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South Africa releases Competition Amendment Bill

On 1 December 2017, the South African Minister of Economic Development, Ebrahim Patel, published Government Notice no. 41294, which announced the release of the Competition Amendment Bill, 2017 (the "Competition Bill") for public comment.

A primary objective of the Bill is to address structural challenges that constrain the South African economy, namely high levels of concentration and the racially skewed spread of ownership. The Competition Bill seeks to address these challenges through the introduction of various means, including:

  • strengthening the provisions of the Competition Act,1998 (as amended) relating to merger regulation and prohibited practices, with a particular focus on abuse of dominance;
  • requiring special attention to be given to the impact of anti-competitive conduct on small businesses and firms owned by historically disadvantaged persons;
  • strengthening existing provisions relating to market inquiries so that consequential remedial actions effectively address market features and conduct that prevents, restricts or distorts competition in the relevant markets;
  • providing the executive with more effective means of participating in competition-related proceedings and the power to initiate market inquiries; and
  • promoting the administrative efficacy of the Competition Commission, market inquiries and the Competition Tribunal.

To provide a sense of the practical implications of some of the proposed amendments, merging parties will be required to disclose, in their merger filings, all common shareholders and cross-directorships with other competitors in the same or a related market(s). This is to detect and evaluate the current levels of concentration and possible coordination that may be aggravated by a proposed transaction. The Competition Bill also requires merging parties to disclose all merger activity they have undertaken in the preceding three years to facilitate a deeper analysis of "creeping concentration" (ie, the impact of incremental mergers over a short-to-medium timeframe).

The Competition Bill seeks to strengthen existing provisions relating to market inquiries so that:

  1. the outcomes of these inquiries result in effective remedial action that promotes competition;
  2. there is guidance on how to evaluate the adverse features of a market; and
  3. particular focus is brought to bear on small businesses and firms owned by historically disadvantaged persons.

Moreover, it is proposed that the commission's findings (including remedial actions) following a market inquiry are binding, unless challenged by the parties concerned before the Competition Tribunal.

The Competition Bill also provides for the imposition of administrative penalties for all contraventions of the Competition Act, including those contraventions that previously attracted administrative penalties only in the instance of a repeat offence. In determining the amount of an administrative penalty, in addition to the factors that the tribunal is currently required to consider, it is proposed that the impact of the contravention on small businesses and firms owned by historically disadvantaged persons should be included in the exercise.

For more information on the Competition Bill, please contact:

Jocelyn Katz
competition | director | head
jkatz@ENSafrica.com
cell: +27 82 413 0882

Mark Garden
competition | director
mgarden@ENSafrica.com