Announcements
As another eventful year draws to a close, we would like to thank our valued clients for their continued support throughout 2019. We wish you all the best for the festive season and a prosperous new year ahead!
Local News
Agribusiness, food & beverages: Fresh produce agent calls for dismissal of case
Interaction Market Services Holdings (IMS), one of 14 fresh produce market agents who were accused of collusion by the Competition Commission (Commission), applied to the Competition Tribunal (Tribunal) to have the case against it dismissed. The matter stemmed from a complaint that was lodged by the Department of Agriculture, Forestry and Fisheries and a subsequent dawn raid. The Commission alleges that the agents were fixing commission fees charged to farmers and that the practice had been enforced by the Institute for Market Agents of South Africa. IMS is bringing a second exception application to the Tribunal, requesting that the Commission's case against it be dismissed due to the affidavits being "vague" and "broad".
Industrials: Panel beating cartel case to continue despite delays
The Tribunal has rejected a dismissal application by Precision and Sons (Pty) Ltd (Precision). Precision, accused of involvement in a panel beating cartel, brought the application on the grounds that the hearing of the matter had been unreasonably delayed. Proceedings had been postponed on several occasions as the Commission's sole witness, a Zimbabwean asylum seeker living in America, experienced difficulties in traveling to South Africa for the hearing. The Commission contended that the unforeseen delay was not its fault but was due to internal processes of the US Government and that the public interest requires the main matter to be adjudicated.
Healthcare: Workshop on the findings & recommendations of the Healthcare Inquiry
The Commission hosted a public workshop on the findings and recommendations of the Health Market Inquiry (HMI) and developments in the healthcare sector on 18 November 2019. The HMI Director has stated that going forward, the Commission is in the process of developing an advocacy strategy that will be shared once it has been standardised.
Regulatory: Updates & developments
There are three developments of interest pertaining to regulatory issues:
- Ms Tamara Paremoer has been appointed as the new Divisional Manager of Mergers & Acquisitions at the Commission, with effect from 1 November 2019. In addition to holding a number of senior positions at the Commission, Ms Paremoer has worked as an economist in the office of the President's Special Economic Advisor as well as a senior economist at the Centre for Competition, Regulation and Economic Development.
- The Commission was awarded a "clean audit" award for the 2018/19 financial year at the Auditor General's award ceremony. The award indicates that the Commission's financial statements did not contain any material misstatements and that there were no material adverse findings in respect of reporting, performance objectives or non-compliance with legislation.
- During a briefing to the portfolio committee on trade and industry, the Commission indicated that it has reduced its ZAR62 million budget deficit to ZAR32.8 million. The Commission noted that due to a lack of funding, it held back on some investigations and operations during the 2018/19 financial year.
Retail: Updates & developments
In the retail sector, there are two developments of interest:
- The Commission published its final report into the Grocery Retail Market Inquiry (Inquiry), which was first initiated in October 2015. The Inquiry identified three principal areas of focus: long-term exclusive lease agreements and buyer power; competitiveness of small and independent retailers; and the regulatory landscape. Several far-reaching recommendations have been made in relation to these areas. A copy of the full report is available
here.
- Shoprite Checkers (Pty) Ltd has lodged an application requesting that the Commission's case against it be dismissed. The matter relates to the Commission’s second abuse of dominance case against Computicket (Pty) Ltd, a subsidiary of Shoprite Checkers, which has been referred to the Tribunal for hearing. The Commission is seeking to hold Shoprite Checkers jointly and severally liable for Computicket’s alleged contravention in relation to the second case. Earlier this year, Computicket was fined for abuse of dominance as part of the first case. The second case relates to similar abuse of dominance allegations pertaining to exclusive agreements but applies to a different time period.
Telecommunications, media and technology: Drone company settlement agreement
The Tribunal has confirmed a settlement agreement between the Commission and iFlight Technology Co Ltd (iFlight). iFlight has admitted that it engaged in the practice of minimum resale price maintenance in relation to the sale of drones. In terms of the settlement agreement, iFlight has agreed to pay an administrative penalty of ZAR139,400.00. This matter originated from a complaint to the Commission and a subsequent investigation that found iFlight had required a local distributor of drones, Smashtronics, to sell its drone products at a specified minimum retail price in May 2017.
Transport: Updates & developments: Interim application against PRASA dismissed
The Tribunal has dismissed an interim relief application by Africa People Mover (APM) against the Passenger Rail Agency of South Africa (PRASA). APM, a privately owned commercial bus company, sought to retain access to Johannesburg Park Station and argued that it couldn't afford to pay the amounts charged by PRASA for accessing the Park Station terminal. During the hearing, evidence was led showing that APM owes PRASA a significant amount of money, after it defaulted on its payments for the use of the stations facilities.
Rest of Africa News
Botswana: Competition authority and energy regulator enter into MoU
The Botswana Competition Authority and Botswana Energy Regulator have entered into a Memorandum of Understanding (MoU) with the objective of enhancing regulatory cooperation within the energy sector. In terms of the MoU, among other things, the regulators will begin sharing information and conducting joint investigations.
COMESA: Investigation launched involving Shoprite
The COMESA Competition Commission (CCC) has announced that it has commenced an investigation into allegations of anti-competitive conduct by Shoprite Holdings Ltd (Shoprite) and GS1 Kenya Ltd (GS1). The Commission received a complaint alleging that Shoprite and GS1 entered into an agreement in terms of which suppliers who wish to merchandise their products in Shoprite supermarkets in Uganda must obtain their barcodes from GS1. It is alleged that since February 2019, Shoprite has refused to receive products which do not have GS1 barcodes and has further directed its suppliers to obtain barcodes from GS1.
Kenya: Updates & developments
In Kenya, there are two developments of interest:
- The Competition Authority of Kenya (CAK) has expressed concerns regarding the Kenya Revenue Authority's (KRA) plans to fix the minimum price of alcohol. The KRA has ordered distillers not to sell alcoholic spirits in 250 millilitre containers at below KES150, which has resulted in manufacturers increasing prices. The CAK has sought further information from the KRA regarding its order, as it could breach the sections of the competition legislation relating to restrictive trade practices.
- The CAK has conditionally approved the acquisition of 90% of the issued share capital of Chemi & Cotex Kenya Ltd (CCKL) by Unilever Overseas Holdings B.V (Unilever B.V). CCKL is involved in the distribution of cosmetics, beauty, hair, oral care products and food products. The approval was granted on condition that Unilever B.V continues providing the target’s products (Whitedent, Bodyline, Baby Soft, Skin Glow, Siri, U & Me, Lovely, Bannister and Tressa) in the market for at least three years upon conclusion of the transaction.
Namibia: Updates & developments
In Namibia, there are two developments of interest:
- The Namibian Competition Commission (NaCC) has refused an exemption application by the National Petroleum Corporation of Namibia (Namcor). In terms of the exemption application, Namcor sought permission to import 50% of Namibia's fuel needs. The NaCC found that the 50% import mandate, proposed by the Ministry of Mines, would lead to a lessening of competition in the fuel market and create barriers to entry.
- Isabella Angihinka Tjatjara has been appointed as the Commissioner of the NaCC. Ms Tjatjara served on the Transportation Commission of Namibia for five years and was in the employ of the Office of the Judiciary as a Principle Magistrate in the Ondangwa Magistrate Court.
Nigeria: New merger thresholds and guidelines for foreign-to-foreign mergers published
The Federal Competition and Consumer Protection Commission's (FCCPC) newly published merger thresholds are now in effect. In terms of the thresholds, a merger shall be notifiable if: the combined turnover of the merger parties in, into or from Nigeria equals to or exceeds One Billion Naira; or the turnover of the target undertaking in, into or from Nigeria equals to or exceeds Five Hundred Million Naira. The FCCPC has also issued
Guidelines On Simplified Process For Foreign-To-Foreign Mergers With Nigerian Component. The Guidelines sets out the information that is required for a foreign-to-foreign merger notification and the applicable filing fees. The Guidelines also provide for an expedited procedure for foreign-to-foreign mergers, in terms of which, the FCCPC shall issue its decision within 15 business days.
Zambia: CCPC warns associations against collusion
The Competition and Consumer Protection Commission (CCPC) has announced that it is concerned that conduct between the Poultry Association of Zambia (PAZ) and the Millers Association of Zambia (MAZ) may amount to collusion. The conduct relates to the two associations agreeing, and subsequently announcing the prices of day old chicks and mealie-meal. The CCPC Director of Restrictive Business Practices has indicated that both PAZ and MAZ currently have cases before the Competition and Consumer Protection Tribunal (CCPT) relating to similar conduct.
International News
European Union: Canon launches appeal against "gun-jumping" decision
The European Commission (EC) has published the full text of its decision to fine Canon Inc. EUR28 million (approximately ZAR453 million) for breaching the EU merger control rules regarding standstill and notification obligations. The fine follows the EC's finding that Canon's partial implementation of the transaction to acquire Toshiba Medical Systems Corporation’s (TMSC) medical equipment business, without EC approval, amounted to 'gun-jumping'. The decision offers insights on transaction structures involving two-step deals and pre-payment of consideration. Canon has subsequently lodged an appeal against the EC's decision.
Greece: Competition authority raids banks
Greece's competition authority raided four of the country's major banks, pursuant to an investigation into possible cartel conduct relating to fees charged for transactions. The authority is investigating fees on credit cards and ATMs, among other information, in an effort to determine whether the banks had collaborated on pricing.
Philippines: Competition authority orders Grab to refund customers
The Philippine Competition Commission (PCC) has ordered Grab Philippines to refund its customers P5.05 million (approximately ZAR1.5 million). According to the PCC, Grab's increase of fares, prior to its merger with Uber, exceeded the existing set of voluntary pricing commitments made to the PCC. In the event that Grab does not comply with the PCC's order, the company will have to pay P2 million (approximately ZAR578,766.00) to the PCC as well as refund customers within 30 days.
United States of America: Updates & developments
In the United States of America (USA), there are three developments of interest:
- The Department of Justice (DOJ) has established a Procurement Collusion Strike Force (PCSF). The PCSF's purpose will be to deter, detect, investigate and prosecute antitrust crimes, such as bid-rigging conspiracies and related fraudulent schemes, which undermine competition in government procurement, grant and program funding. The PCSF will consist of, among others, prosecutors from the Antitrust Division, prosecutors from 13 U.S. Attorneys’ Offices and investigators from the FBI.
- Apple Inc and Intel Corp have filed an antitrust lawsuit against Fortress Investment Group. The tech firms allege that SoftBank Group Corp collected and controlled technology patents for the primary purpose of instituting legal action against tech firms.
- The Federal Trade Commission (FTC) has approved the merger between pharmaceutical and biologic manufacturers, Bristol-Myers Squibb Company (BMS) and Celgene Corporation (Celgene). The merger was approved on condition that Celgene divest Otezla, the most popular oral treatment in the United States for moderate-to-severe psoriasis. The proposed divestiture is the largest that the FTC or the DOJ has ever required in a merger enforcement matter.
Our Recent Work
Carlyle SMD Investment Mauritius / SMD Technologies
The Tribunal unconditionally approved Carlyle SMD Investments Mauritius Holding Company's (Carlyle SMD) acquisition of SMD Technologies (Pty) Ltd (SMD).
Shawn van der Meulen and
Makati Seekane represented the merger parties.
The Carlyle Group is a global private equity, alternative asset management and financial services corporation. Of relevance to the proposed transaction are the activities of Amrod, which is involved in the wholesale supply of corporate-branded promotional products. SMD manufactures and distributes high quality personal and commercial electronics, audio products, bags and luggage products.
The Tribunal found that the merger is unlikely to substantially lessen or prevent competition and does not raise any public interest concerns.
Corruseal Corrugate / the Agricultural Packaging Business of Neopak
The Commission unconditionally approved Corruseal Corrugate Gauteng (Pty) Ltd's (Corruseal Gauteng) acquisition of the Agricultural Packaging Business of Neopak (Pty) Ltd (the Target Business).
Shawn van der Meulen and
Makati Seekane represented Neopak.
Corruseal Gauteng is a vertically integrated company and has operations upstream as a producer of input paper materials and corrugated board. Corruseal Gauteng also has operations downstream as a manufacturer and distributor of corrugated packaging products. Neopak is also a vertically integrated company and has one paper mill and two manufacturing plants. The agricultural business of Neopak does not include a paper mill or manufacturing plant.
The Tribunal found that the merger is unlikely to substantially lessen or prevent competition and does not raise any public interest concerns.
Echotel Tanzania / Africa Online Tanzania
The Tanzanian Fair Competition Commission (FCC) unconditionally approved Echotel Tanzania Ltd's (Echotel) acquisition of assets of Africa Online Tanzania Ltd (Africa Online).
Robert Wilson and
Andriza Liebenberg represented the merger parties.
Echotel, at a group level, provides ICT services to consumers and is predominantly focused in South Africa. Africa Online provides fixed line (fibre) services as well as wireless internet connectivity services.
The FCC found that the merger is unlikely to substantially lessen or prevent competition and does not raise any public interest concerns.
Momentum / Alexandra Forbes insurance merger
The Tribunal unconditionally approved Momentum Metropolitan Investments (Pty) Ltd's (MMI) acquisition of the short term insurance business of Alexander Forbes Ltd.
Shawn van der Meulen and
Andriza Liebenberg represented the merger parties.
The MMI Group (MMS and all related firms) is a financial services company. The target firms, ultimately owned by the Alexander Forbes Group Holdings Ltd, provide personal and commercial lines of short-term insurance.
The Tribunal found that the merger is unlikely to substantially lessen or prevent competition and does not raise any public interest concerns.
RTT / AVL Healthcare
The Commission has unconditionally approved RTT Group (Pty) Ltd's acquisition of the business of AVL Healthcare (Pty) Ltd (AVL) as a going concern.
Shawn van der Meulen,
Sarah Manley and
Makati Seekane represented the merger parties.
RTT provides transportation, warehousing, distribution and other value-added services on a fully integrated basis for various customers. AVL provides logistics services to Adcock Ingram Healthcare (Pty) Ltd and Adcock Ingram Critical Care (Pty) Ltd. AVL also provides limited pharmaceuticals logistic services on behalf of other third-party customers.
The Commission found that the merger is unlikely to substantially lessen or prevent competition and does not raise any public interest concerns.
