New decision of interest
ZAR16 million fine for abuse of dominance
The Competition Tribunal (Tribunal) issued an administrative penalty of approximately ZAR16 million against Uniplate Group (Pty) Ltd (Uniplate) for abusing its dominance. The Tribunal found that Uniplate, the largest manufacturer and distributor of number plate blanks and embossing machines in South Africa, strictly enforced exclusive supply agreements with customers and often threatened customers with litigation if they purchased or attempted to purchase their requirements from Uniplate’s rivals. In terms of the supply agreements, customers were obliged to purchase a Uniplate embossing machine, and all of their number plate blanks and embossing materials from Uniplate. The exclusive supply agreements tied up customers for 10 years and prevented customers from switching to alternative suppliers.
Agribusiness, food & beverages: ASF / Vuka merger prohibited
The Competition Commission (Commission) has prohibited a proposed transaction whereby Africa Forestry Fund II Ltd (AFF) intended to acquire Vuka Forestry Holdings (Pty) Ltd (Vuka Holdings) and Glen Village Trading Co (Pty) Ltd (Glen Village). AFF forms part of the ASF Group, which is active in the plantation of hardwood trees. The hardwood trees are harvested and sold as, among other things, transmission pole logs. Vuka is involved in the treatment of poles and primarily produces treated transmission poles and treated building and fencing poles. The Commission found, among other things, that the proposed merger raised several supplier-customer (vertical) competition concerns and would result in a negative public interest outcome in the broader forestry industry in the Mpumalanga and Limpopo regions.
Engineering & construction: ZAR6 million fine for collusion
The Tribunal has confirmed a settlement agreement between the Commission and GVK Siyazama Building Contractors (Cape) (Pty) Ltd (GVK). The local construction firm admitted to collusive tendering in respect of three construction projects in the Western Cape. The projects involved the construction of a Mediclinic hospital in Brackenville, alterations to and an extension of the Tygervalley Mall, as well as the construction of a warehouse and office buildings in Cape Town. In terms of the settlement agreement, GVK agreed to pay an administrative penalty of ZAR6,038,852.00.
Financial services: ABSA merger approved
The Tribunal has unconditionally approved a large merger whereby Absa Bank Ltd (Absa) seeks to acquire target assets from Société Générale SA (SocGen). SocGen, a French company, controls two firms namely Société Générale South African Nominees (Pty) Ltd and Goudstad Nominees (Pty) Ltd, referred to as the 'Nominee Companies'. The target assets comprise of SocGen’s custody, trustee and derivatives clearing business, its global custody services, and the Nominee Companies.
Industrials: Updates & developments
In the industrials sector, there are two developments of interest:
- The Tribunal has confirmed a settlement agreement between D&D Roof Insulation CC (D&D) and the Commission. D&D, a company involved in manufacturing and supplying glasswool products, admitted to price fixing and market division. In terms of the settlement agreement, D&D agreed to pay an administrative penalty of ZAR1,670,379.00.
- The Tribunal has heard closing arguments in the scrap metal cartel case involving Arcelormittal South Africa Ltd (AMSA), Columbus Stainless (Pty) Ltd, Cape Gate (Pty) Ltd and Scaw South Africa (Pty) Ltd (Scaw). The Commission alleged that the companies operated a buyers’ cartel and fixed the purchase price of scrap metal from about 1998 - 2008. AMSA and Scaw both entered into settlement agreements, leaving Cape Gate as the only remaining respondent in this matter.
Regulatory: Updates & developments
There are three regulatory developments of interest:
- The Commission recently hosted a conference on
"The Impact of the 4th Industrial Revolution on Competition Policy and the Economy". The Competition Commissioner, Tembinkosi Bonakele, provided opening remarks and confirmed that the Commission has set up an internal task team to collate information on the activities of global competition authorities in relation to technology companies. The two panel sessions focused on understanding the impact of the 4th Industrial Revolution on the economy, and the impact of digitalisation and new technologies on competition regulation.
- The Commission and CRESSE are hosting their 6th Competition Economics Workshop on 27 August 2019 in Pretoria. Further information is available
- The African Continental Free Trade Area (ACFTA) agreement was entered into on 30 May 2019. The ACFTA agreement aims to create a single continental market for goods and services, with free movement of business people and investments in Africa. South Africa's Trade and Industry Minister, Ebrahim Patel, has said that the agreement will boost the South African economy and efforts to create jobs.
Telecommunications, media and technology: Ericsson merger approved
The Commission has conditionally approved the proposed merger whereby Telefonatiebolaget LM Ericsson (Ericsson) intends to acquire the antenna and filter products business of Kathrein SE (the Target Business). The Commission found that the proposed merger is likely to raise a substantial public interest concern with regard to its effect on the ability of small businesses or firms controlled by historically disadvantaged persons to become competitive. Accordingly, the merger was approved subject to the condition that the merged entity will not terminate a distribution agreement in place with a South African Sales Partner currently utilised by the Target Business. The merger parties also agreed to remove all restrictions imposed on the Sales Partner.
Transport: Updates & developments
In the transport sector, there are two developments of interest:
- The Commission has conditionally approved the proposed merger whereby Rhenus SE & CO KG (Rhenus) intends to acquire World Net Logistics (World Net). Both companies provide freight forwarding and clearing services to a variety of industries. The Commission approved the merger subject to an employment condition placing a moratorium on merger specific retrenchments for a period of two years.
- The Commission has issued an erratum notice regarding amended terms of reference for the land based Public Passenger Transport Market Inquiry (Transport Inquiry). In terms of the amendment, the Transport Inquiry will be completed by 30 September 2019 (not 31 July 2019, as originally published).
Rest of Africa News
East African Community: Authority appoints new commissioner
Dr John Mduma has been sworn in as a Commissioner of the East African Community Competition Authority (EACCA). The EACCA is a regional competition authority which comprises of six member states - Burundi, Kenya, Rwanda, South Sudan, Tanzania and Uganda. Dr Mduma was appointed at the EACCA's 5th meeting in Tanzania. At the meeting, the Chairperson of Commissioners highlighted some of the authority's activities recorded so far, including preparing proposals to amend the East African Community Competition Act.
Kenya: Updates & developments
In Kenya, there are two developments of interest:
- The Competition (Amendment) Bill 2019 (Bill) has been tabled before the National Assembly. Among other things, the Bill proposes to introduce new provisions that will empower the competition authority to impose penalties for the abuse of buyer power and ensure prompt payment of suppliers.
- The Competition Authority of Kenya (CAK) has launched an online Case Management System (CMS). The CMS is part of the CAK's efforts to improve services and deliver on its key mandate to stakeholders. The CMS will, among other things, enable users to submit merger notifications, apply for exemptions, file complaints, apply for leniency and request advisory opinions.
Mauritius: Updates & developments
In Mauritius, there are two developments of interest:
- The Mauritius Competition Commission (MCC) announced that it is investigating a complaint against Sport Data Feed Ltd (SDF). The complainant, Value Plus Ltd, has alleged that since the 2016-2017 season, SDF has refused to renew its license and that it has been forced to stop its football betting business as a result. The MCC's investigation will focus on the extent to which, if any, the alleged practices may dampen competition between betting shops and between bookmakers to the detriment of punters.
- The MCC has conditionally approved a proposed transaction whereby Eagle Insurance Ltd (Eagle Insurance) will acquire 30% of the shares of Medscheme (Mtius) Ltd (Medscheme). The clients of Medscheme may be in direct or indirect competition with Eagle Insurance and the MCC was concerned the transaction may allow Eagle Insurance to access sensitive data on those clients. The MCC approved the merger subject to undertakings proposed by the merger parties to ensure that Eagle Insurance does not have access to sensitive data of Medscheme's clients.
Namibia: Fine for prior implementation
The Namibian Competition Commission (NACC) has entered into a settlement agreement with PG Glass Namibia (Pty) Ltd (PG Glass). In terms of the settlement agreement, PG Glass has agreed to pay a fine of approximately NAD1.4 million for implementing a merger prior to approval by the NACC. The fine follows a NACC investigation which found that PG Glass had acquired control over Alpha Glass and Windscreens CC.
Swaziland: Draft Banking Market Inquiry report
The Swaziland (now Eswatini) Competition Commission (the ECC) has released a draft report in its Retail Banking Market Inquiry (the Inquiry). The Inquiry found that bank charges in Eswatini were relatively high compared to other Common Monetary Area member countries. The ECC has recommended, among other things, that the Central Bank of Eswatini ensures that banks do not charge high fees that are not related to the costs of providing services.
Zimbabwe: Merger statistics released
The Competition and Tariff Commission (CTC) has released merger statistics for 2018. The CTC handled 18 mergers - 45% of mergers encompassed Zimbabwean firms seeking to expand their businesses, 55% of mergers were unconditionally approved and 10% were approved with conditions. In the first quarter of 2019, the CTC unconditionally approved the acquisition of 70% of the issued share capital of Lancet Laboratories Zimbabwe (Pty) Ltd by Cerba Healthcare Africa, and the acquisition of 100% share in Delta Gold Zimbabwe (Private) Ltd by Dallagio Investments (Private) Ltd.
European Union: Updates & developments
In the European Union, there are three developments of interest:
- The European Commission (EC) has issued a fine of EUR28 million (approximately ZAR452 million) against Canon Inc. (Canon) for implementing its acquisition of Toshiba Medical Systems Corporation (TMSC) before notification to and approval by the EC. The EC has alleged that Canon structured its transaction to circumvent these obligations when it acquired TMSC.
- The proposed EUR33 billion (approximately ZAR53 trillion) merger of Fiat Chrysler and Renault, which would have seen the creation of the world's third largest carmaker, has collapsed after intervention from the French government. All parties to the negotiations were unable to reach agreement on the conditions proposed by the French government, one of Renault's largest shareholders.
- The EC has opened a formal investigation to assess whether Broadcom Inc. (Broadcom) may be restricting competition through exclusivity practices. Broadcom is the world's largest designer, developer and provider of integrated circuits for wired communication devices. The EC suspects that Broadcom has put in place contractual restrictions to exclude its competitors from the market, and intends to impose interim measures during the investigation with regard to the TV and modem chipsets markets.
United States of America: Updates & developments
In the United States, there are two developments of interest:
- It has been announced that the United States Department of Justice (DOJ) and the Federal Trade Commission (FTC) have come to an agreement to divide potential antitrust inquiries involving the world's largest technology companies. The DOJ will be investigating Google and Apple, while the FTC has agreed to scrutinise Amazon and Facebook.
- A number of US states have joined forces in an attempt to stop the merger between T-Mobile US Inc. and Sprint Corp. Hawaii, Massachusetts, Minnesota and Nevada, along with 10 state attorneys led by New York, California and the District of Columbia, have filed a lawsuit against the deal which would see the number of US wireless carriers drop from four to three.
Our Recent Work
New Holdco / Tutuka Software
The Commission has unconditionally approved the proposed merger, whereby K2019135490 (South Africa) (Pty) Ltd (New Holdco) intends to acquire Tutuka Software (Pty) Ltd (Tutuka).
Werner Rysbergen and
Makati Seekane represented the merger parties.
New Holdco is a newly established private company ultimately controlled by Apis Partners Ltd Liability Partnership. Apis Group is a fund manager focused on investing in financial services firms that require capital to fund expanding operations in Africa, the India subcontinent and South-East Asia. Tutuka provides prepaid payment processing solutions which enable its customers to process payments via virtual and or physical prepaid cards e.g. gift cards, multicurrency travel cards, payroll cards and general-purpose reloadable cards. Tutuka further enables its customers, who do not have access to credit cards or online facilities to make payments with prepaid Visa or Mastercard. Tutuka's clients include banks, retailers, telecommunication and financial companies.
Murray & Roberts / Opti Power
The Commission has unconditionally approved the proposed merger, whereby Murray & Roberts Ltd (M&R) intends to acquire Opti Power Projects (Pty) Ltd (Opti Power Projects) and K2016430607 South Africa (Pty) Ltd (Opti Power HR).
Daryl Dingley and
Cara du Plessis acted for the merger parties.
M&R is a multi-national engineering and construction group, and Opti Power Projects and Opti Power HR are involved in the provision of power transmission and distribution services.
The Commission found that the merger is unlikely to substantially lessen or prevent competition or raise any public interest concerns.