guideline on small merger notification

The Competition Commission has issued a guideline on small merger notification pursuant to the recent amendment to merger thresholds.

The amended thresholds have resulted in the revised classification of mergers which would previously have been defined as ‘intermediate’ as ‘small’ and thus not requiring mandatory notification to the competition authorities. In an endeavour to prevent potentially anti-competitive mergers from escaping regulatory scrutiny, the Commission has issued a guideline on the notification of small mergers.

In terms of the Competition Act, the parties to a small merger may implement that merger without the approval of the competition authorities. However, the Commission may call upon the parties to a small merger to notify the Commission of that small merger within 6 months from the date of implementation of the merger if, in the opinion of the Commission, the merger may substantially prevent or lessen competition, or if the merger cannot be justified on public interest grounds. Parties may also voluntarily notify a transaction.

Notwithstanding the above, in its guideline, the Commission states that it will require notification of all small mergers which meet any of the following criteria:

• at the time of entering into the transaction any of the firms, or firms within the group, are subject to an investigation by the Commission in terms of Chapter 2 (prohibited practices and abuse of dominance) of the Competition Act; or

• at the time of entering into the transaction, any of the firms, or firms within their group, are respondents to pending proceedings referred by the Commission to the Competition Tribunal in terms of Chapter 2 of the Competition Act.

Procedurally, the Commission has indicated that it wishes to be informed of such small mergers in writing by way of a letter indicating the parties’ intention to enter into the transaction. The Commission will then revert to the parties indicating whether or not the parties are required to notify the merger in the prescribed manner.

If you would like further information on the implications of the guidelines for your transactions, please do not hesitate to contact any of the directors in the ENS Competition Department:

Lee Mendelsohn		(011) 269 7727		Mark Garden		(011) 269 7944
Justin Balkin		(011) 269 7928		Jocelyn Katz		(011) 269 7671
Lizel Blignaut		(011) 269 7630		Natalia Lopes		(011) 269 7774

 

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