Daryl Dingley, head of Webber Wentzel's Competition team, hosted the Honourable Judge Dennis Davis to discuss recent competition law developments in South Africa for the latest podcast in the Webber Wentzel Legal Insights series. Judge Davis is uniquely placed to speak to these developments as the former Judge President of the Competition Appeal Court (CAC) and given his involvement in drafting the Constitution and the Competition Act.
Burger King and
Mediclinic merger decisions of the Competition Tribunal (the Tribunal) and the Constitutional Court indicate an evolution in South African merger control. A greater emphasis is placed on (i) promoting a greater spread of ownership amongst historically disadvantaged persons (HDPs) and workers; and (ii) the role of the Constitution in merger control (and competition law more generally).
Burger King decision was discussed during the podcast. In this instance, the Competition Commission (the Commission) decided to prohibit an American private equity fund from acquiring Burger King South Africa RF Pty Ltd and Grand Foods Meat Play Pty Ltd from Grand Parade Investments Ltd (GPI). The Commission's reason for the prohibition was that the shareholding of HDPs in GPI would fall from over 68% to 0%. This was the first time that a merger was prohibited on public interest grounds alone in South Africa, even though the acquiring party's strategy was one of expansion resulting in employment growth.
Daryl and Judge Davis discussed how the
Burger King decision indicates that industrial policy has become embedded in competition law policy, vexing the previously essential requirement that merger control be merger specific. This has led to merger conditions becoming increasingly onerous, limiting the level of certainty that practitioners can provide to their clients.
More recently, the Constitutional Court handed down judgment in an appeal against an order of the CAC which conditionally approved a merger between Mediclinic Southern Africa (Pty) Ltd and Matlosana Medical Health Services (Pty) Ltd, following a decision by the Tribunal to prohibit the merger. This decision was also discussed in further detail during the podcast.
While Judge Davis agrees that an interpretation of the Competition Act should promote the spirit, purport, and objects of the Bill of Rights, he stressed that "the Constitution can't just be invoked as a vibe" and that a merger specific inquiry should be applied. Judge Davis was also concerned that the
Mediclinic judgment eviscerates the supervisory role of the CAC, which is designed as an expert court, and that the Constitutional Court judgment appears to hold that the CAC can only alter a decision of the Tribunal if the Tribunal has made an egregious mistake or misdirection and, in doing so, has essentially rendered the role of the CAC to a review court.
Mediclinic judgment is a seminal moment in South African competition law and Daryl and Judge Davis anticipate that we can expect to see an emboldened Commission that may begin finding their cause of action in the Constitution.
Our experts in this podcast series are
Daryl Dingley, Partner, Webber Wentzel; and
- Judge Dennis Davis, Former Judge President of the Competition Appeal Court