New development of interest: Commission finalises guidelines on administrative penalties for failure to notify mergers
The Competition Commission has gazetted final
"Guidelines for the determination of administrative penalties for failure to notify mergers and implementation of mergers contrary to the Act" (the Guidelines) (available
here). The Guidelines present the general methodology that the Commission will follow in determining administrative penalties in cases where parties fail to notify a merger or implement a merger without the approval of the competition authorities. The Guidelines are effective from 1 April 2019.
Local News
Healthcare: Health Market Inquiry to host seminars
The Health Market Inquiry (HMI) announced that it will be holding seminars from 9 to 12 April 2019 in accordance with its revised administrative timetable (available
here). The seminars will focus on facility and funder concentration, and excessive utilisation and supply induced demand.
Industrials: Updates & developments
In the industrials sectors, there are two developments of interest:
- The Commission prohibited the acquisition by Rebel Packaging (Pty) Ltd (Rebel), a subsidiary of Mpact Ltd (Mpact), of a 49% share in Seyfert Corrugated Western Cape (Pty) Ltd. The Commission found that the parties to this transaction implemented the merger in 2011, without obtaining approval from the competition authorities. Mpact has indicated that it will appeal to the Competition Tribunal against the Commission's decision.
- Eston Brick and Tile (Pty) Ltd (Eston), a brick manufacturer, has approached the Tribunal to request that the Commission's decision to institute proceedings against it be reviewed and set aside. The Commission has alleged that Eston engaged in market allocation, but Eston has argued that, among others, the Commission had already investigated the matter and issued a notice of non-referral. The Tribunal has reserved its decision.
Regulatory: Updates & developments
There are two regulatory developments of interest:
- The Tribunal has been asked to confirm a settlement agreement between the Commission and the Law Society of the Northern Provinces. The Law Society had applied for an exemption in relation to its rules, however the Commission found that the Law Society's rules had an adverse effect on competition and were not reasonably required to maintain professional standards or the ordinary function of the profession. After considering the settlement, the Tribunal requested amendments to it, prior to making a decision. The Commission has not sought a penalty in this matter.
- The Commission signed a Memorandum of Understanding (MOU) with the World Bank (International Finance Cooperation). At the signing ceremony, Competition Commissioner, Tembinkosi Bonakele, said that “the Commission is there to play an important role in the economy and make sure there is a clear and certain investment environment that promotes the rule of law."
TMT: Data Services Inquiry provisional report to be released
The Commission has announced that it intends to release its provisional report for the Data Services Market Inquiry (Data Inquiry) by 30 April 2019. The Commission will invite submissions on the provisional report and will then engage in further consultations with key stakeholders before completing its assessment. The Commission has also issued amended Terms of Reference for the Data Inquiry. In terms of the amendment, the Data Inquiry will be completed by 31 December 2019.
Transport: Bus company and PRASA agree to postpone proceedings
Africa People Mover (APM), a commercial bus company, and the Passenger Rail Agency of South Africa (PRASA) have agreed to postpone proceedings in the Tribunal. APM had alleged that PRASA was attempting to deny it access to, and use of, its bus terminal station. APM had indicated that they would seek “urgent interdictory relief”, requesting access to these stations. PRASA had intended to object to the application on the basis that APM allegedly failed to pay its “pay as you use fees” and was in arrears.
Rest of Africa News
COMESA: Updates and developments
There are two developments of interest relating to COMESA:
- The COMESA Competition Commission (CCC) has decided to close its investigation involving Coca-Cola Beverages Africa (Pty) Ltd (CCBA). In 2018, the CCC decided to institute a formal investigation to determine whether the resale price maintenance clauses in CCBA's distribution agreements with third-party distributors were in violation of the COMESA Regulations. To address the CCC’s concerns, CCBA undertook to amend its agreements by removing the clauses which stipulate the prices and profit margins for the sale of its products.
- The CCC and the Competition Authority of Kenya (CAK) held their 4th bilateral meeting from 13 to 15 March 2019. The meeting discussed bilateral co-operation between the two institutions, following the signing of an MOU in 2016.
Kenya: Updates & developments
In Kenya, there are two developments of interest:
- The CAK announced its decision to begin offering penalty waivers to firms that report cartel behaviour and provide evidence against other cartel members. This new offer forms part of the CAK's leniency programme. The CAK has said that firms will be expected to provide evidence and pro-actively cooperate in bringing successful enforcement action in return for full or partial immunity.
- The Kenyan government announced plans to include a retailers' payment code of conduct in the Kenyan Competition Act or the Trade and Development Bill. In January 2019, the Kenya Association of Manufacturers, Association of Kenyan Suppliers and Retail Trade Association of Kenya signed the Retail Trade Code of Good Practice which is intended to guide prompt payment in the retail sector. The code prescribes a penalty or imprisonment for contravention by traders who unreasonably hold suppliers payments, and for retailers who terminate a commercial agreement without notice or, refuse to accept or return goods in breach of contract terms.
Malawi: Supreme Court upholds Competition authority's decision
The Malawi Supreme Court of Appeal has upheld a decision by the Competition and Fair Trading Commission (CFTC) which required Airtel Malawi Ltd to apply to the CFTC for authorisation of the acquisition by Barti Airtel Ltd of Zain Malawi. The CFTC Executive Director has said that the landmark decision will go a long way in providing clarity on the interpretation of certain merger control provisions in the Competition and Fair Trading Act, 43 of 1998.
Tanzania: Indigenous regulations modified as part of mining sector reforms
The Tanzanian government has modified regulations that require local companies to own a majority stake in foreign organisations. In terms of the newly amended Mining Regulations 2019, indigenous Tanzanian companies are required to own a minimum 20% equity as opposed to the 51% previously provided for. Moreover, the regulations allow for more local commercial banks to participate in mining activities.
International News
European Union: Updates & developments
In the European Union, there are two developments of interest:
- The European Commission (EC) fined Google EUR1.49 billion (approximately ZAR 23.6 billion) for breaching EU antitrust rules. The EC found that Google abused its market dominance by imposing a number of restrictive clauses in contracts with third-party websites which prevented Google's rivals from placing their search adverts on these websites. The decision requires Google to, at a minimum, stop its illegal conduct, to the extent it has not already done so, and to refrain from any measure that has the same or equivalent object or effect.
- The EC fined Nike EUR12.5 million (approximately ZAR198 million) for banning traders from selling licensed merchandise to other countries within the European Economic Area. This restriction concerned merchandising products of some of Europe's best-known football clubs and federations, for which Nike held the licence. The EC concluded that Nike's illegal practices, which were in force for approximately 13 years, partitioned the Single Market and prevented licensees in Europe from selling products cross-border, to the ultimate detriment of European consumers.
United Kingdom: Updates & developments
In the United Kingdom (UK), there are two developments of interest:
- The Competition and Markets Authority (CMA) has provisionally found that three large UK construction suppliers, who account for about 90% of UK rolled lead supplies, entered into a cartel. The CMA has alleged that the cartel colluded on prices, exchanged commercially sensitive information, refrained from targeting each other's customers and refused to supply another company whose business threatened to disrupt the market sharing arrangement. The firms now have the opportunity to respond to the CMA’s provisional findings.
- The CMA entered into a MOU with Federal Trade Commission of the United States of America to strengthen enforcement cooperation on consumer protection matters. The new agreement enhances cooperation between the two agencies, streamlines sharing investigative information and complaint data, simplifies requests for investigative assistance, and aids joint law enforcement investigations.
- The CMA has fined guitar supplier, Fender Musical Instruments Europe Ltd GBP25,000.00 (approximately ZAR462,866.00) for hiding relevant documents during an inspection. The CMA issued the fine after discovering a senior officer had concealed notebooks during an inspection of Fender's UK headquarters, as part of a competition law investigation.
United States of America: FTC establishes technology task force
The Federal Trade Commission announced the creation of a task force to monitor competition in US technology markets. The task force will investigate any potential anticompetitive conduct and take enforcement actions when warranted. The new task force team will include attorneys with unique expertise in complex product and service markets and ecosystems, including markets for online advertising, social networking, mobile operating systems and apps, and platform businesses.
Our Recent Work
Glencore / Chevron
The Tribunal conditionally approved the merger involving Glencore South Africa Oil Investment (Pty) Ltd (Glencore SA) and Chevron South Africa (Pty) Ltd (CSA), now Astron Energy (Pty) Ltd. CSA is controlled by Off The Shelf Investments 56 (RF) (Pty) Ltd (OTS), a Broad-Based Black Economic Empowerment Consortium.
Mmadika Moloi and
Busisiwe Masango represented OTS.
Glencore SA is a wholly-owned subsidiary of Glencore SA Oil Investment (Pty) Ltd, which is ultimately controlled by Glencore plc. Glencore’s business includes an energy products business segment relating to oil mining and oil production activities. CSA is a refiner and supplier of petroleum products in SA.
The merger was approved subject to a range of employment, production, BBBEE, procurement, investment and other public interest conditions.
MMC Treasury / Jardine Lloyd Thompson
The Commission conditionally approved the merger involving the acquisition by MMC Treasury Holdings (UK) Ltd (MMC Bidco) of Jardine Lloyd Thompson Group plc (JLT).
Daryl Dingley,
Sarah Manley and
Busisiwe Masango represented the merger parties.
MMC and JLT are global insurance brokers that specialise in assisting clients in securing suitable cover for large and complex insurance risks in specialty sectors, such as aviation and large energy projects. In South Africa, MMC's activities consist of short-term insurance broking, short-term reinsurance broking and employee benefits related services. JLT also offers short-term insurance broking, short term reinsurance broking and employee benefits related services.
The merger was approved subject to conditions relating to cross-directorships and employment.
SEMA / CWT Aquarius
The Commission has unconditionally approved SEMA Holdings Ltd's (SEMA) proposal to move from joint to sole control of CWT Aquarius Shipping (Pty) Ltd (CWT Aquarius).
Desmond Rudman and Andriza Liebenberg represented the merger parties.
SEMA’s activities in South Africa include the provision of line-haul transportation services in respect of equipment, chemicals and consumables as well as minerals using flatbed trucks. In South Africa, CWT Aquarius provides shipping, warehousing customs clearance and freight forward services.
The Commission found that the merger is unlikely to substantially lessen or prevent competition or raise any public interest concerns.
VKB Landbou / Multi Green
The Tribunal conditionally approved the merger between VKB Landbou (Pty) Ltd (VKB) and Multi Green (Pty) Ltd.
Daryl Dingley and
Cara du Plessis represented the merger parties.
VKB is a private company involved in various agricultural activities countrywide, through its subsidiaries. Multi Green specialises in the precision blending of granular and liquid fertilizers.
The merger was approved subject to a condition relating to information exchange.
VKB Agri / Nu Pro
The Tribunal unconditionally approved the merger whereby VKB Agri Processors (Pty) Ltd (VKB Agri) intends to acquire Nu-Pro Feeds (Pty) Ltd (Nu-Pro Feeds) and Oxfordstraat Beleggings Bethlehem (Pty) Ltd (Oxfordstraat) intends to acquire Nu-Pro Commodities (Pty) Ltd (Nu-Pro Commodities). VKB Agri and Oxfordstraat currently jointly control Nu-Pro Feeds and Nu-Pro Commodities.
Daryl Dingley and
Cara du Plessis represented the merger parties.
VKB Agri is a holding company and is involved in a variety of agricultural activities in South Africa through its subsidiaries. Nu-Pro Feeds is involved in the manufacture and supply of animal feed, while Nu-Pro Commodities is involved in the trading of agricultural commodities.
The Tribunal found that the merger is unlikely to substantially lessen or prevent competition or raise any public interest concerns.
