Announcements
As another eventful year draws to a close, we would like to thank our valued clients for their continued support throughout 2018. We wish you all the best for the festive season and a prosperous new year ahead!
Update On The Competition Amendment Bill
On 20 November 2018, the National Council of Provinces' Economic and Business Development Committee adopted the "B" Version of the Competition Amendment Bill 2018 (the Bill). The Bill was adopted with no amendments (a summary of the proposed amendments in the "B" version of the Bill can be accessed here). The final step of the parliamentary process is for the President of the Republic of South Africa to assent to the Bill. Once the Bill is signed by the President, it becomes an Act of Parliament. We anticipate that the Bill will be passed into law late this year or early next year.
Local News
Financial services: Discovery Bank transaction approved
The Tribunal has unconditionally approved a merger whereby NewDiscovery Ltd (now trading as Discovery Bank) will purchase the "Discovery" branded cards business of First National Bank (FNB) (the card transfer business). Prior to the proposed merger, FNB administered and managed Discovery branded credit and fuel cards, however NewDiscovery has since acquired a banking licence, which necessitated a buy-back of the card transfer business from FNB.
Healthcare: National Health Network granted conditional exemption
The Commission has granted the National Health Network a five year conditional exemption (from 1 November 2018 to 31 October 2023). The exemption covers collective bargaining, global fee negotiations and centralised procurement.
Industrials: Updates & developments
In the industrials sector, there have been two developments of interest:
- The Tribunal has confirmed a settlement agreement between the Commission and Scott Bader (Pty) Ltd (Scott Bader). Scott Bader admitted that it agreed with its competitor, NCS Resin (Pty) Ltd, not to target each other's customers and not to supply customers who had overdue accounts with either company. Scott Bader successfully applied for leniency and consequently an administrative penalty was not imposed.
- The Tribunal has confirmed settlement agreements between the Commission, Landee Cleaning Services CC and Women on Board CC. The companies admitted that they colluded on a tender issued by the City of Cape Town for mowing public spaces, road reserves and cemeteries, and have paid administrative penalties of ZAR 4,476.60 and ZAR 19,019.48 respectively.
Mining: Sibanye Stillwater/Lonmin merger approved
The Tribunal has conditionally approved the merger between Sibanye Gold t/a Sibanye Stillwater (Sibanye Stillwater) and Lonmin Plc. The merger was approved subject to a number of conditions including a moratorium on all retrenchments for a period of six months from the implementation date. The Tribunal was unable to ascertain the exact number of merger specific retrenchments and consequently ruled that the moratorium be granted to allow Sibanye Stillwater the opportunity to conduct a comprehensive assessment of the operational requirements of the target firm, and consult all relevant stakeholders.
Telecoms, media & technology: Predatory pricing case continues
As part of the on-going predatory pricing case involving Media24, the Constitutional Court has heard an application for leave to appeal by the Commission against a judgment of the Competition Appeal Court (CAC). The Constitutional Court has been asked to determine the appropriate cost threshold to be used when determining whether low prices constitute predatory pricing. Media24 contends that the CAC was correct in its approach to a pricing threshold, as the test should be focused on conduct and not the intention of the parties.
Transport: SA Airlink and Safair abandon merger
Following the Commission's prohibition of a merger between SA Airlink (Pty) Ltd and Safair Operations (Pty) Ltd, the merger parties have decided to abandon the merger application. In February 2018, the Commission found that the proposed merger is likely to result in a substantial prevention or lessening of competition in the market for scheduled passenger services. The merger parties subsequently brought an application to the Tribunal for reconsideration, which was scheduled to be heard at the end of November 2018.
Regulatory: Updates and developments
There have been three developments of interest pertaining to the Commission:
- On 12 November 2018, the Minister of Economic Development (the Minister), published a draft amendment to Regulation 15 of the Competition Commission Rules for public comment. The amendment proposes that Rule 15(1) (in terms of which any person, upon payment of the prescribed fee, may inspect or copy any Commission record), should not apply to a record in certain instances. The amendment proposed by the Minister, seeks to bring Rule 15 in line with section 7 of the Promotion of Access to Information Act, 2000. A copy of the Gazette can be found
here.
- The Commission has concluded a Memorandum of Understanding (MOU) with the Federation of Governing Bodies of SA (FEDSAS). The purpose of the MOU is to facilitate co-operation between the Commission and FEDSAS, to enable FEDSAS to assist the Commission with the investigation of complaints and advocate for schools to comply with competition law principles. A copy of the MOU can be found
here.
- The Commission held its annual conference in November 2018. Key topics of discussion included: the practical implementation of the Bill; the need for capacity and resources at the competition institutions; the challenge of prosecuting abuse of dominance cases; and regional co-operation across Africa. The first panel discussed, "Investment, Concentration and Legislative amendments" and the second panel discussed the topic "Towards regional integration: developments and challenges". The keynote address was delivered by the Minister, and a policy lecture was delivered by Judge David Unterhalter.
Rest Of Africa News
COMESA: CCC approves bank takeover
The COMESA Competition Commission (CCC) has approved a merger between Chase Bank (Kenya) Ltd (CBKL) and SBM Bank (Kenya) Ltd (SBM Kenya). The transaction relates to the acquisition of the assets of CBKL by SBM Kenya. The CCC determined that the merger was not likely to substantially lessen competition in the region and noted that the merger was important in aiding CBKL, which would exit the market in the foreseeable future absent the merger. A copy of the decision is
here.
Egypt: Regional training centre for competition launched
As part of efforts to improve the knowledge base of competition agencies in the Middle East and North Africa region, UNCTAD and the Egyptian Competition Authority have opened a regional Training Centre for Competition in Cairo. UNCTAD’s head of competition and consumer policies has said that the new centre will serve as a platform for regional integration and regular exchange between competitions authorities in seven countries, including Algeria, Egypt, Jordan, Lebanon, Morocco, Tunisia and the State of Palestine.
Kenya: Company fined for prior implementation
The Competition Authority of Kenya has imposed a financial penalty of KES 1.5 million (approximately ZAR 202,000) on Interconsumer Products Ltd (Interconsumer) for acquiring 100% of the assets of Belsize Industries Ltd (Belsize) and implementing the transaction without regulatory approval. Interconsumer manufactures sanitary products and Belsize is a manufacturer of tissue paper.
Namibia: Dawn raid set aside
The dawn raid on Puma Energy (Namibia) Pty Ltd (Puma) by the Namibian Competition Commission (NaCC) has been set aside. The raid, which took place in September 2016, relates to a NaCC investigation of Puma's alleged abuse of dominance and price fixing. The High Court set aside the warrant and ordered that all documents and electronic devices seized be returned to Puma. A copy of the judgment is available
here.
Tanzania: New FCC chairman appointed
The President of the United Republic of Tanzania has appointed Professor Humbrey P.B Moshi, a retired lecturer at the University of Dar es Salaam, as Chairman of the Fair Competition Commission. Professor Moshi's appointment became effective on 30 October 2018.
Zimbabwe: CTC launches investigation in stock feeds market
The Competition and Tariff Commission (CTC) has commenced an investigation into an alleged restrictive practice involving the distribution of stock feeds. It is alleged that distributors of day old chicks are making the sale of chicks conditional upon one buying a particular number of stock feeds bags. The CTC has called on all interested stakeholders to submit their representations on the matter by the end of November 2018.
International News
European Union: Airline ticket distribution services scrutinised
The European Commission has opened an investigation to assess whether agreements between certain booking system providers, and airlines and travel agents, may restrict competition. A key aspect of the investigation is whether certain terms in these agreements restricts the ability of airlines and travel agents to use alternative suppliers of ticket distribution services.
India: Updates and developments
In India, there are two developments of interest:
- As part of an investigation into alleged price-fixing of air ticket prices, the Competition Commission of India (CCI) is examining the use of algorithms by airlines to determine fares. The investigation commenced after instances of spikes in air ticket prices during festivals and natural calamities.
- The CCI has ruled that Amazon and its rival in India, Flipkart, are not abusing their dominant market positions. The CCI rejected an allegation by the All India Online Vendors Association that Amazon and Flipkart were using their dominant positions to favour select sellers. The CCI stated in its ruling that it does not appear that any one player in the market is commanding any dominant position at this stage of evolution of market.
Switzerland: Financial companies raided
The Swiss competition authority has raided the offices of several financial companies. The search and seizure follows an investigation into a suspected boycott of mobile payment solutions. The competition authority has said that there is a suspicion that the companies agreed not to make their credit cards available for use with Apple Pay and Samsung Pay, in order to favour the Swiss solution, TWINT.
United Kingdom: Updates and developments
In the United Kingdom, there are three developments of interest:
- The Competition and Markets Authority (CMA) has decided to close its investigation into anti-competitive agreements in the pharmaceutical sector. In its summary of the closure decision (available here), it was noted that the CMA considered that, on balance, continuing with the remaining aspects of its investigation would not be the best use of its resources.
- The CMA has launched an investigation into suspected anti-competitive arrangements in the financial services sector. The CMA has not reached a view as to whether there is sufficient evidence of an infringement of competition law for it to issue a statement of objections to any of the parties under investigation.
- The CMA has provisionally found that "most favoured nation” clauses in ComparetheMarket's contracts with home insurers could be causing customers to miss out on better home insurance deals. The CMA noted that the clauses prevent rival comparison sites and other channels from trying to win home insurance customers by offering cheaper prices.
Our Recent Work
RTT and Orion Group merger approved
The Tribunal has unconditionally approved a merger whereby RTT Group (Pty) Ltd (RTT) intends to acquire Making Memories (Pty) Ltd (Orion), Rigel Healthcare Logistics (Pty) Ltd (Rigel) and Prosperity Property Project (Pty) Ltd (Prosperity) (collectively, the Orion Group).
Shawn van der Meulen, Cara du Plessis and Makati Seekane represented the merger parties.
RTT and its subsidiaries provide IT-driven solutions, transportation, warehousing and distribution, and other value-added services. The Orion Group is a logistics and distribution provider servicing the pharmaceutical and health care industries.
The Tribunal found that the merger is unlikely to substantially lessen or prevent competition and does not raise any public interest concerns.
Somerset Mall and Somerset Value Mart merger approved
The Commission has unconditionally approved a merger in terms of which PHG Somerset Value Mall (Pty) Ltd (PHG) will acquire a 30% undivided share of the property and rental enterprise known as the Somerset West Value Mart (SWVM).
Burton Phillips and Irvin Lethetsa acted for the merger parties.
PHG is jointly controlled by PHG Investments (Pty) Ltd and PHG Developments (Pty) Ltd (the PHG Group). The PHG Group is a property development and management company with its head office situated in Bloemfontein. SWVM is a shopping centre situated in Somerset West, Western Cape. Its operations include the letting of commercial and retail space to various retailers, convenience, clothing, lifestyle and other outlets.
The Commission found that the proposed transaction does not raise any competition concerns as there is no geographical overlap in the activities of the merger parties.
TYME Digital Bank merger approved
The Tribunal has unconditionally approved a merger whereby K2018262882 (South Africa) (Pty) Ltd (NewCo) intends to acquire Commonwealth Bank of South Africa (Holding Company) Ltd (CBSA Holdco).
Robert Wilson,
Werner Rysbergen and
Makati Seekane represented the merger parties.
NewCo is a South African investment group that controls a number of firms across a wide range of industries that are active in different markets of the financial services sector. CBSA Holdco does not have any business activities. CBSA and TYME Technical Solutions (Pty) Ltd (TTS) jointly operate as a digital bank under the trading name TYME Digital Bank (TYME Bank). TYME Bank currently provides a limited range of banking services such as money transfer, TYME Coach and Merchant Advance.
The Tribunal found that the merger is unlikely to substantially lessen or prevent competition and does not raise any public interest concerns.
