Competition amendment bill seminar: Thank you and Overview
On 31 January 2018, the Competition Practice held a seminar where a panel of esteemed competition law experts comprehensively unpacked the significant amendments proposed by the Competition Amendment Bill, 2017 (the Bill). The publication of the Bill marks an era of change for competition law in South Africa and is one of the most significant developments in this area of law since the Competition Act, 89 of 1998 (Act) came into force. The Bill evokes many potentially complex issues and the purpose of the seminar was to discuss the key proposed amendments, and the consequences thereof, for companies doing business in South Africa.
David Lewis (Executive Director of Corruption Watch and Former Chairperson of the Competition Tribunal) shared his views and chaired the panel discussion. Our panel comprised of: James Hodge (Director and Managing Partner of Genesis Analytics); Advocate Michelle Le Roux (Chairperson of the Ministerial Advisory Panel regarding amendments to the Competition Act); Advocate Phumlani Ngcongo; and Advocate Jerome Wilson SC. Our panelists all participated in an informative and engaging panel discussion and provided attendees with valuable advice and practical insights.
Overall, it was noted that the amendments propose a sweeping change in approach towards competition law. Members of the panel speculated that much of the proposed amendments, with some resemblance to their current form, are likely to be become law, and that businesses are now in an era where there needs to be a greater focus on proactive compliance.
Some of the members of the panel expressed concern about the amplification of ministerial powers proposed by the Bill, and it was also noted that a number of the amendments, in their current form, may be susceptible to constitutional challenges. Although it is anticipated that the Bill may be passed into law by the third quarter of 2018, there may be room for further public consultation as the Bill makes its way to parliament. We will keep you updated on all further developments in this regard.
Thank you to all the speakers and guests who attended, we appreciate your on-going support.
Agribusiness, Food & Beverage: Updates and Developments
Further to our October update (available here), the Competition Tribunal (Tribunal) has overturned the decisions of the Competition Commission (Commission) in relation to two separate mergers. The mergers involve the same consortium of companies, all of which are active in the agricultural sector. The Commission had recommended that the Tribunal prohibit the proposed mergers due to competition concerns relating to coordination. Notwithstanding these concerns, the Tribunal approved the mergers subject to conditions regulating cross directorship between the firms and the prevention of potential job losses.
Industrials: Updates and Developments
In the industrials sector, there are two developments of interest:
- The Tribunal has confirmed a settlement agreement between the Commission and Evraz Highveld Steel and Vanadium Ltd (Evraz). In terms of the settlement agreement, Evraz will pay an administrative penalty of ZAR 1 million for engaging in collusive conduct (price fixing and market allocation) with ArcelorMittal South Africa Ltd. A copy of the settlement agreement is available
- The Commission has recommended that the Tribunal conditionally approve the proposed transaction, whereby Barnes Southern Palace (a consortium involving the Barnes Group Holdings (Pty) Ltd and Southern Palace Group of Companies (Pty) Ltd) intends to acquire Scaw Metals Group from the Industrial Development Corporation. The Commission imposed conditions to address information sharing concerns. The Commission, merging parties and the Economic Development Department have also agreed on certain employment conditions, as well as conditions which will ensure that the merged entity will supply small steel mills with direct reduced iron which will enable them to produce better quality steel.
Healthcare: Health market inquiry publishes expenditure analysis reports
The Health Market Inquiry (HMI) has published a series of eight analytical reports (for public comment) based on medical scheme claims for the period 2010 - 2014. The documents describe the work of the HMI with regard to expenditure analysis and use empirical evidence to understand the drivers of the costs of private healthcare in South Africa. The HMI has also indicated that further work using this data is still underway and will be released in due course - in particular geographic analyses and drivers of demand in the private healthcare market.
Mining: Royal bafokeng merger conditionally approved
The Tribunal has conditionally approved the merger between Royal Bafokeng Platinum Ltd (Royal Bafokeng) and Maseve Investments 11 (Pty) Ltd (Maseve). In terms of the proposed merger, Royal Bafokeng will acquire the concentrator plant and certain surface assets of the Maseve Mine and the total issued capital in Maseve. The merger was approved subject to the conditions, among others, that Royal Bafokeng employs 115 staff members at its concentrator plant and 20 permanent employees from Maseve, giving preference to retrenched employees for job opportunities likely to occur in the future.
Regulatory: Updates and Developments
In the regulatory sector, there are two developments of interest:
- The Commission, together with other competition authorities worldwide, celebrated World Competition Day on 5 December 2017. World Competition Day aims to create awareness and support for the effective implementation of competition regimes worldwide, by highlighting the benefits of a competitive market structure for consumers. The theme for 2017 was: "Re-imagining Competition Policy and Law in the Era of Disruption". Disruptive digital technologies have sparked global debate in recent years, particularly with reference to regulatory challenges and interventions.
- Further to the publication of the Bill in December 2017, during the ANC's January 8th statement, ANC President Cyril Ramaphosa, confirmed plans to expand the mandate of the country's competition authorities in order to reduce concentration of ownership and control in the economy, and to open the market to new, black-owned companies. Mr Ramaphosa stated that these institutions will have the responsibility and the means to reduce monopoly control of the economy and increase competition.
Retail: Updates and Developments
In the retail sector, there are two developments of interest:
- According to reports, Commission spokesperson, Sipho Ngwema, has confirmed that the Commission's investigation of the school uniform industry is at an advanced stage and that an announcement regarding the results is set to be made in the coming weeks. Mr Ngwema confirmed that some of findings so far revealed that over a third of private schools and Model C schools were found to have exclusive agreements with school uniform suppliers. The Commission has also indicated that most schools surveyed are unaware of the guidelines for school uniforms issued by the Department of Basic Education, which stipulate that school uniforms should be as generic as possible and obtainable from as many suppliers as possible.
- The Commission has conditionally approved the merger between Lewis Stores (Pty) Ltd (Lewis) and United Furniture Outlets (Pty) Ltd (UFO). The Lewis Group is a furniture, appliance and electronics retailer focussed on the lower-middle income market. UFO is an independent cash furniture store selling a variety of furniture from various retail outlets within South Africa. The merger was approved subject to the condition that there be no merger related retrenchments for a period of two years post-implementation.
Telecoms, Media and Technology: Private property merger conditionally approved
The Commission has conditionally approved the merger whereby CTP Ltd (CTP) intends to acquire Private Property South Africa (Pty) Ltd (Private Property). CTP is a wholly owned subsidiary of Caxton Publishers and Printers Ltd and operates printing press facilities throughout South Africa. Private Property sells property related digital advertising services on an online platform which enables property shoppers to search and find property listings as well as property related services. The Commission found that the proposed transaction may create a platform that might facilitate information sharing because two of the new shareholders in Private Property are also direct competitors in bond origination and insurance markets. The Commission imposed conditions addressing the potential sharing of confidential information that may arise from cross directorships.
Botswana: Post-Merger impact assessment report published
The Botswana Competition Authority (BCA) has published a Post-Merger Impact Assessment Report. The purpose of post-merger impact assessments is to establish the market effects of the decisions taken by the BCA and provides an opportunity to assess whether the conditions / remedies imposed were sound, given the information available at the time, and if the assumptions on which the conditions were made were sensible. A copy of the report is available
Kenya: Updates and Developments
In Kenya, there are three developments of interest:
- The Competition Authority of Kenya (CAK) has launched investigations into schools directing parents to buy uniforms and other supplies from specific shops. It is reported that the CAK has asked parents to report such arrangements, and advised parents that they should not be made to buy uniforms from specific shops.
- The CAK has rejected an application by the Institute of Surveyors of Kenya (ISK) for an exemption from regulations preventing it from setting minimum service fees for its members. The CAK argued that the ISK did not sufficiently justify the need for minimum prices and that such fees would reduce competition and increase the costs of lan
- In a new report titled, "Unlocking Growth Potential in Kenya: Dismantling Regulatory Obstacles to Competition", the World Bank has found that regulations that restrict competition are more prevalent in Kenya than in other middle-income countries. The report recommends the removal of the cap of fines for restrictive trade practices and also recommends moves such as opening markets and removing anti-competitive regulations.
Ghana: New competition to be passed
The Ghanaian Ministry of Trade and Industry has announced that a competition bill and policy document are ready for submission to cabinet, and will be passed into law in 2018. This development follows a process of stakeholder consultation and a decade of discussions around the possible implementation of competition law.
Namibia: Commission prohibits mobile network merger
The Namibian Competition Commission (NaCC) has prohibited the merger between Namibia Post and Telecom Holdings (NPTH) and Samba DutchCo B.V. (Samba). NPTH and Samba, together own Namibia's largest mobile network operator MTC. NPTH also owns MTC’s competitor Telecom Namibia. The NaCC has said that any merger of NPTH and Samba would lessen competition in the Namibian mobile market. It has been reported that the decision has now been referred to the Industrialisation, Trade and SME Development Minister who has authorised a notice for public comment requesting input on whether or not the NaCC's decision should be supported.
Zambia: Commission concerned about increase in chlorine prices
The Competition and Consumer Protection Commission (CCPC) has released a statement expressing concern regarding the sharp increase in prices of disinfectants, particularly chlorine, in the wake of a cholera outbreak in Zambia. The prices of chlorine are reported to have increased by between 800% and 1000%. The CCPC has indicated that investigations have been launched.
Zimbabwe: Updates and Developments
In Zimbabwe, there are two developments of interest:
- The Competition and Tariff Commission (CTC) has launched a National Competition Policy. The CTC Chairperson, Antony Mutemi, said that the objective of this policy is to establish the parameters and the strategic policy considerations that will guide the drafting of a new competition law or reviewing of the existing legislation. Mr Mutemi also indicated that the policy seeks to addresses the regulatory and institutional infrastructure that will ensure the effective implementation and enforcement of competition law.
- The CTC has released a statement following recent announcements of “recommended maximum wholesale and retail prices” for various goods and services, and has urged all players involved to guard against the likely resultant anti-competitive effects of this conduct. The CTC said that it had observed that whenever a "recommended maximum price" is announced, retailers or wholesalers have a tendency to all charge that maximum price under the guise of complying with the stipulation. In this respect, the CTC has said that it expects all players in any sector to charge significantly different prices that facilitate the competition process.
Australia: ACC to conduct inquiry on the impact of digital platforms
Australia's Competition and Consumer Commission (ACCC) has been instructed to conduct an inquiry on the impact of digital platforms on supply of news and journalistic content and the implications of this for media content creators, advertisers and consumers. The ACCC has been given a year to produce a draft report with the view to publish a final report by early June 2019. It has been reported that Facebook and Google are said to be among the firms who will be investigated as part of this inquiry.
European Union: Updates and Developments
In the European Union, there are three developments of interest:
- The European Commission (EC) has fined Qualcomm Inc. (Qualcomm) EUR 997 million (approximately ZAR 14.9 billion) for abusing its market dominance in the LTE baseband chipsets market. It is alleged that Qualcomm restricted competitors from competing in the market. The fine represents 4.9% of Qualcomm's turnover in 2017.
- The Court of Justice of the European Union has held that a selective distribution system for luxury goods, designed primarily to preserve the luxury image of those goods, does not breach the prohibition of agreements, decisions and concerted practices provisions in EU law. This case involved proceedings brought by Coty Germany GmbH (Coty) against one of its authorised distributors, with a view to prohibiting it from distributing Coty goods via a certain online platform. In order for this restriction to be lawful, the court indicated that following conditions must be upheld: (i) resellers must be chosen on the basis of objective criteria of a qualitative nature; and (ii) the criteria laid down must not go beyond what is necessary.
- The EC has decided that International Skating Union (ISU) rules imposing severe penalties on athletes participating in speed skating competitions that are not authorised by the ISU are in breach of EU antitrust law. The EC Commissioner said that the excessive penalty the ISU imposes on skaters serves to protect its own commercial interests and prevent other event organisers from setting up their own events. The ISU must now abolish or modify its rules, and should not impose or threaten to impose unjustified penalties on athletes who participate in competitions that pose no risk to legitimate sports objectives.
India: Competition authority fines the board of control for cricket in India USD 8 Million
The Competition Commission of India (CCI) has imposed a fine of 520 million rupees (approximately ZAR 97 million) on the Board of Control for Cricket in India (BCCI), in relation to allegations that BCCI had abused its power, by agreeing to broadcasters' demands that it must not create a rival to the Indian Premier League. The CCI argued that the BCCI had no justification for this self-imposed restriction.
United States: FTC announces increase in thresholds
The Federal Trade Commission (FTC) has announced that the size-of-transaction threshold for reporting proposed mergers and acquisitions under Section 7A of the Clayton Act of 1914 will adjust from USD 80.8 million (approximately ZAR 957 million) to USD 84.4 million (approximately ZAR 1 billion). The FTC advised that revised thresholds will apply to all transactions that close on or after the effective date of the notice, which is 30 days after its publication in the Federal Register.
Our Recent Work
Ethos private equity VI V RTT Holdings (PTY) LTD Merger unconditionally approved
The Tribunal has unconditionally approved the merger whereby Ethos Private Equity Fund VI (Ethos Fund VI) intends to acquire sole control over RTT Holdings (Pty) Ltd (RTT).
Shawn van der Meulen, Sarah Manley and Cara du Plessis represented the merger parties.
Ethos Fund VI is a private equity investment fund that comprises various local and foreign limited partners (investors). RTT and its subsidiaries provide transportation, warehousing and distribution and other value-added services on a fully integrated basis.
The Commission found that the proposed merger is unlikely to substantially lessen or prevent competition and did not raise any public interest concerns.
Old Mutual Limited and Old Mutual PLC merger conditionally approved
The Tribunal has conditionally approved the merger whereby Old Mutual Ltd (OM Ltd) will acquire Old Mutual plc (OM plc).
Robert Wilson and Werner Rysbergen represented the merger parties.
OM Ltd was incorporated with the purpose of facilitating the internal reorganisation and managed separation of the Old Mutual Group and to allow for a primary listing on the JSE, a standard listing on the LSE as well as secondary listings on the Malawi Stock Exchange, Namibia Stock Exchange and Zimbabwe Stock Exchange. OM plc is the holding company for the Old Mutual Group of companies globally which provides investments, savings, life assurance, asset management, banking and property and personal insurance in Africa, Latin America and Asia.