.
- The Commission has recommended to the Tribunal that the proposed merger whereby Milco SA (Pty) Ltd intends to acquire Clover Industries Ltd, be conditionally approved. The Commission has recommended that the merger parties be required to procure juice concentrate from their current supplier for a certain period of time, as well as prevent the potential exchange of competitively sensitive information. In terms of public interest conditions concerns they recommend that, no retrenchments are allowed for a certain period and the merger parties are required to set up a reskilling fund worth ZAR 10 million.
Engineering & construction: WBHO / Trencon alliance
The Tribunal conditionally approved the merger which entails the formation of an economic alliance between WBHO Construction (Pty) Ltd and Trencon Construction (Pty) Ltd. The companies intend to operate as a single economic entity i.e. as part of the WBHO Alliance. The alliance is the result of a settlement agreement between several construction companies and the government, following an investigation into collusion in the industry.
Financial services: Development fund in investment merger
The Commission has recommended to the Tribunal that the proposed transaction whereby Boundary Terraces 042 (Pty) Ltd (Boundary Terraces) intends to acquire Bravo Group Ltd (Bravo Group), be conditionally approved. In terms of the conditions the merger parties agree that Bravo Group will establish a Development Fund, worth approximately ZAR7.35 million, to assist affected employees as well as their immediate family members in terms of reskilling, small business development and/or a bursary allocation for an immediate family member of an affected employee.
Industrials: Updates & developments
In the industrials sectors, there are five developments of interest:
- The Competition Appeal Court (CAC) upheld an appeal by A'Africa Pest Prevention CC and Mosebetsi Mmoho Professional Services CC against a Tribunal decision which found that the firms had engaged in price-fixing and collusive tendering. The appellants argued that during the relevant period they were constituent firms within a single economic entity and that, properly characterised, their conduct did not coincide with the character of these practices in terms of the Competition Act. The CAC held that the parties conduct lacked the hallmarks of collusion - for instance, the parties had submitted identical prices (as opposed to a highly uncompetitive price so as to make way for the other who would have a lower bid to be awarded the tender), and that the collusive tendering appeared overt (rather than covert) in nature. To read the decision, click
- The Tribunal confirmed a settlement agreement between the Commission and More Asphalt (Pty) Ltd (More Asphalt). More Asphalt admitted to collusion and agreed to pay an administrative penalty of ZAR 579,204.57.
- The Tribunal dismissed a complaint referral against two asphalt producers, Roadspan Surfaces (Pty) Ltd and Much Asphalt (Pty) Ltd. The Commission alleged that the two companies entered into the collusive agreement during a meeting in 2008. The Tribunal, however, found that the Commission had not discharged its onus to prove that the companies had entered into a geographic market division agreement.
- The Commission referred to the Tribunal for prosecution diesel particulate filters (DPF) company, Ibiden Co Ltd (Ibiden). Ibiden has been charged with price-fixing and collusive tendering in the market for manufacturing and supplying DPFs to Original Equipment Manufacturers (OEMs).
- The Tribunal has conditionally approved a merger whereby Rappa Management (Pty) Ltd seeks to acquire Rappa Holdings (Pty) Ltd. The acquiring group’s activities include trading in precious metals - particularly, through Aulion. Aulion procures gold doré bars from Rappa Resources and further refines it into a pure gold bar from its Dubai base. Rappa Resource, a subsidiary of Rappa Holdings, produces and supplies gold concentrates and gold doré bars. The transaction was approved subject to a condition that Rappa Resources not refuse to supply gold doré bars to local refineries.
Healthcare: Pharmaceuticals merger approved
The Commission conditionally approved the proposed merger whereby Glaxosmithkline Consumer Healthcare Holdings Ltd intends to acquire the Consumer Healthcare Business of Pfizer Inc. The merger was approved subject to the conditions that the merger parties limit retrenchments and continue using a local pharmaceutical company for a period of 3 years.
Mining: Communities seek leave to appeal Sibanye / Lonmin merger
The Greater Lonmin Community (GLC) has launched an application at the Constitutional Court (CC) seeking leave to appeal a CAC judgment. In terms of the application, the GLC has requested that the CC declare that the approval of the Sibanye-Lonmin merger unlawful. Furthermore, following the CAC's finding that the GLC was not a key party to the merger proceedings, the GLC is contending that certain clauses of the Competition Act be declared unconstitutional.
Regulatory: Updates & developments
There are two regulatory developments of interest:
- The Tribunal confirmed a settlement agreement between the Commission and the Law Society of the Northern Provinces. In terms of the agreement, the law society agrees to rescind some of its professional rules and guidelines that were found to be anti-competitive. The Commission did not seek a penalty in this matter.
- The Minister of Trade, Industry and Economic Development, Ebrahim Patel, has tabled his department’s Budget Vote before a National Assembly mini-plenary at Parliament. The Minister announced that in the next financial year, to open up priority sectors, the Commission will initiate one new market inquiry per year, complete more than 60 cartel investigations in the next five years and initiate 10 investigations into abuse of market power by dominant firms. Also, an estimated ZAR 6 billion is expected to be raised in commitments from large companies to support development of small and medium suppliers and black entrepreneurs through merger conditions and the BBBEE equity-equivalence investment programme in the next five years.
Retail: Nestle skin care merger approved
The Commission has conditionally approved the proposed merger whereby Sunshine Luxembourg VII SARL (Sunshine) intends to acquire Nestle S.A Skin Health Business (NSH). Both companies are involved in the manufacture and supply of skin care products. The merger was approved subject to a condition placing a moratorium on merger specific retrenchments for two years.
Telecommunications, media and technology: Updates & developments
In the TMT sector, there are three developments of interest:
- The CC has dismissed an appeal by the Commission against the CAC's judgment in the Media24 predatory pricing matter. Four separate judgements were delivered with the majority decision finding that although the application raised an arguable point of law of general public importance within the court’s jurisdiction and that leave to appeal should be granted, the appeal must be dismissed with costs. To read the decision, click
- The Tribunal has approved a settlement agreement between the Commission, Media24 (Pty) Ltd and Novus Holdings Ltd. The two companies agreed that a restated management agreement implemented in 2015 constituted a notifiable merger. In terms of the settlement agreement, the companies undertook to notify the Commission of any future transactions that constitute a notifiable merger and refrain from engaging in any conduct that contravenes the Competition Act.
- The CAC has dismissed an appeal by the Commission against Primedia (Pty) Ltd t/a Ster-Kinekor Theatres and Avusa Ltd t/a Nu Metro Cinemas. The CAC held that the Commission failed to show that a market allocation agreement was implemented between the parties, which may have triggered the application of section 4(1)(b) of the Competition Act. To read the decision, click
Transport: Update on automotive code
After months of engagement with stakeholders, it has been reported that the Commission no longer intends to implement an Automotive Code of Conduct. The Commission has indicated that it will rather convert the proposed code into a guideline. The Commission's spokesperson has said that they hope to retain the intention, essence and the effect of the code, but that it would not be necessary for OEMs to concur or sign the guideline.
Rest of Africa News
Angola: Banking merger approved
The Angolan Regulatory Competition Authority (ARC) has approved a merger involving Banco Económico, Seguradoras Unidas and Tranquilidade – Corporação Angolana de Seguros. The ACR found that no obstacles to competition would be created in the relevant markets.
East African Community: Updates & developments
There are two developments of interest relating to the East African Community (EAC):
- Representatives from the EAC member states attended a meeting in Kenya to validate the draft East African Community Competition Authority's (EACCA) Outreach and Advocacy Strategy (2019/20 - 2024/25). The draft was finalised, validated and submitted it to the EACCA Commissioners for consideration and approval.
- The Deputy Minister of Foreign Affairs and EA Cooperation has stated that the EACCA is in the process of aligning its activities with the broader activities of the ECA, recruiting staff, amending the organisations 2010 regulations and developing merger and acquisition regulations. It has also been reported that the EACCA has finalised a study aimed at addressing challenges in the regional retail sector.
Gambia: Authority hosts mergers workshop
The Gambia Competition and Consumer Protection Commission held a Mergers Capacity Building Workshop to develop case handlers' skills. The workshop was facilitated by representatives from the COMESA, South Africa and Kenya competition authorities, as well as the United States Federal Trade Commission.
Kenya: Updates & developments
In Kenya, there are two developments of interest:
Kenya Competition Amendment Bill, 2019 (Bill) was published on 12 July 2019. The closing date for submissions on the Bill is 1 August 2019.
- The Competition Authority of Kenya (CAK) has reviewed its
Market Definition Guidelines in an effort to support the growth of Kenya’s digital economy, as encapsulated in the Kenyan Government’s Digital Economy Blueprint. The guidelines take into account the challenges faced in regulating the digital economy sector and introduce global concepts such as Big Data, multi-sided and digital markets.
Australia: Digital Platforms report released
The Australian Competition and Consumer Commission (ACCC) released its final
Digital Platforms Inquiry report. The report contains 23 recommendations, spanning competition law, consumer protection, media regulation and privacy law. The ACCC has identified numerous adverse effects associated with digital platforms, many of which flow from the dominance of Google and Facebook. One of the report's findings is that the market power of Google and Facebook has distorted the ability of businesses to compete on their merits in advertising, media and a range of other markets.
European Union: Updates & developments
In the European Union, there are three developments of interest:
- The European Commission (EC) has imposed a fine of EUR 242 million (approximately ZAR 3.8 billion) on Qualcomm Inc. (Qualcomm) for abuse of dominance in the market for 3G baseband chipsets. The EC found that Qualcomm sold these products at a price below cost to key customers with the intention of eliminating a competitor.
- The EC has opened a formal antitrust investigation to assess whether Amazon's use of sensitive data from independent retailers who sell on its marketplace is in breach of EU competition rules. As part of its investigation, the EC will examine the standard agreements between Amazon and marketplace sellers and the role of data in the selection of the winners of the “Buy Box”.
- The EC has imposed a fine of EUR 6.9 million (approximately ZAR 109 million) on Sanrio Co. Ltd (Sanrio) for restricting traders from selling licensed merchandise to other countries within the European Economic Area. This restriction concerned products featuring Hello Kitty and other characters owned by Sanrio.
United Kingdom: Anti-competitive allegations in antibiotic markets
The Competition and Markets Authority (CMA) has provisionally found that sellers of the antibiotic Nitrofurantoin (commonly used to treat urinary tract infections) may have engaged in anti-competitive conduct. The CMA has alleged that two suppliers and a wholesaler, Alliance Healthcare, entered into arrangements in terms of which Alliance Healthcare would buy equal volumes of the drug from each of the two suppliers so that they would not compete.
United States of America: Updates & developments
In the United States of America, there are two developments of interest:
- The United States Department of Justice (DOJ) has announced that it has opened a broad investigation into a number of digital technology firms to assess whether the firms are engaging in anti-competitive practices. Although the DOJ has not specified which companies will be probed, it did indicate that the investigation will consider concerns regarding search, social media and online retail services.
- The DOJ has announced a new policy incentivising antitrust compliance. In terms of the new policy, the DOJ will, for the first time, consider compliance at the charging stage in criminal antitrust investigations.
Our Recent Work
Compcare / Selfmed
The Commission has conditionally approved the transaction whereby CompCare Wellness Medical Scheme (CompCare) intends to acquire Selfmed Medical Scheme (Selfmed).
Sarah Manley and
Makati Seekane represented the merger parties.
CompCare is an open medical scheme, which offers a wide product range of benefit options to private individuals, families and employer groups across South Africa. Selfmed is a self-administered, open medical scheme. It is medium sized and offers healthcare products and services products to private individuals, families as well as employer groups across South Africa. The merger was approved subject to employment related conditions.
Rössing Uranium / China National Uranium
The Namibian Competition Commission has conditionally approved the acquisition of control over Rössing Uranium Ltd (Rössing) by China National Uranium Corporation Limited (CNUC).
Daryl Dingley and
Clare-Alice Vertue represented the sellers, Rio Tinto Overseas Holdings Ltd.
Rössing is a uranium mine in Namibia as well as one of the largest open pit uranium mines in the world. CNUC is a Chinese government owned company involved in mining and prospecting activities internationally. The merger was approved subject to a number of conditions, including conditions relating to required levels of local employment, procurement and management.
Safety SA Topco / Metrix Software Solutions
The Commission has conditionally approved the proposed merger whereby Safety SA Topco (Pty) Ltd (Safety SA) intends to acquire Metrix Software Solutions (Pty) Ltd (Metrix).
Shawn van der Meulen and
Makati Seekane represented the merger parties.
Safety SA and its subsidiary NOSA, are collectively controlled by the Carlyle Group. Relevant to the proposed transaction is that the NOSA, through its subsidiaries, has a Supplier Vetting System which provides support and compliance training for purposes of vetting suppliers and contractors against occupational health, safety and environmental standards. Metrix is a developer and supplier of integrated software services and solutions for governance risk and compliance for health, safety environments, social and quality spectrums. The Commission found that the merger is unlikely to substantially lessen or prevent competition or raise any public interest concerns.
Telkom / Trudon
The Tribunal has unconditionally approved the transaction in which Telkom SA SOC Limited (Telkom) seeks to acquire the remaining shares in Trudon (Pty) Ltd (Trudon). Trudon is one of Telkom's subsidiaries, and is operated as a division of Telkom. Robert Wilson and
Busiswe Masango represented the merger parties.
Telkom is a wireline and wireless telecommunications provider in South Africa. Trudon is a local advertising and marketing company. Trudon provides print and digital solutions under the name "Yellow Pages" and also provides an online business directory known as “White Pages”. The Commission found that the merger is unlikely to substantially lessen or prevent competition or raise any public interest concerns.
Insights and Articles
Aluko & Oyebode 2019 Capital Market Roundtable
On the 25 July 2019,
Daryl Dingley participated in the Aluko & Oyebode Capital Market Roundtable themed
"Engendering an Effective Regulatory Landscape for Competition law in Nigeria - Promoting a Fairer Market". Daryl was asked to share his insights on the application of competition law in South Africa over the past 20 years. The keynote address was given by Mr Oscar Onyema, the Chief Executive Office of the Nigerian Stock Exchange. Other participants included the Director General of the Federal Competition and Consumer Protection Commission and the Deputy Director of Mergers and Acquisition at the Nigerian Securities Exchange Commission.
5th Annual Competition and Economic Regulation (Acer) week
Mmadika Moloi attended ACER week hosted by the Competition Authority of Botswana, the National Energy Regulator of South Africa and the University of Johannesburg’s Centre for Competition, Regulation and Economic Development. Key points shared in the week included the announcement by the Minister of Investment, Trade and Industry that the Competition Authority of Botswana will be renamed the Competition and Consumer Authority (the CCA) and that a separate body, the Competition and Consumer Board, will be established to govern and direct the affairs of the CCA. Other points discussed were the amendments to Botswana's legislation to include criminal liability for cartel conduct and the introduction of a new era of competition law enforcement in South Africa, focusing on economic inclusiveness and participation by small, medium and micro-sized enterprises and businesses owned or controlled by historically disadvantaged persons.
Mmadika Moloi and Edwina Warambo (a Principal Associate at Anjarwalla & Khanna, who was on secondment at Webber Wentzel at the time of writing) recently published an article titled "Keeping up with competition law: Key developments across Africa in the first half of 2019".
Shawn van der Meulen recently published an article titled
"Navigating merger control complexities in Africa".