New Decision Of Interest
A recent decision of the Competition Appeal Court (CAC) has provided guidance on the test to be applied in assessing whether non-compete / restraint of trade clauses will expose companies to a prohibited practice contravention (Dawn Consolidated Holdings (Pty) Ltd and the Competition Commission). This significant judgement examined whether a non-compete clause in a shareholders agreement contravened the Competition Act. The CAC highlighted the importance of assessing agreements between parties in a horizontal relationship in their totality, to determine whether they exhibit the "character" of prohibited cartel conduct. A copy of the full decision is available
Agribusiness, Food & Beverage: Updates & developments
In the agribusiness, food and beverage sector, there are three developments of interest:
- The Competition Tribunal has conditionally approved the acquisition by Pioneer Foods (Pty) Ltd of Heinz Foods South Africa (Pty) Ltd. The Tribunal approved the merger subject to comprehensive employment conditions, including that the merger parties, for a period of two years, may only retrench a maximum of 27 employees as a result of the transaction.
- The Tribunal has conditionally approved the merger between Bayer Aktiengesellschaft (Bayer) and Monsanto Company (Monsanto). Both companies are involved in the research and development for bio-technology traits and chemicals. The Tribunal has approved the merger subject to the condition that the merged entity divests and sells the entire global Liberty Link trait technology and the associated Liberty branded agro-chemicals business of Bayer, as well as Bayer’s SA cotton seed business.
- The Tribunal has conditionally approved the merger comprising a series of inter-related steps which will provide Remgro International Holdings (RIH) with sole control over Capevin Holdings Ltd and, ultimately Distell Group Ltd. The merger will see the creation of a new entity controlled by Remgro Beverages (Pty) Ltd and was approved subject to confidential conditions that are transactional in nature.
Energy & Infrastructure: AECMSA admits to price-fixing
The Tribunal has confirmed a consent agreement between the Commission and the Association of Electric Cable Manufacturers of South Africa (AECMSA). The Commission alleged that all members of AECMSA agreed on, or engaged in a concerted practice in respect of, input prices or costs of raw materials required for the manufacture of power cables. It is reported that Eskom, large industries and municipalities were primarily affected by the contravention. The Tribunal has imposed an administrative penalty of ZAR 14,853 which is equal to 1% of AECMSA's 2010 membership fees. A copy of the consent agreement is available
Industrials: Company fined for cartel conduct
The Tribunal has confirmed a consent agreement between the Commission and NCS Resins (Pty) Ltd (NCS). During its investigation, the Commission found that NCS colluded with its competitor, Scott Bader (Pty) Ltd, to fix the price of resins, ancillaries and catalysts, and divide the market by allocating customers. The Tribunal imposed an administrative penalty of ZAR 29.7 million. A copy of the consent agreement is available
Healthcare: Market Inquiry outcomes published in June
The Health Market Inquiry (HMI) has announced that its Provisional Findings and Recommendations Report (Provisional Report) will be published on 28 June 2018. The HMI Panel will hold a press conference on 28 June 2018, during which the HMI Chair will present and release the Provisional Report to stakeholders and the public, and announce further details regarding the stakeholder comment period allowed for the Provisional Report.
Regulatory: Commission budget allocation
The Minister of Economic Development (the Minister) announced that ZAR 282 million has been allocated to the Competition Commission for the new financial year. This accounts for the largest share of the total budget of ZAR 10.7 billion. The Minister indicated that 100 cases of cartel conduct will be investigated, a projected 400 mergers finalised and market inquiries into private healthcare, grocery retail and communication data costs completed. The Minister also reassured the public that the department will finalise a revised Competition Amendment Bill 2017 during the course of this year.
TMT: Data findings to be published soon
Telecommunications and Postal Services Minister Cwele, has said that the findings of the data inquiries being undertaken by the Independent Communications Authority of South Africa (ICASA) and the Commission are expected to be published in June and August respectively. During the Minister's budget speech, he indicated that ICASA plans to release findings of its Priority Market Study which will list priority markets to be subjected to the market review process.
Transport: Public hearings to be held as part of Inquiry
The Commission has announced that it will hold public hearings as part of its Public Passenger Transport Market Inquiry from June to August 2018. The Commission is calling on market participants, the public and any other interested groups to participate.
Rest of Africa News
Angola: Competition law enacted
Further to our April update (available here), Competition Law 5/18 of 10 May 2018 has been enacted in Angola. The new law will be enforced by, a yet to be established, Competition Regulatory Authority (CRA) and will apply to prohibited practices and mergers.
COMESA: New Member States to be admitted soon
The final round of negotiations relating to Somalia's admission to COMESA has been concluded. These negotiations were held before the 20th COMESA Summit at which Somalia and Tunisia are set to join the regional bloc, having fulfilled the terms and conditions of accession to the COMESA Treaty. Once Somalia and Tunisia join, the number of COMESA member states will increase from 19 to 21.
Kenya: Kenya Airways seeks exemption
Kenya Airways has applied to the Competition Authority of Kenya for an exemption in relation to its joint venture deal with Tanzania’s national carrier Precision Air. In terms of the exemption application, Kenya Airways is seeking regulatory approval to discuss revenue sharing, price setting, route schedules, sales and marketing on the two airline’s joint venture routes in Kenya and Tanzania.
Mauritius: Construction sector under scrunity
The Competition Commission of Mauritius has released its Report of the Construction Market Study for comments from stakeholders. The study has found that various markets within the construction sector are highly concentrated, major players of the sector are vertically integrated across the supply chain, and that prices of construction materials are not subject to regulation.
Zambia: Updates & Developments
In Zambia, there are two developments of interest:
- The Competition and Consumer Protection Commission (CCPC) has released Guidelines for Calculating Merger Fees, 2018 (Guidelines). The filing fee remains at 0.1% of the turnover / assets (which is higher), however the fee is no longer based on the combined turnover / assets of the parties to the transaction. The fee will now be based on 0.1% of the highest turnover / assets of whichever party has the highest value among the figures. A copy of the Guidelines is available
- The CCPC has announced that it has received complaints regarding increases of the price of bottled water in Zambia. The CCPC has launched an investigation into the matter and noted that the increase followed the suspension of the manufacturing, packaging, supply and retail by Zambia Metrological Agency on various sizes of bottled water. The CCPC has stated that all manufacturers and traders that will be found to have increased the prices of this commodity without reasonable justification will be taken to task.
Australia: Commission unsuccessful against Pfizer
The Australian Competition and Consumer Commission (ACCC) has lost an appeal against Pfizer Australia Pty Ltd (Pfizer). The ACCC alleged that Pfizer abused its market power to prevent or deter competition from other suppliers selling generic atorvastatin products to pharmacies, and engaged in exclusive dealing when offering to supply atorvastatin to community pharmacies. The Federal Court upheld an earlier decision which found the ACCC's case was not legally incoherent. A copy of the decision is available
European Union: Updates & developments
In the European Union, there have been two developments of interest:
- Yelp, an online platform which allows users to find local businesses, has filed a complaint with the European Commission (EC) contending that Google prioritises its own services and content over competitor offerings. Google was fined USD 2.9 billion (approximately ZAR 36 billion) last year by the EC in relation to a similar allegation. In addition, the company has formed a coalition with other organisations, such as Trip Advisor, to launch a new website and campaign called Focus on the User - a software tool which allegedly demonstrates that Google's organic algorithm is capable of producing better unbiased results for consumers.
- The EC has reached a decision in its long-running matter involving Gazprom, the dominant gas supplier in a number of European countries. The EC has imposed a set of obligations on Gazprom that address its competition concerns and enables the free flow of gas at competitive prices in Central and Eastern European gas markets. Obligations include the removal of contractual barriers to the free flow of gas and the undertaking that Gazprom cannot leverage its dominance in the gas supply market.
United Kingdom: CMA orders divesture in hospital merger
After investigating a merger between Cygnet Health Care Ltd (Cygnet) and the adult services division of Cambian Group plc, the Competition and Markets Authority (CMA) has ordered Cygnet to sell one of four of its hospitals. The CMA found that the merger could result in a substantial lessening of competition in the East Midlands where the merged entity would be the largest provider of male mental health rehabilitation services.
United States of America: More allegations against Facebook
A company called Six4Three LLC has alleged that Facebook is using a range of methods to collect information it could use for commercial purposes. It is alleged, among other things, that Facebook tracked and monitored the use of competitive apps and used data to give certain Facebook products and features an unfair competitive advantage over other social applications.
Our Recent Work
Bachique and Macquarie Equities merger approved
The Commission has unconditionally approved a merger whereby Bachique 715 (Pty) Ltd (BEE Holdco) intends to acquire 51% of the issues share capital of Macquarie Equities South Africa (Pty) Ltd (MESA) from Macquarie Holdings South Africa (MHSA).
BEE Holdco is a newly established firm formed for purposes of this transaction. BEE Holdco comprises a consortium controlled by Mazi Capital Pty Ltd (Mazi) and AMB Capital Pty Ltd (AMB). Mazi is a black-owned asset management group servicing institutional and individual investors, while AMB provides advisory, investing and proprietary trading services to a wide network of clients. MESA is a JSE registered brokerage firm, and part of the Macquarie Group. Post-merger, MESA will be jointly controlled by BEE Holdco and the Macquarie Group.
The Commission found that the merger is unlikely to substantially lessen or prevent competition and does not raise any public interest concerns.
Robert Wilson, Burton Phillips and
Andriza Liebenberg represented the merger parties.