New development of interest
Draft guidelines on information exchange between competitors gazetted
Draft Guidelines on the Exchange of Information between Competitors under the Competition Act 89 of 1998 (Draft Guidelines) have been published in the Government Gazette for public comment. The Draft Guidelines are intended to provide guidance to firms, trade associations, regulators and other interested stakeholders to make informed decisions on the type of information exchange that may be potentially harmful to competition, and the type that may enhance efficiencies. The Draft Guidelines present the general approach that the Competition Commission (Commission) will follow in determining whether the exchange of information between competitors amounts to a prohibited practice such as price fixing, market allocation or bid rigging, in terms of section 4 of the Competition Act. The closing date for the submission of comments on the Draft Guidelines is 14 September 2017. A copy of the Draft Guidelines is available
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Local News
Agribusiness, Food & Beverage: Merger between DOW and dupont conditionally approved
The Commission has recommended to the Competition Tribunal (Tribunal) that the proposed large merger whereby DowDuPont Inc. (DowDuPont) intends to acquire Dow Chemical Company (Dow) and [Source].I. du Pont de Nemours and Company (DuPont), be conditionally approved. In South Africa, Dow’s activities include the distribution of sunflower seeds, agrochemicals, material science products and food texturisers, while DuPont is involved in the distribution of agrochemicals and various seeds including maize and sunflower. The Commission found that the proposed merger is likely to substantially prevent or lessen competition in the market for the development and supply of certain insecticides. In order to remedy this, the Commission has recommended that the proposed merger be approved subject to conditions pertaining to licensing, the registration of biotechnology traits, and divesture. The hearing of the matter will continue at the Tribunal on 4 August 2017.
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Engineering And Construction: Updates And Developments
In the engineering and construction sector, there are two developments of interest:
- The Commission has referred a complaint against Corobrik (Pty) Ltd (Corobrik) and five other brick makers to the Tribunal for prosecution, on charges relating to cartel conduct. The referral follows an investigation conducted by the Commission which revealed that Corobrik and the other brick makers had entered into agreements relating to price fixing and market division.
- The Commission has entered into a settlement agreement with Good Hope Brick (Pty) Ltd t/a Cape Brick (Cape Brick). The conclusion of the settlement agreement follows an investigation initiated in 2012 by the Commission against Cape Brick and two other brick manufacturing companies. In terms of the settlement agreement, Cape Brick has agreed to pay an administrative penalty of ZAR 300,000.00 for engaging in cartel conduct, including price fixing and market division in the masonry brick market in the Western Cape.
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Healthcare: Updates And Developments
In the healthcare sector, there are two developments of interest:
- The Commission has recommended to the Tribunal that the proposed merger between Mediclinic Southern Africa (Pty) Ltd and Matlosana Healthcare Services (Pty) Ltd be prohibited. The Commission'[Source] investigation revealed that the proposed merger is likely to substantially prevent or lessen competition in the market for the provision of healthcare services in Klerksdorp and surrounding areas. The Commission also found that the proposed merger raised public interest concerns in relation to a particular industrial region around Klerksdorp.
- Further to our February update (available here), the Tribunal has dismissed a complaint referral brought by Afrocentric Health Ltd (Afrocentric) against Discovery Medical Scheme (DMS) and Discovery Health (Pty) Ltd (Discovery Health). Afrocentric alleged that Discovery Health had contravened the Competition Act by engaging in collective bargaining on behalf of schemes it administers when negotiating tariffs with private hospitals. The Tribunal upheld objections brought by DMS and Discovery Health and ordered that Afrocentric pay the costs.
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Industrials: Updates And Developments
In the industrials sector, there are two developments of interest:
- The Tribunal has conditionally approved the merger between Denel SOC Ltd (Denel) and Turbomeca Africa (Pty) Ltd (TMA). Denel provides defence, security and related technologies to the South African Air Force. TMA manufactures engine components for Safran HE, which are used to build the helicopter engines supplied to Denel. The Commission found that the proposed merger would result in the retrenchment of 42 employees after one year of implementation of the merger. In order to remedy this, the conditions require that there be no retrenchments of any employees as a result of the merger for a period of two years from the date of implementation.
- The Commission has prohibited the proposed intermediate merger whereby Jasco Electronic Holdings Ltd (Jasco Electronics) intends to acquire Cross Fire Management (Pty) Ltd (Cross Fire). Jasco Electronics provides a range of end-to-end converged ICT offerings for carriers and enterprises across various sectors, and its subsidiary, Jasco Fire, is active in the fire protection industry. Cross Fire provides the design, supply, fabrication, installation, servicing and maintenance of a range of fire protection systems. The Commission found that the proposed merger will likely result in the substantial prevention or lessening of competition in the market for the provision of active fire protection systems.
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Mining: Commission prohibits merger between Timrite and Tufbag
The Commission has prohibited the proposed intermediate merger between Timrite (Pty) Ltd and the Mining Bag Division of Tufbag (Pty) Ltd. The Commission found that the proposed merger was likely to facilitate and enhance potentially market allocative arrangements in the manufacturing and distribution of polypropylene-based mining support bags.
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Regulatory: Minister patel reiterates that amendments to the competition act can be expected soon
Further to our May update (available here), Minister of Economic Development, Ebrahim Patel (the Minister), has reiterated that amendments to the Competition Act are being considered. The Minister, speaking at the ANC’s fifth national policy conference, said that the government was looking at the mandate of the competition authorities, to give them more authority to investigate where there are high levels of concentration, and what remedies could deal with it effectively. The Minister went on to say that, "exclusion must be something of the past, not something of the present and the future".
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Retail: upate on grocery retail sector market inquiry
Further to our June update (available
here), as part of the Commission's Grocery Retail Sector Market Inquiry, public hearings continued in Kwa-Zulu Natal in early July. The Commission has also recently amended the completion date of the inquiry to 31 March 2018.
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Telecoms, Media & Technology: Updates And Developments
In the telecoms, media and technology sector, there are three developments of interest:
- Further to our May update (available here), in a written reply to a parliamentary question, the Minister has stated that the establishment of a market inquiry into the state of competition in the data market and the inquiry’s terms of reference would be announced by 1 September 2017. The Minister said the Commission would investigate the data services value chain and its interrelationship with other parts of the ICT sector and the broader economy.
- In this regard, the Independent Communications Authority of South Africa (ICASA) has also announced that it is undertaking an inquiry to determine the priority markets in the electronic communications sector. ICASA has announced that this inquiry is part of a number of initiatives to address the high cost of communication in SA, and that ICASA is in consultation with other regulatory bodies such as the Commission and the National Consumer Commission to find ways in which data costs can be further reduced.
- The Tribunal has approved the settlement agreement between the Commission and Natal Witness Printing and Publishing Company (Pty) Ltd (Natal Witness) in relation to the latter’s failure to notify a merger between it and Mandla-Matla Publishing (Pty) Ltd (Mandla-Matla). In terms of the settlement agreement, Mandla-Matla is to pay a penalty of ZAR 200,000.00 and Natal Witness is to pay a penalty of ZAR 800,000.00. Caxton and CTP Publishers Ltd (Caxton) objected to the approval of this consent agreement on the basis that the penalty imposed was inadequate, however, the Tribunal rejected Caxton’s application.
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Transport: Update on the public passenger transport market inquiry
Further to our May (update available here), the Commission has issued a Call for Submissions document wherein it invites all relevant stakeholders who wish to participate in the Public Passenger Transport Inquiry to make formal submissions. The Call for Submissions document is available here. All submissions must be made in terms of the published Public Passenger Transport Inquiry Stakeholder Participation Guidelines, available here. The deadline for submissions is 24 August 2017.
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Africa News
Botswana: Competition authority and tax regulator sign mou
The Botswana Competition Authority (BCA) and the Botswana Unified Revenue Service (BURS) have signed a memorandum of understanding (MoU) which solidifies the interaction between the two regulators and formalises cooperation in fulfilling their respective mandates. In terms of the MoU, the BCA will have access to credible data from BURS on company figures such as, turnover for the purpose of calculating market shares. This will enable the BCA to understand the market structure and make informed decisions with respect to the effect of anti-competitive mergers and acquisitions and other restrictive business practices.
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Comesa: CCC and CAK approve Bayer / Monsanto merger
The COMESA Competition Commission (CCC) has approved the acquisition of the Monsanto Company by Bayer Aktiengesellscharl (Bayer), finding that it was not likely to lessen competition in the region. The Competition Authority of Kenya also approved the buyout of Monsanto Kenya Ltd by Bayer’s investment vehicle Bayer Aktiengesellscharl KWA Investment Company, two weeks prior to the CCC decision. The worldwide transaction is valued at USD 66 billion (approximately ZAR 860 billion) and the merger has received scrutiny from a number of international competition regulators.
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Mauritius: MCC finds in favour of major chicken suppliers
The Mauritian Competition Commission (MCC) has released its decision regarding alleged collusive agreements which led to alleged price fixing and controlled the quantity of supply of chicken in the Mauritian market. The MCC has concluded that the firms under investigation, Innodis Ltd, Panagora Marketing Co Ltd and Avipro Ltd, did not contravene the Mauritian Competition Act 2007. Nevertheless, the MCC has endeavoured to monitor the operations of the markets closely as, during its investigation, it came upon certain practices which present risks to the existence of healthy competition in the relevant markets.
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Namibia: Supreme court confirms that the ncc does not have jurisdiction over medical aid funds
The Namibian Supreme Court (Court) has delivered its judgement in the long-running matter between the Namibian Competition Commission (NaCC) and the Namibian Association of Medical Aid Funds (NAMAF) and its members. The NaCC alleged that NAMAF and its members set prices for medical services by setting benchmark tariffs after collective negotiation. The benchmark tariffs, which are published annually, are the tariffs for an exhaustive array of medical services that NAMAF regards as reasonable. The issue raised in this matter was to establish whether the NaCC has jurisdiction over registered medical aid funds for the purpose of the Namibian Competition Act No 2 of 2003. The Court found that while medical aid funds were businesses in the form of enterprises, and were by law required to apply sound business principles in their operations, these considerations did not mean their economic activity was market related for the purpose of achieving a gain or reward. Accordingly, NAMAF and its members are permitted to continue to use their system of benchmark tariffs. A copy of the decision is available
here.
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Sub-Saharan Africa: Mergers and acquisitions activity rises
A recent Thomas Reuters analysis has found that inbound mergers and acquisitions (M&A) activity in the sub-Sharan African region during the first six months of 2017 has reached its highest level in four years. Investments are led by the United States, the United Kingdom and China. The analysis indicates that the value of announced M&A transactions involving sub-Saharan Africa during the first half of 2017 has reached USD 18 billion (approximately ZAR 234 billion).
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International News
European Union: Updates And Developments
n the European Union, there are two developments of interest:
- The European Commission (EC) has carried out unannounced inspections at the premises of companies in the motor insurance industry in Ireland. The EC has concerns that the relevant companies may have engaged in anti-competitive practices in breach of EU anti-trust rules that prohibit cartels and restrictive business practices and/or abuse of a dominant market position.
- The EC has informed pharmaceutical company Teva Pharmaceutical Industries Ltd (Teva) of its initial view that a patent agreement concluded with Cephalon Ltd (Cephalon) was in breach of EU anti-trust rules. In terms of this agreement, Teva agreed not to market a cheaper generic version of Cephalon'[Source] drug for sleep disorders. This conduct, if confirmed, would infringe Article 101 of the Treaty on the Functioning of the European Union that prohibits restrictive business practices.
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Russia: LG electronics investigated for anti-competitive practices
The Federal Antimonopoly Service has initiated proceedings against LG Electronics RUS, LLC (LG RUS). The competition regulator has alleged that LG RUS used special monitoring systems on retailers to control prices of smartphones. LG RUS has said that other companies also use monitoring systems to track devices' sales prices, and that the claim made by the authority is partly exaggerated.
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United Kingdom: CMA develops tool to screen cartels
The Competition and Markets Authority (CMA) has developed a ‘Screening for Cartels’ tool to assist procurers to assess whether their tender data evidences any signs of cartel behaviour. The tool scores data against certain tests, and the combined and weighted test totals provide a suspicion score' for tender exercises.
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United States of America: Newspaper publishers seek anti-trust exemption
News Media Alliance, a non-profit organisation which represents large newspaper publishers in the United States of America, is seeking an anti-trust exemption from United States Congress. The objective of the anti-trust exemption is to permit newspaper publishers, such as The Washington Post, The Wall Street Journal and The New York Times, to negotiate collectively with the two dominant distributors of online news content, Google and Facebook, in relation to business model solutions to safeguard the industry.
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Our Recent Work
Commission dismisses complaint against emirates
Webber Wentzel represented Emirates Airlines (Emirates) in relation to complaint proceedings initiated by the Commission. It was alleged that the incentives which Emirates offers to travel agents gave rise to the exclusion of its competitors from the market. Following extensive engagements with Emirates over a period of more than two years, the Commission has found that the incentives utilised by Emirates to reward travel agents for increasing ticket sales are perfectly legitimate because they do not give rise to any anti-competitive effects. In July 2017, the Commission issued a notice of non-referral. Martin Versfeld and Clare-Alice Vertue acted on behalf of Emirates.
Jesiflex (PTY) Ltd and kevro holdings (PTY) Ltd merger unconditionally approved
The Tribunal has unconditionally approved the proposed merger whereby Jesiflex (Pty) Ltd (Jesiflex) intends to acquire Kevro Holdings (Pty) Ltd (Kevro).
Mmadika Moloi, Burton Phillips and Elisa Mugabo represented the merger parties.
Jesiflex is a newly formed acquisition vehicle for purposes of the proposed transaction and accordingly does not have any business activities. Kevro is a corporate and promotional product supplier in Africa that is active in the wholesale supply of various branded promotional products to distributors and re-sellers.
The Commission found that the proposed merger is unlikely to substantially lessen or prevent competition and did not raise any public interest concerns.
Main street 1514 (PTY) Ltd and mancosa (PTY) Ltd and regent business school (PTY) Ltd merger unconditionally approved
The Tribunal has unconditionally approved the merger whereby Main Street 1514 (Pty) Ltd (Main Street) will acquire Mancosa (Pty) Ltd (Mancosa) and Regent Business School (Pty) Ltd (Regent) from Mangro Holdings (Pty) Ltd.
Robert Wilson, Werner Rysbergen and Cara du Plessis represented the merger parties.
Main Street has been established solely for purposes of this transaction. Main Street is a wholly-owned subsidiary of Actis Investment Holdings No.1 190 Limited (EMK SA (Mauritius)). Mancosa and Regent provide tertiary education and offer long distance programmes for undergraduate and postgraduate students not only in South Africa but in the SADC region as well.
The Commission found that the proposed merger is unlikely to substantially lessen or prevent competition and did not raise any public interest concerns.
Peugeot SA and Opel business of general motors LLC merger conditionally approved
The Commission has conditionally approved the proposed merger whereby Peugeot [Source].A. (Peugeot) intends to acquire the Opel Business of General Motors LLC (Opel Business).
Robert Wilson, Werner Rysbergen and Cara du Plessis represented the merger parties.
In South Africa, Peugeot is active in the import and supply of passenger vehicles and commercial vehicles. The Opel Business is active in the supply of passenger vehicles and car parts in South Africa, but does not supply commercial vehicles.
The Commission found that the proposed merger raised public interest concerns and therefore imposed conditions on the merger parties relating to employment.
Ringer Africa AG, one africa media (PTY) Ltd, Everythingdar. Com Ltd, Brigthermonday Tanzania Ltd and Cheki Tanzania Ltd merger unconditionally approved
The Fair Competition Commission of Tanzania (FCC) has unconditionally approved the proposed merger whereby Ringer Africa AG (Ringier Africa) and One Africa Media (Pty) Ltd (OAM) intend to establish a joint venture though an amalgamation of their assets which amongst others include EverythingDar. Com Ltd (EverythingDar), BrigtherMonday Tanzania Ltd (BrighterMonday) and Cheki Tanzania Ltd (Cheki).
Daryl Dingley and Betty Mkatshwa represented the merger parties.
Ringier Africa operates in Tanzania through EverythingDar, whilst OAM operates in Tanzania through BrighterMonday and Cheki. EverythingDar, BrighterMonday and Cheki are all active in the market for the provision of online advertising services, however their activities in this market have very a distinct focus. In particular, EverythingDar operates a horizontal platform that focuses on consumer-to-consumer advertising services, whereas BrighterMonday and Cheki operate vertical platforms that focus on business-to-consumer advertising services.
The FCC found that proposed transaction is unlikely to substantially prevent or lessen competition and did not raise any public interest concerns.
KB Milling (PTY) and progress milling (Lydenburg) (PTY) Ltd merger conditionally approved
The Commission has conditionally approved the proposed merger whereby VKB Milling (Pty) Ltd (VKB Milling) intends to acquire Progress Milling (Lydenburg) (Pty) Ltd (Progress Milling).
Daryl Dingley and Cara du Plessis represented the merger parties.
VKB Milling operates maize mills in Mokopane and Thohoyandou in Limpopo, which retail and wholesale white maize products. It also operates a mill in Frankfort in the Free State, which focusses on gristing (separating grain from chaff). Progress Milling used to be active in white maize milling before it ceased operations in February 2016.
The Commission imposed a condition on the merger parties relating to the exchange of competitively sensitive information between the merged entity and other market participants.
