Engineering & construction: Construction company colludes
The Commission has referred a settlement agreement it reached with a construction company, GVK-Siya Zama (Cape) (Pty) Ltd (GVK), to the Competition Tribunal for confirmation as an order. The company has been charged with price-fixing, market division and collusive conduct in the construction industry. In terms of the settlement agreement, GVK has agreed to pay an administrative penalty of ZAR6 million.
Financial services: Updates & developments
In the financial services sector, there are two developments of interest:
- The Tribunal unconditionally approved the proposed acquisition by Capitec Bank Ltd (Capitec) of Portuguese-owned Mercantile Bank Holdings Ltd (Mercantile Bank). Capitec operates as a retail bank and Mercantile Bank provides business, commercial and private banking services. Capitec was selected by the Portuguese government as the successful bidder after approximately 60 expressions of interest from foreign and local bidders were received. The Tribunal found that the proposed merger did not raise any competition or public interest concerns.
- The Commission recommended to the Tribunal that the proposed merger whereby Absa Bank Ltd (Absa) intends to acquire the custody, trustee and derivatives clearing services business of Societe Generale (the Target Assets), be unconditionally approved. Absa is a diversified financial services provider and the Target Assets are active in the financial securities services. The Commission found that the proposed merger did not raise any competition or public interest concerns.
Healthcare: Nurse's application against GEMS dismissed
The Tribunal has dismissed an interim relief application by a certified registered nurse against the Government Employees Medical Scheme (GEMS). Charlnita Cassiem, who runs her own business by administering dialysis to patients, had requested, among other things, that an agreement between GEMS and clinical technologists to provide open dialysis should be declared anti-competitive because its sole intention is to create a cartel. Ms Cassiem also requested that GEMS is interdicted from exercising its dominant position by compelling customers to stop making use of Cassiem’s services. GEMS argued that it had no dominance or market power capable of being abused and that Cassiem was using this process to extort payment from GEMS.
Industrials: Updates & developments
In the industrials sectors, there are three developments of interest:
- The Commission referred a settlement agreement it reached with Sonae Arauco (Pty) Ltd (Sonae) to the Tribunal for confirmation as an order. Sonae has admitted to price-fixing and collusive conduct in the wood-based commodity industry. In terms of the settlement agreement, Sonae has undertaken to pay an administrative penalty of ZAR46.9 million.
- The Tribunal confirmed a settlement agreement between the Commission and Greensweep Consortium (Pty) Ltd (Greensweep). The corporate cleaning company admitted it had colluded with another company in relation to a 2016 South African Social Security Agency tender. In terms of the settlement agreement, Greensweep agreed to pay an administrative penalty of ZAR 40,300.59.
- The Tribunal confirmed two separate settlement agreements between the Commission and power cable companies, Freefall Trading 1071 CC (trading as Indlovu Enterprises) and Cables for Africa CC. The companies admitted to collusive tendering in respect of a City Power tender and have agreed to pay administrative penalties of ZAR10,724.15 and ZAR10,079.50 respectively. Due to the Commission's findings that the companies also tried to subvert the BEE Act, the Commission confirmed to the Tribunal that it will refer the matter to the Broad-Based Black Economic Empowerment Commission.
Mining: CAC dismisses appeal against Sibanye / Lonmin merger conditions
The Competition Appeal Court (CAC) has dismissed an appeal by the Association of Mineworkers and Construction Union to set aside the Tribunal's approval of the merger between Sibanye Gold Ltd and Lonmin PLC. The CAC concluded that the merger parties had established that the determination of the number of jobs to be lost as a result of the merger was rational, and that the public interest in preventing employment loss had been balanced.
Regulatory: Updates & developments
There are two regulatory developments of interest:
- On 29 May 2019, Ebrahim Patel was appointed Minister of Trade and Industry by President Cyril Ramaphosa, combining the portfolios of Economic Development with Trade and Industry. Prior to this, he had served as Minister of Economic Development since May 2009. Agencies reporting to Minister Patel include the Commission, the Tribunal, the International Trade Administration Commission and the Industrial Development Corporation.
- The Commission has invited academics, private practioners and competition officials to submit research papers for inclusion in the Commission's program for its 13th Annual Competition Conference. The theme for this year's conference is "Competitive markets for an inclusive society: challenges, opportunities and prospects". The deadline for the submission of papers is 5 July 2019.
Retail: Updates & developments
In the retail sector, there are three developments of interest:
- The Competition Commission has published its preliminary findings and recommendations in the Grocery Retail Market Inquiry (the Retail Inquiry). The purpose of the Retail Inquiry, launched in October 2015, is to understand the general state of competition in the grocery retail sector. Stakeholders are required to make further submissions on the provisional report by 28 June 2019.
- The Tribunal conditionally approved the large merger whereby a new company, registered as K2019216440 (South Africa) Ltd, will purchase the entire issued shares of Edgars Consolidated Stores Ltd (ECSL). The Edcon Group (including ECSL) is in financial distress and the merger is intended to achieve a restructuring and recapitalisation of the debt and equity structure of Edcon Ltd. The conditions imposed relate to increasing local procurement, BEE participation and ensuring that there are no job losses as a result of the merger.
- The SA Clothing and Textile Workers’ Union (SACTWU) has written to the competition authorities to request that the 2012 merger between AVI Ltd (AVI) and shoemaker Green Cross Manufacturers Pty Ltd, be revoked for alleged breach of job commitments. AVI recently shutdown the Green Cross factory and retrenched 320 workers. SACTWU believes that the retrenchments are a direct consequence of the 2012 merger.
Tourism: Robben Island boat operators' hearing
A hearing involving two boat operator companies has taken place before the Tribunal. The companies, who ferry passengers between the V&A Waterfront and Robben Island, are alleged to have engaged in price-fixing and tender collusion. The case relates to a tender issued by the Robben Island Museum for bidders to be listed on its database as preferred service providers. Following an investigation, the Commission found that five companies had been involved in the collusive activities. In June 2018, the three other companies involved admitted to the charges and settled with the Commission.
Transport: Updates & developments
In the transport sector, there are two developments of interest:
- The Tribunal confirmed a settlement agreement between the Commission and Crown Relocations (Pty) Ltd (Crown). The furniture removal company admitted to price-fixing in relation to the e-toll levy charged to customers transporting goods on Gauteng highways. In terms of the settlement agreement, Crown has agreed to pay an administrative penalty of ZAR 240,647.05. The settlement follows a 2017 investigation by the Commission into allegations that several furniture removal companies, and the movers’ association to which they belong, had fixed the e-toll levy imposed on customers.
- The Commission amended its terms of reference for the land based Public Passenger Transport Market Inquiry (Transport Inquiry). In terms of the amendment, the Transport Inquiry will be completed by 31 July 2019.
Rest of Africa News
Angola: New competition authority begins receiving merger filings
The Competition Regulatory Authority of Angola (ARC) confirmed that it has received a merger notification of the transaction between Angolan Bank, Banco Economico and local insurance company, Tranquilidade-Corporacao Angolana de Seguros. The regulatory authority indicated that it received the notification in March 2019, but did not mention the exact stake that will be acquired by Banco Economico.
Botswana: Authority conditionally approves Edcon merger
The Botswana Competition Authority (BCA) conditionally approved the acquisition of 100% of the shares in Edgars Consolidated Stores Ltd by New HoldCo. The BCA noted that the proposed transaction did not raise any competition concerns but would give rise to certain public interest concerns. It approved the merger on the condition that "the merged entity shall use all its endeavours to ensure that the business of Edgars Consolidated Limited (Edcon) is maintained in Botswana; and in the event that the merged entity is compelled to change the Botswana business model, such intentions should be communicated to the Competition Authority with a clear justification for the decision."
ECOWAS: Regional competition authority launched
On 31 May 2019, the Commission of the Economic Community of West African States (ECOWAS) launched its regional competition authority in Gambia. The ECOWAS Regional Competition Authority (ERCA) has been established to implement the Regional Competition Rules adopted by the ECOWAS Authority in 2008. ECOWAS member states include Benin, Burkina Faso, Cape Verde, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone and Togo. Following the launch, the ERCA held meetings to chart a course for the operations of ERCA. Henrietta Uzoamaka Didigu has been appointed as the first Executive Director of the ERCA.
Kenya: Authority conditionally approves banking merger
The Competition Authority of Kenya (CAK) conditionally approved the proposed merger between Commercial Bank of Africa Ltd (CBA) and NIC Group. In terms of the proposed transaction, NIC will issue new shares to CBA shareholders. The CAK approved the merger subject to the condition that no employee is declared redundant for a period of 12 months from the date of closing the transaction.
Nigeria: Transitional merger filing arrangements
The Securities Exchange Commission (SEC) and Federal Competition and Consumer Protection Commission (FCCPC) have issued a joint advisory note on transitional arrangements for merger filings in Nigeria. The FCCPC and SEC have reached a mutual understanding with respect to pending and new merger notifications. During the transition period, which began on 3 May 2019, all notifications will be reviewed under existing SEC Regulations and Guidelines, and notifications will be filed at the FCCPC offices. The SEC and FCCPC will jointly review notifications and the FCCPC will convey decisions.
Zimbabwe: Authority to probe agricultural merger
The Competition and Tariff Commission (CTC) has decided to investigate the proposed acquisition of Profeeds Private (Pvt) Ltd (Profeeds) and Produtrade Pvt Ltd by Ashram Investments Pvt Ltd. The CTC will assess whether the merger will lessen competition or will result in the creation of a monopolistic situation, and has requested that interested stakeholders submit written representations by 14 June 2019.
Australia: TPG Telecom and Vodafone merger prohibited
The Australian Competition and Consumer Commission prohibited the proposed merger between TPG Telecom Ltd (TPG) and Vodafone Hutchison Australia Pty Ltd. The ACCC has concluded that the proposed merger is likely to substantially lessen competition in the supply of mobile services because the proposed merger would preclude TPG entering as the fourth mobile network operator in Australia.
European Union: Raids conducted in retail sector
The European Commission (EC) confirmed that its officials have carried out unannounced inspections at the premises of companies active in the grocery retail sector in France. The EC has concerns that two grocery retail companies may have violated EU antitrust rules that prohibit cartels and restrictive business practices.
United Kingdom: Updates & developments
In the United Kingdom, there are two developments of interest:
- The Competition and Markets Authority (CMA) has provisionally found that four pharmaceutical companies agreed not to compete for the supply of a prescription only anti-nausea drug in the UK. It is alleged, among other things, that in terms of the agreements concluded, one of the companies involved paid its rivals not to enter the market.
- The CMA has secured the disqualification of three former directors of office fit-out companies for their involvement in cartel behaviour. The CMA found that all three individuals were directors of their respective companies at the time of the cartel activity. The effect of the disqualification is that these directors are now disqualified from acting as directors or being involved in the management of any UK company. The CMA has secured nine director disqualifications since December 2016.
United States of America: Qualcomm to appeal decision
Qualcomm Incorporated, one of the world's largest smartphone chip and modem manufacturers, has announced that it will appeal a recent judgement which found that it had violated competition laws. Earlier in May, U.S. District Judge Lucy Koh found that Qualcomm’s licensing practices have strangled competition in parts of the chip market for years, harming rivals, smartphone makers, and consumers.
Our Recent Work
Crossfin / Sureswipe
The Commission has unconditionally approved the acquisition of Sureswipe (Pty) Ltd, by Crossfin Technology, a leading independent fintech group.
Daryl Dingley and Clare-Alice Vertue represented the merger parties.
Sureswipe provides acquiring, payment and value-added services to a diversified customer base across South Africa.
The Commission found that the merger is unlikely to substantially lessen or prevent competition or raise any public interest concerns.
Old Mutual Life and AE-AMD Independent Power Producer 3 / AE-AMD Independent Power Producer 1
The Tribunal has unconditionally approved a proposed merger whereby Old Mutual Life Assurance Company (South Africa) Ltd (OMLACSA) seeks to acquire AE-AMD Independent Power Producer 3 (RF) (Pty) Ltd (Herbert) and AE-AMD Independent Power Producer 1 (RF) (Pty) Ltd (Greefspan).
Shawn van der Meulen and Makati Seekane represented the merger parties.
OMLCSA is a long-term insurer which provides various products. It also operates in the renewable energy sector and invests in a number of projects under the government’s Renewable Energy Independent Power Purchase Procurement Program (REIPPPP). Herbert and Greefspan are Independent Power Producers which have been awarded tenders under the REIPPPP to supply electricity generated from renewable sources (in this case solar) to Eskom.
The Tribunal found that the merger is unlikely to substantially lessen or prevent competition or raise any public interest concerns.
Sima Chrome / Bhaphalane Siyanda Chrome
The Commission has unconditionally approved the proposed merger whereby Sima Chrome (Pty) Ltd (SIMA) intends to acquire Bhaphalane Siyanda Chrome Company (Pty) Ltd (BSCC).
Mmadika Moloi and Busisiwe Masango represented the merger parties.
SIMA is an investment company which invests in platinum group metals, chrome, base metals (manganese), energy (coal, uranium, oil, gas) and industrials. BSCC is an investment holding company which is invested in various mining activities.
The Commission found that the merger is unlikely to substantially lessen or prevent competition or raise any public interest concerns.
Written by Elisha Bhugwandeen, Webber Wentzel