On 23 January 2018, the Competition Commission (the Commission) announced that it had suspended its advisory opinion service, pending the finalisation of the case involving Hosken Consolidated Investments Ltd (HCI), Tsogo Sun Holdings Ltd (Tsogo Sun) and Niveus Investment Ltd (Niveus). Advisory opinions form part of the Commission’s advocacy functions which facilitate compliance with the Competition Act, 89 of 1998 (the Act). These opinions are not binding on the Commission or the parties requesting such advice.
The Commission has applied for leave to appeal to the Constitutional Court against a Competition Appeal Court (CAC) decision in this matter. The Commission contends that the decision by the CAC creates a precedent which can be used by parties to challenge a non-binding advisory opinion issued by the Commission if they do not agree with it. The Commission indicated that a final decision on the advisory opinion service will be made after its application for leave to appeal (and appeal, if leave is granted) has been decided.
By way of background, in October 2017, the CAC held that the proposed transaction involving HCI, Tsogo Sun and Niveus did not require merger control approval in terms of the Act. The Commission subsequently applied for leave to appeal to the Constitutional Court against the CAC’s decision. In 2014, the Commission and the Competition Tribunal (the Tribunal) unconditionally approved HCI’s acquisition of a majority shareholding in Tsogo. However, HCI was unable to acquire the majority of the shares in Tsogo and only became the largest minority shareholder. As part of the 2014 transaction, HCI indicated that the two gaming businesses held under Tsogo and Niveus would not be integrated and as a result there would be no retrenchments. However, because the 2017 proposed transaction envisaged a transfer of the gaming interests held under Niveus to Tsogo, the Commission argued that this constituted a form of integration, and that it was necessary to assess whether or not the transaction should be approved subject to any employment related conditions.
In August 2017, at the request of HCI, the Commission issued an advisory opinion in which it advised the company to notify the proposed transaction to the competition authorities. HCI did not agree with the Commission’s non-binding advisory opinion and approached the Tribunal for a declaratory order that it was not required to do so. The Tribunal dismissed the application and held, among other things, that it did not have jurisdiction to hear the matter because there was no "live dispute" between the parties. HCI and Tsogo then filed an appeal with the CAC against the Tribunal’s decision. The CAC set aside the Tribunal's decision and found, among others things, that the Tribunal indeed had jurisdiction to hear the matter and that there was in fact a "live dispute" between the parties.