At today’s CCC Business Reporter Workshop, Senior M&A Analyst Sandya Booluck presented major plans to amend the regional trading bloc’s merger-control regime.
The most notable part of this “complete overhaul” of the CCC regime will be the likely change from the current non-suspensory to a suspensory merger notification scheme.
Says Primerio Ltd. antitrust counsel Andreas Stargard: “This change is, of course, still subject to approval by the CCC Board and the COMESA Secretariat Council of Ministers, but it is likely to pass in my personal opinion. This is especially true since, as former CCC Head Lipimile pointed out at today’s session, this change was in fact demanded by several of the NCAs of the COMESA member states, also in view of the Art. 24(8) referral procedure. It thus presumably enjoys broad support from the bloc’s leadership and will obtain a passing vote before the end of 2023!”
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)
Combined assets and/or turnover of at least R6.6-billion.
Assets and/or turnover of at least R190-million.
Combined assets and/or turnover equals or exceeds R560-million but is less than R6.6-billion.
Assets and/or turnover equals or exceeds R80-million but is less than R190-million.
Combined assets and/or turnover of less than R560-million.
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.
The COMESA Competition Commission has recently made available the relevant merger filing documentation and forms. Complying with the requirements set out in Form 12 certainly appears, at first glance, to be relatively straightforward, however, contrary to what is stated in the COMESA Regulations, the Merger notification form appears to prohibit the closing of a transaction without approval (i.e., parties may not implement the merger or acquisition without the COMESA Commission approval).
The attempt to legislate by way of the notification documents further erodes merger control certainty. Given the extremely wide ambit of what constitutes a notifiable merger, the COMESA Commission will need to ensure that the contradiction contained in the merger filing forms is urgently rectified.