Mergers and Acquisitions in South Africa Tembinkosi Bonakele

Mergers and Acquisitions in South Africa Tembinkosi Bonakele Deputy Commissioner, Competition Commission South Africa ICN Merger Workshop 10 -11 March 2009 Chinese Taipei

Jurisdiction: a Merger • A merger occurs when one or more firms directly or indirectly acquire or establish direct or indirect control over the business of another firm: • Through: • “Purchase or lease of the shares, interests or assets of that competitor, supplier, customer or other persons; • Amalgamation or combination with that competitor, supplier, customer or other person; or Any other means”

Jurisdiction: Thresholds • Thresholds set by Minister of Trade & Industry after consultation with the Commissioner • Based of turn over and/ or asset value • Small merger no mandatory notification, notification voluntary or by order of the Commission • Intermediate merger – Commission decides, right of appeal to the Tribunal • Large merger – Commission recommends to Tribunal, merger subjected to public hearing

Categories of Mergers • Phase 1 cases non complex cases, low market shares • Phase 2 cases Relatively complex case Market shares of >15% but below 30% • Phase 3 cases Very complex cases High market shares (> 30%)

Merger Analysis Jurisdiction No No Is it a merger, as defined in the Act? Have thresholds been met? Inform parties Repay fees Yes Yes e. g. concentration, import competition, barriers to entry, , Countervailing power of customers, coordination. Does the merger result in SLC? Are there any defenses? Technology, efficiency or other pro-competitive gains No Are there any public interest considerations? • • Effect on a particular sector or region Employment Competitiveness of SME’s or black businesses International competitiveness

Merger Analysis • Define the market • Explore likely theories of harm • Collect data from: Parties Customers Competitors Other sources • Test, confirm or disprove theory of harm

Public Interest Issues Consideration given to effects of merger on: • A sector or region • Employment • Ability of SME’s or historically disadvantaged persons to become competitive • Ability to compete internationally

Decision Making The Commission can decide or make recommendations to either: ü Approve without conditions ü Approve subject to certain conditions ü Prohibit

Time Frames • Intermediate mergers: Commission has initial 20 business days to decide Can extend with 40 business days. • Large mergers: the Commission has initial 40 business days to refer its recommendations to the Tribunal can apply to the Tribunal for an extension of 15 business days at a time with the parties consent.

Thank you for listening