“Partisanship can degrade the brand of the antitrust agencies, reduce their influence aboard, and discourage longer term investments that strengthen agency performance. Though difficult to quantify, these constitute a potentially serious, unnecessary drag on agency effectiveness”
(William Kovacic, “Policies and Partisanship in U.S. Federal Antitrust Enforcement” (2014) Antitrust Law Journal, Vol. 79 at 704).
In their article entitled “Developments in South African Merger Control – Ministerial Interventionism and the Impact on Timing & Certainty,” John Oxenham, Andreas Stargard, and Michael Currie argue that, while the existence of ‘public-interest’ provisions in merger control is an express feature in certain jurisdictions’ antitrust regimes, the manner and regularity with which they are applied remains a significant challenge both for antitrust practitioners and for their clients gauging certainty of their foreign investments.
A consideration of the developments in the South African context indicates the substantial risks associated with the manner in which antitrust agencies and governmental departments approach public interest considerations in merger proceedings.
Merging firms, particularly multinationals, need to be acutely aware of the challenges and risks associated with the use of public-interest considerations throughout merger-control proceedings in South Africa. Recent interventionist strategies have had a significant impact on two key features: the timing and cost of concluding mergers in the region.
The paper was presented at this year’s ABA Antitrust Spring Meeting, the largest competition-law focussed conference in the world, taking place annually in Washington, D.C. AAT’s readers have exclusive free access to the PDF here.
Intervention by economic ministry outside proper competition channels yields R1 billion employment fund
As reported yesterday, AB InBev has agreed to a R1bn ($69m) fund to buoy the South African beer industry and to “protect” domestic jobs. It is widely seen as a direct payment in exchange for the blessing of the U.S. $105 billion takeover of SABMiller by InBev — notably occurring outside the usual channels of the Competition Authorities, instead taking place as behind-closed-door meetings held between the parties and the Minister for Economic Development, Ibrahim Patel, and his staff.
As we reported earlier this week, the previously granted extension of the competition authorities’ review was “widely suspected that the request for the extension is due to intervention by the Minister of Economic Development, in relation to public interest grounds. Although there is no suggestion at this stage that Minister Patel is opposing the deal, the proposed intervention does highlight bring into sharp focus the fact that multinational mega-deals face a number of hurdles in getting the deal done.”
AAT has reported previously on “extra-judicial factors,” as well as the interventionism by the current ministry. This latest deal struck by Mr. Patel and the parent of famed Budweiser beer includes a promise by the parties to preserve full-time employment levels in the country for five years after closing, according to AB InBev. Moreover, the companies pledged to provide financial help for new farms to increase raw materials production of beer inputs like hops and barley.
The minister is quoted as saying: “This transaction is by far the largest yet to be considered by the competition authorities and it’s important that South Africans know that the takeover of a local iconic company will bring tangible benefits. Jobs and inclusive growth are the central concerns in our economy.”
The holy trinity of InBev’s beers
Our editors and contributing authors have reported (and warned) on multiple occasions that the extra-procedural behaviour of the economic minister effectively side-lines the competition agencies, thereby eroding the perceived or real authority of the Competition Commission and the Tribunal. Says Andreas Stargard, a competition law practitioner with a focus on Africa:
“This ‘unscripted’ process risks future merger parties not taking the Authorities seriously and side-stepping them ex ante by a short visit to the Minister instead, cutting a deal that may be in the interest of South Africans according to his ministry’s current political view, but certainly not according to well-founded and legislatively prescribed antitrust principles. The Commission and the Tribunal take the latter into account, whereas the Minister is not bound by them, by principled legal analysis, nor by competition economics.”
This is especially true as the current deal involves the takeover of SABMiller, an entity that controls 90% of South Africa’s beer market. From a pure antitrust perspective, this transaction would certainly raise an agency’s interest in an in-depth investigation on the competition merits — not merely on the basis of job maintenance and other protectionist goals that may serve a political purpose but do not protect or assure future competition in an otherwise concentrated market.
Says one African antitrust attorney familiar with the matter, “What may be a short-term populist achievement, racking up political points for Mr. Patel and the ANC, may well turn out to be a less-than-optimal antitrust outcome in the long run.”
S.A. Competition Tribunal imposes record fine for missed merger filing in healthcare
By AAT guest author Meghan Eurelle
On 7 April 2016, the South African Competition Tribunal (“Tribunal”) confirmed that merger parties Life Healthcare Group Proprietary Limited and Joint Medical Holdings Limited had entered into a consent agreement with record-breaking consequences. The two hospital groups admitted to not complying with the Competition Act, 1998 (“the Act”) by failing to notify the competition authorities of their merger and to obtain the required approval prior to the merger being implemented; and subsequently agreed to jointly pay an administrative penalty of 10 million Rand, or approximately U.S. $690,000. (Interestingly, the parties also conceded that they were guilty of fixing the price of services back in 2004 but the Tribunal dropped these charges.)
The R10-million administrative penalty is a record amount for gun-jumping, or the failure to notify the competition authorities of a merger. Previously, the highest penalty for a failure to notify was just over R1-million. The new record penalty follows numerous warnings by the Competition Commission (“Commission”) that it intended to materially increase penalties for failure to notify mergers — says Andreas Stargard, an antitrust practitioner with Pr1merio advisors, “South Africa has a suspensory merger-notification system, like most international antitrust regimes do. And unlike other African countries, such as Senegal or Mauritius, the domestic S.A. competition legislation prohibits transacting parties from effecting the transfer of control or beneficial ownership prior to obtaining clearance from the authorities.”
In terms of the Act, transactions that are defined as “intermediate mergers” and “large mergers” must be notified to the Commission and may only be lawfully implemented if it has been approved, with or without conditions, by the relevant competition authorities. Small mergers do not have to be notified in the ordinary course and may be implemented without approval unless required by the Commission.
Merger notification thresholds in South Africa remain as follows:
Acquiring and Target firm (merger group)
Target firm
Large Merger
Combined assets and/or turnover of at least R6.6-billion.
AND
Assets and/or turnover of at least R190-million.
Intermediate Merger
Combined assets and/or turnover equals or exceeds R560-million but is less than R6.6-billion.
AND
Assets and/or turnover equals or exceeds R80-million but is less than R190-million.
Small Merger
Combined assets and/or turnover of less than R560-million.
OR
Assets and/or turnover of less than R80-million.
In light of the above, it serves as an important reminder to parties that they ensure compliance with the competition authorities and the Act so as to avoid costly consequences.
Key competition-law conference features dedicated panel discussion on African antitrust developments
By Michael-James Currie
The 54th annual American Bar Association Antitrust Spring Meeting was held in Washington, D.C., during the second week of April 2016 and the AAT editors were there to ensure that we provide our readers with an update on the latest developments in relation to African antitrust issues, discussed during a panel held last Friday.
ABA Africa Panelists
Given that mergers hit a global all-time high last year with the total value of transactions amounting to over USD 4.6 trillion, merger control is certainly at the forefront of many antitrust practitioners. The interest in mergers and acquisitions has perhaps gained even further attention in light of the announcement this week that the USD160 billion Pfizer/Allergan global mega-deal has been officially abandoned, despite the transaction having already been filed before all the relevant competition agencies around the world. While the Pfizer/Allergan deal was called off as a result of new tax laws and therefore not as a result of antitrust issues directly, the deal did put multinational mega-deals firmly in the spotlight.
The Pfizer/Allergan deal is not the only mega-deal that faced significant government opposition. It was announced this week that Halliburton’s takeover of Baker Hughes, in a deal valued at USD 25 billion, is going to be strongly opposed by the U.S. DOJ.
It is, however, not only the U.S. Government that is having a significant impact on multinational deals, as evidenced by the Anbang Insurance and Starwood Hotels & Resorts deal, valued at USD 14 billion, which has also been abandoned after mounting pressure by the Chinese government.
From an African perspective, the South African Competition Commission just last week extended its investigation in the USD 104 billion SABMiller and Anheuser-Busch InBev merger. It is widely suspected that the request for the extension is due to intervention by the Minister of Economic Development, in relation to public interest grounds. Although there is no suggestion at this stage that Minister Patel is opposing the deal, the proposed intervention does highlight bring into sharp focus the fact that multinational mega-deals face a number of hurdles in getting the deal done.
‘Getting multinational deals through’ is a hot topic at the moment amongst antitrust practitioners and is and the ABA thought it beneficial to have a panel discussion dedicated purely to merger control issues across African jurisdictions. In particular, the panel addressed some of the key issues which merging parties need to consider, including inter alia issues relating to harmonisation across agencies, the role of public interest considerations, prior implementation and the need for upfront substantive economic assessments.
The panel consisted of a varied mix of panellists from both private practice and government, and included Pr1merio director John Oxenham (he is also a founding partner at South African based law firm Nortons Inc.), economist and former Commissioner of the COMESA Competition Commission (COMESA CC) Rajeev Hasnah (Rajeev was also a former commissioner of the Mauritius Competition Commission and is an economist for Pr1merio), manager of the South African Competition Commission office, Wendy Ndlovu, and Kenyan based external counsel Anne Kiunuhe (Anne practices at the law firm Anjarwalla & Khanna).
The panellists were tasked with addressing a variety of topics: we summarise below some of the key issues which the panellists highlighted, which merging parties, practitioners and antitrust agencies themselves (amongst whom Tembikosi Bonakele, the South African Competition Commissioner was present in the panel audience) should be cognisant of in relation to merger control in Africa.
John Oxenham and Wendy Ndlovu at ABA Spring Meeting 2016 in Washington, D.C.
John Oxenham
John pointed out that from a South African perspective, mergers undergo a robust evaluation by the Competition Authorities and that although the investigation of most large mergers is completed within 60-70 days, the fact that the Commission may request the Competition Tribunal for an extension of up to 15 business days at a time, may result in the investigation of certain mergers taking considerably longer. The risk of a merger being delayed is increased significantly due to the level of third party interventionism, particularly ministerial intervention on public interest grounds.
John advised that merging parties should consider the impact that a particular merger will have on the public-interest grounds upfront to avoid delays in the investigation period as a result of further requests for information from the Commission, or may even amount to an incomplete filing.
In respect of substantive economic assessments, John pointed out that a number of jurisdictions, including South Africa, Namibia, Zambia and to a lesser extent Botswana, requires a substantive upfront economic assessment. In this regard the South African Competition Commission is perhaps the most robust in its economic evaluation of a merger in light of the resources dedicated to its own in-house economic department as well as utilising external experts when necessary. John also highlighted the fact that the South African Competition Authorities rely on oral testimony and expert witnesses are often subjected to substantial and lengthy examination and cross examination before the Competition Tribunal.
On the topic of gun-jumping or prior implementation, John mentioned that the following jurisdictions are examples of countries which do not require notification prior to implementing the transaction – in other words, they are not suspensory:
Malawi
Senegal
Mauritius
Whereas the following countries do require notification prior to implementation (suspensory merger control jurisdictions):
South Africa
Swaziland
Zambia
Botswana
On harmonisation, John confirmed that in relation to public interest considerations in merger control, the South African competition authorities play a leading role on the African continent and pointed out that in addition to Kenya and Tanzania, Namibia also considers public interest considerations and that there is a substantial amount of collaboration and information sharing between the South African and Namibian competition authorities, as was the case in the Walmart/Massmart deal.
Despite the information sharing between agencies, John confirmed that there are rules in place to protect confidential and legally privileged information and that the South African competition authorities are cognisant and respectful of these provisions.
Rajeev Hasnah
Rajeev Hasnah, Pr1merio economist and former COMESA Competition Commissioner, and Anne Kiunuhe from Kenya
Rajeev noted the significant progress which the COMESA CC has made in relation to merger control by publishing financial thresholds for mandatorily notifiable transactions and specified filing fees, as well as publishing guidelines which clarify when a merger will have a sufficient regional dimension to fall within the COMESA CC’s jurisdiction.
On the topic of harmonisation, Rajeev discussed the challenges due to a lack of harmonisation between COMESA and its member states and noted that COMESA does not have exclusive jurisdiction in the cases which do fall within its jurisdiction. Parties, therefore, may find themselves being required to file a merger both before the COMESA CC as well as before the respective national authorities. A further challenge facing the COMESA CC is that there are 19 member states and consequently, the relevant geographic market is significant. Accordingly, often the national authorities are best placed to evaluate a merger and will therefore defer the evaluation of the merger to the relevant national authority.
On the role of economic assessments, Rajeev stated that an economic assessment underlies any merger evaluation and that both the Mauritius Competition Commission and the COMESA Competition Commission conducts a comprehensive economic assessment of a merger.
Wendy Ndlovu
When asked on what role public interest considerations play in merger control in terms of the South African competition regime, Wendy indicated that the framework of the Competition Act specifically requires the competition authorities to consider the impact that a merger may have on the four specified public interest provisions contained in the Act. Wendy confirmed that an evaluation of public interest considerations may both justify a merger despite the merger likely being likely to cause a substantial lessening or prevention of competition in the market, alternatively, public interest considerations may lead to a prohibition or the imposition of conditions on a merger which raises no competition law concerns and may in fact be pro-competitive.
Wendy recognised that there is a need, however, for greater certainty in respect to the manner in which the South African authorities evaluate public interest considerations and pointed out that the Competition Commission is likely to finalise and publish its guidelines on the public interest assessment in an effort to promote greater certainty.
On prior the issue of prior implementation, Wendy pointed out that merging parties need to be mindful of the consequences of gun-jumping and noted that the South African Competition Tribunal has imposed administrative penalties, as in the Netcare case, on parties for failing to notify a mandatorily notifiable transaction.
Anne Kiunuhe
Anne discussed the Competition Authority of Kenya’s (CAK) willingness to focus not only on merger control but has also identified the CAK’s increasing tendency to investigate and prosecute firms engaged in restrictive practices (as demonstrated by the recent dawn raids conducted by the CAK in the fertiliser industry). Despite the CAK’s growing confidence, Anne pointed out that in respect of merger control, the CAK is open to and in fact often relies on precedent from foreign jurisdictions when evaluating a merger. In particular, Anne noted that public interest grounds are specifically considered during the merger review procedure and that in this respect, the CAK largely takes the lead from the South African competition authorities.
From a practical perspective, Anne mentioned that the CAK usually requests a meeting with the merging parties soon after a transaction has been notified, and that usually representatives from the merging parties, along with local external legal counsel, should be present. The CAK prefers that the representatives present should be the best placed to answer or address the CAK’s queries. This often necessitates representatives from the parent company being present as opposed to representatives from the subsidiary entities only.
The direct contact between the CAK and the merging parties is quite different from the manner in which the COMESA CC evaluates mergers where the consideration of a merger is done solely on the papers and any communication between the COMESA CC and the merging parties is done through the merging parties’ local external counsel.
As to legislative developments, Anne pointed out that the merger regulations in Kenya now provide that for purposes of establishing a “change of control”, it is sufficient if the acquiring firm is able to materially influence the commercial decisions of the target firm. Accordingly, the acquisition of a minority shareholding for instance may constitute a change of control if the holders of such shares may for instance exercise veto rights.
On COMESA, Anne mentioned that the COMESA CC permits merging parties to seek a comfort letter when unsure as to whether a merger requires filing and that the use of comfort letters has been rather prevalent.
Conclusion
The role of public interest considerations in merger control was a dominant focus point throughout the panel discussion due to this unique aspect in a growing number of African jurisdictions merger control provisions.
Please click on the following link to access a an article on the role of public interest considerations in merger control in South Africa, which addresses in particular, the impact of ministerial intervention in merger proceedings and the concomitant impact which such intervention has on the costs, timing and certainty of merger proceedings.
March 2016 has been a busy month for the competition agencies of South Africa and Kenya respectively. Both agencies carried out search and seizure operations as a result of alleged collusion within various sectors of the economy. While the March dawn raids are not connected, the South African Competition Authority, as part of its advocacy outreach, provided training to the Competition Authority of Kenya relating to inter alia, search and seizure operations.
South Africa
On 23 March 2016, the South African Competition Commission carried out search and seizure operations in the automotive glass fitment industry, as part of its continued investigation into alleged collusion within this sector.
Accordingy to the SACC, the raid was carried out “at the Gauteng premises of PG Glass, Glasfit, Shatterprufe and Digicall as part of its investigation of alleged collusion. PG Glass and Glasfit are automotive glass fitment and repair service providers; Shatterprufe supplies PG Glass and Glasfit with automotive glass while Digicall processes and administers automotive glass related insurance claims on behalf of PG Glass and Glasfit.”
John Oxenham, founding director of Pr1merio, notes that “[t]his most recent dawn raid follows on from those carried out towards the latter part of 2014 and 2015 and confirms that the SACC has adopted a more robust approach to investigating alleged anti-competitive practices.” In this regard, Commissioner, Tembinkosi Bonakele, confirmed at the 9th Annual Competition, Law, Economics and Policy Conference in November last year that the Competition Commission has in the past two years, “conducted more dawn raids than those conducted in preceding years since the Competition Commission came into existence” (nearly 16 years ago).
For an overview of dawn raids and cartel investigations in South Africa, please see the following GCR Article.
Kenya
This month the Competition Authority of Kenya (“CAK”) conducted its first dawn raid. The search and seizure operations were carried out in respect of two fertiliser firms, Mea Limited and the Yara East Africa, based on the CAK’s suspicion of price fixing occurring between these two firms, who together control approximately 60% of the fertiliser market. The CAK conducted the raid in accordance with Section 32 of the Competition Act, 2011 which provides for the Authority to enter any premises in which persons are believed to be in possession of relevant information and documents and inspect the premises and any goods, documents and records situated thereon. This follows an inquiry which was launched last year by Kenyan competition authorities into what the CAK termed “powerful trade associations exhibiting cartel-like behaviour specifically targeting banks, microfinance institutions, forex bureaus, capital markets as well as the agricultural and insurance lobbies”. The fact that the CAK has carried out its first dawn raid demonstrates its growing stature.
The fertiliser industry appears to be a priority sector for a number of African jurisdictions as the CAK’s investigation into this sector follows the South African Competition Commission’s investigation into the fertiliser industry (which resulted in a referral before to the South African Competition Tribunal for adjudication some years back). In this regard,the South African Competition Commission’s spokesperson stated that the “fertiliser sector is viewed as a priority sector, due to the its importance as an input in the agricultural sector” (as reported here on African antitrust)
Zambia
Interestingly, the Zambian Competition and Consumer Protection Commission (“CCPC”) had, in 2012, conducted dawn raids at the premises of two fertiliser companies, as a result of alleged collusion within the industry.
On a Path to Harmonisation?
While there are a number of practical and legislative hurdles to effectively carrying out cross border search and seizure operations, it appears that cross border investigations may not be too far off. This is particularly so as the various agencies within the Southern African Region have identified similar priority sectors (as evidenced by both the investigations into the fertiliser sectors as well as the various market inquiries into the grocery retail sector).
COMESA member state, the Comoros, recently adopted its own competition, (Loi No.13 -014 /AU – Relative à la concurrence en Union des Comoros (the Competition Act)) which will apply to all entities (public and private) who conduct business which has an “effect” in the Comoros.
The Act prohibits restrictive practices and abuse of dominance practices, although caters for a rule of reason defence. Parties may also apply for exemptions from either the Government or the Commission Nationale de la Concurrence (“CNC”). The CNC is responsible for enforcing the provisions of the Act, but has not yet been established.
Firms that are currently active in Comoros should take particular note of this legislative development due to the substantial administrative penalties which may be imposed for contravening the Competition Act.
Potential penalties for engaging in restrictive practices in contravention of the Competition Act can result in firms being fined a maximum of 5% of global turnover and 20% local turnover. These potential maximum penalties are significantly higher than the commonly prescribed maximum administrative penalty of 10% of domestic turnover only.
Interestingly, the Competition Act does not provide for merger notification. There is, however, a provision which provides for the imposition of an administrative penalty if incorrect information is provided to the CNC in relation to a merger. Primerio Founder, John Oxenham, mentions “This discrepancy needs to be clarified and it is likely that this provision applies in circumstances where the CNC calls upon merging parties to provide it with information in relation to a specific transaction”.
Primerio Director, Andreas Stargard, confirmed that the Competition Act will be subject to COMESA and is in line with COMESA’s framework which Stargard mentions “envisages that each member state must have its own domestic competition regime”.
Landlocked and Oil-Rich South Sudan Joins Free-Trade Zone
As South Sudan was officially admitted to the East African Community (EAC) as its sixth member in Arusha (Tanzania), on Wednesday, March 2, the beleaguered nation joined a free-trade zone that will allow it to benefit from more open labour movement, less restrictions on capital flows and other increased economic integration. The other member states are Tanzania, Kenya, Uganda, Burundi, and Rwanda. After integration with S. Sudan — the youngest nation on Earth — the region will have a population of an estimated 163 million.
John Oxenham, of Pr1merio Africa advisors, says: “South Sudan’s former institutional weaknesses were (apparently, despite the ongoing civil strife in the country) sufficiently remedied that the EAC governing body saw fit to grant the application for admission that had been pending since 2011. Basic governance principles must be met for EAC membership, and we are not even talking competition-law here…”
As the EAC charter provides, all members must demonstrate and strive to achieve “good governance including adherence to the principles of democracy, the rule of law, accountability, transparency, social justice, equal opportunities, gender equality, as well as the recognition, promotion and protection of human and peoples’ rights in accordance with the provisions of the African Charter on Human and Peoples’ Rights.” (EAC Treaty, Chapter 2 Article 6 (d)).
Setting aside civil-rights concerns or worries about political instability, the integration of an oil-rich nation may ultimately benefit its neighbouring fellow EAC members, such as Kenya and Uganda. It remains to be seen whether integrating a less-than-stable country into the EAC zone will harm the competition legislation the region enacted in 2006. As AAT author Elizabeth Sisendapointed out recently, the organisation “has been setting up the mechanisms for its enforcement to-date through capacity building and mobilizing resources. In 2010, the EAC subsequently enacted competition regulations to assist in implementing the Act. One of the main challenges that has been encountered in the EAC with regards to the implementation of competition law and policy has been the unique economic and market structure of the member states. The majority of the EAC member states are economies that are transitioning from state-regulation to liberalization.”
We note that S. Sudan’s northern neighbour, the Republic of [the] Sudan, is currently a COMESA member state and thereby subject to the COMESA competition-law regulations and related merger-notification regime. South Sudan has, since at least the 2012 talks in Uganda, likewise been in negotiations with the COMESA governing bodies to discuss accession to that free-trade zone.
The Namibian Competition Commission (“NaCC”) has recently confirmed that the NaCC has submitted proposals to the Ministry of Industrialisation, Trade and SME Development (“Ministry”) relating to possible amendments to the Namibian Competition Act.
AAT does not yet know exactly what the nature and scope of the proposed amendments are, although the NaCC has indicated that the current Act, which was promulgated in 2003, is out of date and does not sufficiently cater for Namibia’s context (relating both to Namibia’s economic and socio-economic environment).
Furthermore, the NaCC has indicated that the amendments are aimed at increasing the NaCC’s enforcement capabilities and address ‘loopholes’ in the current Act.
In this regard, Minister Calle Schlettwein under whose portfolio the NaCC falls, stated that: “I am made to understand that in the years ahead, the Commission will focus on moving forward as a highly competent and equipped market regulator, especially in addressing market distortions on monopolistic and collusive behaviour and inefficiencies on price formation processes in the country that impact on the consumer welfare and the broader structure of the economy. To this end, its activities are to be driven by the adoption of a National Competition Policy as well as revisions to the Competition Act.”
As Andreas Stargard notes, ‘[i]t would not be surprising if the proposed amendments related to “complex monopolies” and the introduction of criminal sanctions for cartel conduct,’ as this would be in line with the amendments made to the South African Competition Act (although not yet in force). “Moreover, the Namibian commission will also likely cater for so-called ‘public interest’ elements in its enforcement strategy, as we have seen in several African jurisdictions.” Stargard’s law partner at Pr1merio, John Oxenham, likewise emphasises “the strong ties between the two respective competition authorities” in southern Africa:
“The NaCC has often taken the lead from the South African competition authorities in respect of the interpretation and enforcement of competition law matters. The Namibian Competition Act is also largely moulded around the South African Competition Act.”
The spokesperson for the NaCC has said that “the aim of the review is to strengthen the enforcement capabilities and machinery of the commission and to close loopholes that exist within the current law. Our Competition Act is similar, in many ways, to that of South Africa and the amendment thereof will only raise our standards to international best practices but within the context of Namibia.”
Schlettwein is on record as saying: “I am made to understand that in the years ahead, the Commission will focus on moving forward as a highly competent and equipped market regulator, especially in addressing market distortions on monopolistic and collusive behaviour and inefficiencies on price formation processes in the country that impact on the consumer welfare and the broader structure of the economy.
“To this end, its activities are to be driven by the adoption of a National Competition Policy as well as revisions to the Competition Act.”
In sum, given that the proposed introduction of a “complex monopolies” offence and criminal sanctions in South Africa has led a number of practioners in that country questioning the constitutionality or the practicality of the these amendments, it will be interesting to see whether the NaCC takes these concerns into consideration assuming we at AAT are indeed correct that these are the amendments which the NaCC is also proposing to introduce.
On 18 February 2016, an objection was filed at the NaCC in relation to the Lewis Stores and Bears Stores merger, two furniture retailers who are set to merge in Namibia.
Lewis Stores operates mostly out of South Africa and has recently appeared in the financial press in South Africa as a result of various adverse allegations in relation to its micro-lending policy. The allegations against Lewis Stores include claims that Lewis targets individuals whom they are ‘aware’ of will not be able to afford the credit instalments and then subject those individuals to high interest rate penalties – An allegation which Lewis denies.
Irrespective of the merits of the allegations against Lewis, it is a very interesting complaint which has been brought before the NaCC. In essence, the complainant’s objection is based on the argument that the businesses practices of Lewis will “be detrimental to the public” as the Namibia Financial Institutions Supervisory Authority (“NAMFISA”), the regulator of micro lenders (including in-store credit providers), has not proven its effectiveness in adequately protecting consumers from the type of harm envisaged by the complainant in respect of Lewis’ business practices.
The complaint immediately raises a number of interesting considerations.
Firstly, from a policy perspective, it would appear highly unusual for a regulator such as the NaCC to so assume the duties of another regulator, NAMFISA. The complainant in this matter argues that the NaCC should take NAMFISA’s inadequacy into account when considering the impact of the merger on public interest grounds. Whether the NaCC is prepared to entertain such a complaint remains to be seen, however, it would seem unlikely given that in terms of the Namibian Competition Act, there are specified public interest grounds which the NaCC may consider when evaluating the impact of the proposed merger on public interest grounds. It should be noted, however, that the list of grounds, although identical to the public interest grounds contained in the South African Competition Act, is not exhaustive and the NaCC is entitled to consider broader public interest grounds.
Secondly, and somewhat bizarrely, the Namibian Competition Act states that “a merger must either be approved or rejected” (without express wording that it can be approved subject to conditions). Despite this, the MassMart/Wal-Mart merger was, however, approved subject to conditions which were largely a replication of the public interest conditions imposed by the South African Competition Authorities in respect of the same merger.
The existence of public interest provisions in a number of African jurisdictions’ competition law legislation has been subject to extensive debate, largely due to the uncertainty with which competition authorities approach the evaluation of such public interest considerations when compared to the more traditional competition law objectives.
Accordingly, the NaCC should guard against entertaining a complaint which will jeopardise ‘merger control certainty’ which is pivotal to all good merger control regimes.
Most African jurisdictions with competition laws have included provisions in their respective legislations that allow the competition authorities to conduct market inquiries.
Market inquiries have proved to be useful tools for competition agencies in numerous jurisdictions, particularly in Europe, and is becoming a common and increasingly popular tool amongst an number of African agencies as well.
Despite the benefits that may flow from a market inquiry, it is important that competition agencies appreciate and have due regard to the costs associated with such inquiries. Market inquiries are very time consuming and onerous for market participants and should be used sparingly. Having said that, the focus of market inquiries in most African jurisdictions tend to be on markets which the relevant authorities have identified as having a large impact on consumers.
In other words, socio-economic considerations appear to be a significant factor during the screening process used in deciding whether to institute a market inquiry. Sectors such as food, healthcare and banking (at an individual consumer level) are some of the common industries which have been ‘prioritised’ or identified as important sectors.
While the number of market inquiries which have been concluded on the African continent is limited, as competition agencies gain more expertise and confidence in their mandates, there is likely to be a significant increase in the number of market inquiries instituted and firms conducting business in Africa, particularly within ‘priority’ sectors, should be cognisant of this.
We set out below a brief overview of the market inquiries which are currently being conducted in the various African jurisdictions.
South Africa
There are currently three market inquiries which are underway, one into the private healthcare sector and the other into the grocery retail market. The third market inquiry is in the liquefied petroleum gas sector.
The private healthcare inquiry was launched on the basis that cost of private health carein South Africa is a concern to the competition authorities. A revised statement of Issues for public comment was announced on 11 February 2016 and comments are to be submitted by 11 March 2016.
The grocery retail inquiry is focussed largely on the stricture of the market and the ability of smaller or informal retailers to compete, but will also address issues such as “long term lease” clauses (which has already been adjudicated upon by the Competition Tribunal).
The third market inquiry is into the LPG which was launched in August 2014 is expected to conclude in March 2016.
The only previous market inquiry concluded in South Africa was into the banking sector. This inquiry was conducted on an informal basis as there were no formal legislative powers bestowed on the competition authorities to conduct market inquiries.
Swaziland
The Swaziland Competition Commission (SCC) announced in January 2016 that a market inquiry has been launched into the retail banking sector. The SCC stated that retail banking service offered to consumers, micro and medium enterprises remained the most important sub-sector of banking. It is, however, the ‘current account’ which is the central product to be used as the starting point for the inquiry.
Zambia
On 1 February 2016, the Zambian Competition Authority (CCPC) announced that it will be conducting a market inquiry into the vehicle towing industry. While the CCPC indicated that it wishes to understand the “conditions of competition in the market”, although the inquiry came about as the CCPC had received numerous complaints from consumers that emergency towing operators were charging high prices. It remains to be seen whether this inquiry is focused predominantly on competition-law issues, or rather consumer-protection laws.
Botswana
The Competition Authority in Botswana (CA) is currently underway with a market inquiry into the grocery retail sector, focusing on shopping malls and in particular, the impact of long term exclusivity leases on competition in the market.
COMESA
Consistent with the competition authorities of South Africa and Botswana, the COMESA Competition Commission (“CCC”) has also launched an investigation into the impact that shopping malls have on competition. The CCC announced that it will carry out their inquiry by taking samples from the member states.
As we reported earlier this week, the previously granted extension of the competition authorities’ review was “widely suspected that the request for the extension is due to 
The R10-million administrative penalty is a record amount for gun-jumping, or the failure to notify the competition authorities of a merger. Previously, the highest penalty for a failure to notify was just over R1-million. The new record penalty follows numerous warnings by the Competition Commission (“Commission”) that it intended to materially increase penalties for failure to notify mergers — says Andreas Stargard, an antitrust practitioner with 
John Oxenham, of 
AAT does not yet know exactly what the nature and scope of the proposed amendments are, although the NaCC has indicated that the current Act, which was promulgated in 2003, is out of date and does not sufficiently cater for Namibia’s context (relating both to Namibia’s economic and socio-economic environment).
African Antitrust & Competition Law 