In terms of Section 12 of the Competition Act, 1998 (Act No.89 of 1998), as amended, a merger occurs when one or more firms directly or indirectly acquire or establish direct or indirect control over the whole or part of the business of another firm.
A merger may occur through a purchase or lease of shares and assets, joint ventures and/or pure amalgamation of firms/businesses.
If a business is uncertain about whether a transaction is a merger and should be notified with the Competition Commission or not, a written request for a non-binding advisory opinion, detailing the nature of the business proposal, may be submitted to the Chief Legal Counsel: Legal Services division. A charge of R2 500 will be levied for the advisory opinion. The advisory opinion is non-binding on both the Competition Commission, as well as the business. It would merely give the business a guide on matters that the Competition Commission would consider in the case of a merger, as well as an indication of potential difficulties.
|Thresholds||Combined turnover / Asset value||Target turnover / Asset value|
|Lower threshold||R 600m||R 100m|
|Higher threshold||R6.6b||R 190m|
According to Section 13(3) of the Act, the Commission has discretion to require the parties to a small merger to notify the Commission of that merger, if the merger may substantially prevent or lessen competition or cannot be justified on public interest grounds. Merging parties may not take further steps to implement that merger until it has been approved or conditionally approved.
According to the Commission’s Rules, either the primary acquiring firm or the primary target firm can make a joint filing in terms of Rule 27 or a separate filing in terms of Rule 28. Rule 28 caters for instances where joint notification is not possible such as hostile takeovers. It should be noted however that in the case of a separate filing, either of the merging parties should approach the Commission to obtain permission to file separate notifications of the merger.
A joint merger notification must be made in a single filing by one of the primary firms, and must include:
The Merger forms can be obtained in the following manner:
In terms of the Commission Rule 30(1) within 5 business days after receiving a Merger Notice filed in respect of a merger declared to be a large merger, or within 10 business days after receiving a Merger notice filed in respect of any other merger, the Commission may deliver to the filing firm a Notice of Incomplete Filing, Form CC13(2) . The initial period for consideration of the proposed merger will not begin until the merging parties have satisfied all notification requirements set out in the Form CC13(2). The Commission may deliver a Notice of Complete Filing, Form CC13 (1). However, if neither Form CC13 (1) nor Form CC13 (2) is delivered within the statutory period the filing will be deemed to be complete.
To claim confidentiality over information that is submitted to the Commission, the merging parties must complete the Form CC 7 – confidentiality claim, which is available on the Commission’s website. Practitioners should note that in terms of the instructions on the Form CC7 you need to create a table (from column 1 to 5) indicating which information is confidential, why it is considered confidential information, which persons are restricted to access it, etc.
Section 12A of the Act sets out the analytical framework for the competitive assessment of mergers as follows:
|Category of Merger||Period of Investigation|
|Initial Period||Extended Period|
|Small or Intermediate||20 business days||Once only for 40 business days. The Commission has sole discretion in determination of the extending the period of investigation.|
|Large||40 business days||One or more extensions of a maximum of 15 business days. The Commission requires the merging parties and the Tribunal’s consent to extend the investigation|
In case of intermediate and small mergers, upon completion of the merger investigation, the Competition Commission will issue a certificate approving the merger, approving the merger subject to conditions or prohibiting a merger. In terms of Section 16(1)(a) of the Act, if the Competition Commission takes a decision, with which the merging parties do not agree, they can appeal the decision before the Competition Tribunal. And if the decision that is taken by the Tribunal is still agreeable to the merging parties, they can appeal before the Competition Appeal Court.
The business can request for a pre-notification meeting with the manager of Mergers and Acquisition division to obtain any other necessary guidance related to merger procedure. The relevant contact person is Ms Lebohang Mabidikane and his contact details are as follows: