The Competition Act 89 of 1998 (Competition Act), contains merger review
provisions that establish a mandatory merger filing regime for merger transactions
that meet the statutory definition of a merger as well as the prescribed thresholds for
notification.1 The mandatory merger requirements are contained in section 13(1)(b)
and section 13A(3), of the Competition Act. These sections prohibit any party from
implementing a merger without the approval of the respective competition authority.
Section 13 and 13A read with 59(1)(d)(vi) grants the Competition Tribunal (Tribunal),
a competition regulator that is established in terms of section 26(1) of the Act, the
power to impose an administrative fine on the parties that contravene the provisions
of sections 13 and 13A. Section 59(2) reads, An administrative penalty imposed in
terms of subsection (1) may not exceed 10% of the firm s annual turnover in the
Republic and its exports from the Republic during the firm s preceding financial
year.
The prescribed administrative fine is the same as the fine that the Tribunal might
impose on companies that are found guilty of engaging in prohibited practices
contained in Chapter 2, which relates to, inter alia, cartel conduct2 or abuse of
dominance3 or price discrimination.4 By not making a distinction between the fines
imposed for anti-competitive conduct under chapter 2, the Competition Act illustrates how important it is for merging companies to not implement the merger transaction
without the approval of the competition authority.
Despite the possibility of sanctions by the Tribunal and the imposition of a maximum
fine of 10%, of the companies turnover of the previous financial year, the
Competition Act does not provide a definition or an explanation of what
implementation means. A definition of the term implementation is important for
two reasons, firstly it helps the merging companies to avoid conduct that
contravenes section 13 and 13A(3) and secondly, it ensures that the competition
authorities are able to effectively use merger review to prevent conduct that
facilitates or creates anti-competitive markets. The question that this dissertation
seeks to answer is, what does implementation means for purpose of merger review?
This dissertation considered the merger review provisions that are applied in the
European Union s (EU) legislations and the case law of the European Commission
(EU) to find out how the term implementation has been defined in the EU. A
comparison of the EC merger control regime and the South African merger control
regime assisted to identify possible similarities and differences that might assist to
find the definition of the tern implementation. This dissertation identified factors, in
the considered EU decisions, which are important for merger review in the South
African context as these factors assist to understand how the merging companies
might avoid contravening the South African Competition Act in the context of a
merger.
The factors identified in the EU decisions include, inter alia, merger agreement,
control, jurisdiction and effects in South Africa. Although these factors are not
exhaustive, the competition authorities need to consider all factors together when determining what implementation means. When applying the above factors to South
African merger review it can be concluded that, implementation for purpose of
merger review entails the enforcement of the terms of a merger agreement or terms
of reference of the merger agreement, to the extent that such conduct constitute
control either by way of majority shares or by way of influencing the business of the
company being acquired. The enforcement of such merger agreement terms must
take place in South Africa and do not necessarily need to have any direct effects on
competition. / Mini Dissertation (LLM)--University of Pretoria, 2015. / Mercantile Law / LLM / Unrestricted
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:up/oai:repository.up.ac.za:2263/53156 |
| Date | January 2015 |
| Creators | Mashego, Dineo |
| Contributors | Van Heerden, C.M. (Corlia), dineom@compcom.co.za |
| Publisher | University of Pretoria |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Mini Dissertation |
| Rights | © 2016 University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria. |
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