Implications of non-notification of notifiable mergers in South African competition Law

Abstract

Competition regulation is meant to encourage the attainment, maintenance and promotion of high levels of competition in order to facilitate a number of economic and social objectives. From an economic theory perspective firms are motivated by self-interest and profit maximisation which may result in attempts to subvert the competition process. Mergers are often economically good for the prosperity of merged entities and the economy in general but may sometimes result in negative welfare consequences for consumers and other competitors if left unregulated. Chapter 3 of the Competition Act deals with merger control and provides that an intermediate or large merger may not be implemented until it has been approved by the competition authorities, with or without conditions while small mergers may be implemented without approval of competition authorities unless the parties to the small merger voluntarily decides to notify or the Competition Commission requires them to do so, if in the Competition Commission?s opinion the merged entity may substantially prevent or lessen competition; or cannot be justified on public interest grounds. It is trite that notifiable mergers must be notified before implementation to the competition authorities and failure to notify notifiable mergers attracts costly consequences such as the imposition of administrative penalties, requiring divestiture or even prohibition of the merger deal ex post amongst others. The focus of the dissertation revolves around the merger notification process; and consequences of implementing a notifiable merger prior to or without notification to the competition authorities. It also incorporates a discussion of implications to small mergers which despite legally not obliged to notify before implementation the Competition Act provides that the Competition Commission may require the parties to notify the merger even after implementation. The main conclusion is that merging parties should not expose their businesses to the legal uncertainty inherent with non-notification of notifiable mergers prior implementation. Small mergers are also encouraged to apply to avoid costly consequences because the Competition Commission may require them to notify ex post, which may result in conditions being imposed or the merger being unscrambled.

oorweging oor die moontlike gevaar van die VBW in sy huidige vorm en die gedeeltes wat wysigings vereis. Dit sal geïllustreer word dat die VBW opgestel is met die duidelike bedoeling om beskerming en voordeel van die verbruiker deur kodifisering van die Gemene Reg beginsels wat voorsiening maak daarvoor om die posisie van die verbruiker binne die verbruikersmarkte te versterk. Heelwat van die bepalings en beginsels wat deur die VBW bekendgestel is, is vreemd tot die Suid-Afrikaanse regsisteem. Dus kan daar verwag word dat die implementeering van n nuwe stuk wetgewing binne n bestaande regstelsel, konflik en onsekerheid in die toepassing daarvan ondervind sal word. Gevolglik is daar twee stelle gevolgtrekkinge wat uit hierdie verhandeling spruit. Eerstens; die algemene effek wat Deel G van die VBW op verbruikersmarkte gehad het, naamlik die bevordering van verbruikers se regte wat daardeur verbruikers, veral voorheen benadeelde verbruikers, in staat stel om aktief deel te neem in verbruikers markte in die geheel. Tweedens het die verhandeling ongelukkig ook gevind dat die VBW versuim het om essensiële meganismes toe te pas, soos wat dit gebruik word in die Verenigde Koninkryk en die Europese Unie naamlik, onregverdige kontrak bepalinge wetgewing wat onregverdige en onredelike kontrakvoorwaardes voorkom.