Advancing a constitutional approach in evaluating mergers and acquisitions in South Africa : lessons from competition commission of South Africa vs Mediclinic Southern Africa (PTY) LTD 2022 (4) SA 323 (CC)

Abstract

Competition law is a vital tool that can be used to regulate and promote a competitive market economy. It is often argued that in a free market economy, market operation/performance should be left to be determined and regulated by market forces, and therefore state intervention should be minimal. Even though this view may have merit, it may be unsuitable or undesirable in developing countries like South Africa that are grappling with historical political ties that have engraved deep racial inequalities and uneven opportunities or access to participate in the economy. In the latter scenario, it is fundamentally important for the government to introduce measures to ensure that free market operations do not widen the inequalities and exclude other members of the society from meaningful participation in the economy. This is the story of the current South African competition law regime. The South African Competition Act has traditional competition objectives and equity objectives, both of which are explicitly set out in the preamble, section 2, and the substantive provisions of the Act. Section 12A of the Act, the merger control provision, is one of those provisions in the Act that incorporates both the competition and equity policy objectives. The legislature intended that both policy objectives be approached with and given equal weight in interpreting and applying section 12A. Section 12A is therefore a regulatory tool deployed by the South African government to regulate the implementation of mergers and acquisitions to promote competition and further advance access to and equal participation in the economy. These objectives are in line with some of the fundamental objectives underpinning our constitutional democracy including the right to equality and the advancement of human rights. The Constitution is the supreme source of law that sets the benchmark against which all laws must be interpreted. The Competition Act should therefore be applied within the framework of the Constitution. Section 39(2) enjoins courts, tribunals, and forums to promote the spirit, purport, and objectives of the Bill of Rights when performing judicial duties. It therefore follows that; competition authorities should give regard to the constitution and the Bill of Rights when evaluating mergers and acquisitions. In Competition Commission v Mediclinic, the Constitutional Court stated that when evaluating mergers, competition authorities are bound to give regard to all the policy objectives of the Competition Act, and further comply with all their constitutional duties including the injunction in section 39(2) to promote the spirit, purport and objects of the Bill of Rights.