Catch Up With Competition Law Now - September 2019

Announcement

Competition & Regulatory Team of the Year at the 2019 African Legal Awards

We are delighted to announce that we won the Competition and Regulatory Team of the Year award at the 2019 African Legal Awards. Hosted by Legal Week and the Corporate Counsel Association of South Africa, the African Legal Awards recognise excellence and innovation in the legal profession on the continent. The winners were decided by an independent adjudicating panel made up of general counsel and other senior members of the legal community. Thank you to our clients for your continued support.

 

Local News

Agribusiness, food & beverages: Updates & developments

In the agribusiness, food & beverages sector, there are three developments of interest:

  • The Competition Tribunal (Tribunal) conditionally approved the transaction through which South African Breweries (Pty) Ltd (SAB) intends to conclude licensing agreements with Diageo South Africa (Pty) Ltd (Diageo SA). In terms of these agreements, SAB will be appointed as the exclusive licensee for the manufacture, distribution, marketing and sale of the Smirnoff and Guinness branded products in South Africa (and other territories). The transaction was approved subject to the condition that SAB and Diageo adhere to information barrier provisions. In addition, SAB must also: provide refrigerator space to competitors, not induce customers to buy Smirnoff or Guinness brands on condition that they also purchase ABI products, and commence local draught production of the Guinness Brands.

  • The Tribunal conditionally approved the acquisition by Milco SA (Pty) Ltd (Milco) of Clover Industries Ltd (Clover). The merger was approved subject to conditions pertaining to employment, local procurement and information sharing. Employment conditions included, a three-year moratorium on retrenchments and an undertaking that the merged entity contribute to the reasonable relocation and training costs of those affected employees applying for new/vacant positions. The merged entity also agreed to continue to procure its required volumes of bulk juice concentrate from local suppliers.

  • The Tribunal heard closing arguments in the Unilever South Africa (Pty) Ltd (Unilever SA) matter. The Commission alleges that Unilever and Sime Darby Hudson Knight (Sime Darby) entered into an agreement or arrangement to divide markets by allocating specific types of goods and customers. The Tribunal's judgment will be released in due course.

Engineering & construction: Power Construction settlement agreement approved

The Tribunal approved a settlement agreement between the Commission and Power West Cape (Pty) Ltd (Power West Cape). The construction firm has admitted to a once-off bid-rigging contravention involving a tender for the South African National Roads Agency SOC Ltd. In terms of the agreement, Power West Cape agreed to pay an administrative penalty of approximately ZAR3 million.

Healthcare: Final Health Market Inquiry Report released

The Commission published its Final Health Market Inquiry Findings and Recommendations Report. The Report sets out the Health Market Inquiry's (HMI) findings in relation to facilities, practitioners and funders, as well as a package of recommendations. The HMI recommends that, among other things, the Commission review their approach to creeping mergers to address high levels of concentration, a dedicated healthcare regulatory authority referred to as the Supply Side Regulator for Healthcare be established, and that a single, comprehensive, standardised base benefit option is offered by all medical schemes.

Industrials: Tribunal approves settlement agreement in long-running wire case

The Tribunal approved separate settlement agreements between the Commission and two wire products manufacturers Wireforce Steelbar (Pty) Ltd and Hendok (Pty) Ltd. Both companies admitted to being part of a cartel that fixed the prices of nails, wire and wire related products. The companies have agreed to pay penalties of ZAR4,319,951.22 and ZAR5,001,364.34 respectively over a five year period.

Retail: Updates & developments

In the retail sector, there are three developments of interest:

  • The Tribunal has conditionally approved CPG In Store (Pty) Ltd’s (CPG) acquisition of the merchandising business of the Consumer Packaged Goods Division of Imperial Logistics South Africa Group (Pty) Ltd. In terms of the conditions imposed, CPG must limit merger related retrenchments to a confidential number and Imperial Logistics must allocate a specified amount of money to a re-skilling fund for affected employees and/or to contribute to the future educational needs of their children.

  • The terms of reference for the Grocery Retail Sector Market Inquiry have been amended. In terms of the amendment, the inquiry will be completed by 31 October 2019.

  • The Commission conditionally approved Natura Cosmeticos S.A’s acquisition of Avon Products, Inc (Avon). Both companies are involved in the manufacture and distribution of various beauty and personal care cosmetics. In order to address the Commission's concern that certain pre and post-merger retrenchments effected at Avon in South Africa are likely to be merger specific, the Commission approved the merger subject to conditions requiring the reinstatement of all the affected employees and imposing a moratorium on retrenchments for two years.

Transport: Updates & developments

In the transport sector, there are two developments of interest:

  • The Tribunal conditionally approved the small merger whereby Takata Corporation (Takata) was acquired by Joyson KSS Holdings No.2 SARL and Joyson KSS Auto Safety SA, subsidiaries of Ningbo JoysonTakarta is amidst a global restructure. The exit of Takata from South Africa would lead to the closure of Takata SA and result in job losses. The Tribunal approved the merger subject to the condition that the merger parties not retrench any “protected employees” for a period of two years.

  • The terms of reference for the Land Based Public Passenger Transport Market Inquiry have been amended. In terms of the amendment, the inquiry will now be completed by 31 March 2020.

Telecommunications, media and technology: ICASA & Commission sign MOA

ICASA and the Commission signed a MOA to address areas of co-jurisdiction and coordinate decision making and consultations in respect of market definitions for electronic communications, broadcasting and postal services as well as determining the existence of effective competition in these markets.

 

Rest of Africa News

COMESA: Regional regulator to launch prohibited practice investigations

It has been reported that the COMESA Competition Commission (CCC) will be launching investigations into various sectors including pharmaceuticals, construction, banking, telecommunications, dairy, beverages and water. The CCC’s manager in-charge of enforcement and exemptions, has said that the authority is currently screening various sectors which have been prioritised to identify anti-competitive practices such as price-fixing and collusive tendering.

Botswana: Updates & developments

In Botswana, there are two developments of interest:

  • The Botswana Competition Authority (BCA) has requested that measures be implemented in the machining/line boring market to remove barriers to entry. The BCA initiated its intervention in the market after receiving information that Komatsu Botswana (Pty) Ltd (Komatsu) and Barloworld Equipment Botswana (Pty) Ltd (Barloworld Equipment) were allegedly abusing their dominance, by refusing to register or list suppliers on their vendor list database. Barloworld Equipment has agreed to improve its recruitment and communication strategy to allow for more potential suppliers and Komatsu Botswana has undertaken to amend its supplier requirements.

  • The Chairperson of the BCA, Dr Onkemetse Tshosa, has left the BCA to join the High Court of Lesotho as a Judge. Dr Tshosa began his term as Chairperson of the BCA in September 2015. The new Acting Chairperson is Ms. Thembisile Phuthego.

Kenya: Proposed acquisition of National Bank of Kenya

The Competition Authority of Kenya (CAK) has conditionally approved acquisition of National Bank of Kenya Ltd by KCB group. The merger was approved subject to the condition that 90% of the merged entity's employees will be retained for a period of 18 months from the date of the closing of the merger.

Namibia: Preliminary abuse of dominance finding against Computicket

Following an investigation, the Namibian Competition Commission (NaCC) confirmed its preliminary findings that Computicket Namibia has abused its dominant position. The NaCC found that Computicket has been imposing exclusive agreements on its clients and engaging in bundling, price discrimination and tying. The NaCC may call for an oral conference before a final determination will be made.

Uganda: COMESA calls for competition law to be finalised

The CCC Director and Chief Executive Office, George Lipimile, has recently remarked that Uganda is the only country in the East African Community without a competition authority. Mr Lipimile said that the CCC is holding over USD1 million in merger notification fees that are due to Uganda. Mr Lipimile also noted that competition authorities are self-financing institutions with the ability to contribute to the national budget.

Zambia: Commission launches amnesty programme

The Competition and Consumer Protection Commission (CCPC) has, from 1 September 2019, launched a six month amnesty program to raise awareness and compliance with the Competition and Consumer Protection. The programme provides an opportunity for persons or enterprises who are engaged in cartel and restrictive business practices to apply for amnesty in exchange for a waiver of fines as well as immunity from possible prosecution.

 

International News

Australia: Revised immunity policy & whistle-blowing tool

The Australian Competition and Consumer Commission (ACCC) has updated its cartel immunity and cooperation policy. The policy will continue to offer immunity to the first party that reports a cartel, however, in terms of the revised policy, applicants seeking immunity will now be asked to enter into a cooperation agreement early in the immunity process. The ACCC has also launched an anonymous whistle-blowers online portal. The portal encrypts the whistle-blower's information and removes the person’s IP address so their identity is anonymous to the ACCC.

BRICS: Draft Digital Era Competition Law Report released

BRICS competition authorities have published a draft academic report titled, "Digital Era Competition: A BRICS view" to explore the broader challenges the digital economy poses for competition law enforcement and to reflect on a new theoretical framework and policy recommendations for the BRICS competition authorities to consider in their enforcement and policy work.

European Union: Updates & developments

In the European Union (EU), there are two developments of interest:

  • Margrethe Vestager has been appointed as EU Competition Commissioner for a second term. It has been reported that Ms Vestager has also been appointed as the executive vice president for digitisation.

  • The European Commission (EC) has imposed a fine of EUR31.6 million (approximately ZAR524 million) on Coroos and Groupe CECAB for participating in a cartel. The EC has found that Bonduelle, Coroos and Groupe CECAB participated in a cartel for the supply of certain types of canned vegetables to retailers and/or food service companies for more than 13 years. The three companies admitted their involvement in the cartel and agreed to settle the case. Bonduelle was not fined as it revealed the existence of the cartel to the EC.

United States of America: Updates & developments

In the United States of America (US), there are two developments of interest:

  • It has been reported that the US Department of Justice will open an investigation into Facebook. The company is currently being investigated by the Federal Trade Commission, a group of state attorneys and the House of Representatives Judiciary Committee.

  • Starkist Co. (StarKist) has been sentenced to pay a criminal fine of USD100 million (approximately ZAR1.5 billion), the statutory maximum, for its role in fixing the prices for canned tuna sold in the US. StarKist was also sentenced to a 13-month term of probation.
 

Our Recent Work

Bioko / Vanchem

The Commission unconditionally approved Bioko 760 (Pty) Ltd's (Bioko) proposed acquisition of the business and certain assets of Vanchem Vanadium Products (Pty) Ltd (Vanchem), South Africa Japan Vanadium (Pty) Ltd (SAJV) and the entire issued share capital of Ivanti Resources (Pty) Ltd (Ivanti).

Shawn van der Meulen and Busisiwe Masango acted for the merger parties.

Bioko is a wholly owned subsidiary of Bushveld Resources Ltd, which in turn is owned by Bushveld Minerals Ltd (Bushveld Minerals) (the Acquiring Group). The Acquiring Group is a vanadium producer, energy developer and component manufacturer. Vanchem owns and operates a primary vanadium processing facility with a beneficiation plant.

The Commission found that the merger is unlikely to substantially lessen or prevent competition or raise any public interest concerns.

Navitas / Main Street 1606

The Tribunal conditionally approved Navitas Holdings (Pty) Ltd's (Navitas) proposed acquisition of Main Street 1606 (Pty) Ltd (Main Street 1606), in a transaction that will take multiple steps.

Shawn van der Meulen and Makati Seekane acted for the merger parties.

Navitas is an energy development and investment company which controls 12 firms in South Africa including Kabi Solar (Pty) Ltd (Kabi Solar). Main Street 1606, established by Stanlib Infrastructure Private Equity Fund 1, is a special purpose vehicle established to purchase a minority interest in three renewable energy companies that have contracts with Eskom under the Program.

The Tribunal found that the merger is unlikely to substantially lessen or prevent competition or raise any public interest concerns.

Groupe Bruxelles Lambert / Webhelp

The Commission has unconditionally approved Groupe Bruxelles Lambert's (GBL) proposed acquisition of Webhelp.

Robert Wilson and Cara du Plessis acted for the merger parties.

GBL is an investment holding company that operates in South Africa through its subsidiary, Imerys S.A. (Imerys). Imerys is a multinational company which specialises in the production and processing of industrial minerals. Webhelp is a French-headquartered information technology services provider and is active in the provision of business process outsourcing services.

The Commission found that the merger is unlikely to substantially lessen or prevent competition or raise any public interest concerns.

Phuthuma Nathi Investments merger

The Commission has unconditionally approved Phuthuma Nathi Investments (RF) Ltd's (PN1) acquisition of Phuthuma Nathi Investments 2 (RF) Limited (PN2).

Daryl Dingley and Cara du Plessis acted for the merger parties.

The proposed transaction involves an internal restructuring of MultiChoice Group Ltd's Broad-Based Black Economic Empowerment (BEE) shareholding structure. PN1 and PN2 currently collectively hold 25% of the issued shares in MultiChoice South Africa Holdings (Pty) Ltd. PN1 and PN2 are public companies listed on the Equity Express Securities Exchange, a securities exchange specifically created to look after the needs of BEE schemes. Both companies hold MCSA shares on behalf of its shareholders and to receive and distribute dividends to its shareholders.

The Commission found that the merger is unlikely to substantially lessen or prevent competition or raise any public interest concerns.