Competition Act, 1998 (Act No. 89 of 1998)

Notices

Guidelines for the Determination of Administrative Penalties for Failure to Notify Mergers and Implementation of Mergers Contrary to the Competition Act No. 89 of 1998, as amended

2. Purpose and Introduction
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2.1. The primary objective of these guidelines is to provide transparency, certainty and objectivity in how the Commission will determine administrative penalties in cases of failure to notify and prior implementation.

 

2.2. Failure to notify and prior implementation of notifiable mergers denies competition authorities the opportunity of investigating transactions and making the determination at the time of the merger whether the merger is likely to give rise to a substantial lessening of competition that may permanently alter the structure of the market and raise public interest issues. In the context of failure to notify or prior implementation, administrative penalties serve as a specific deterrent against failure to notify or prematurely implementing a merger that could result in distortions in the market, which constitute a contravention of the Act. In general, administrative penalties in cases of failure to notify and/or prior implementation serve to ensure compliance with merger regulations.

 

2.3. The Act provides for administrative penalties to be imposed on firms if they are parties to a merger and:
2.3.1. fail to give notice of the merger as required by Chapter 3 of the Act; and/or1
2.3.2. proceed to implement the merger without the approval of the Commission or Tribunal, as required by the Act2 (whether or not the merger has been notified to the competition authorities).

 

2.4. The Tribunal has noted the need to provide guidance on how administrative penalties ought to be determined in cases of failure to notify and prior implementation.3 The Tribunal has, however, cautioned against using the exact factors set out in the Competition Commission v Aveng (Africa) Ltd and Others Case No: 84/CR/DEC09 ("Aveng")4 six-step methodology for failure to notify and prior implementation cases. As a result, the Tribunal has provided guidance on the methodology that should be used in calculating fines in failure to notify and prior implementation cases.5 Accordingly, being mindful of the fact that failure to notify and prior implementation cases involve different considerations from cartel and abuse of dominance contraventions, the Commission decided to issue separate guidelines on the determination of penalties for failure to notify and prior implementation. These guidelines will consider factors specific to failure to notify and prior implementation cases.

 

2.5. In developing these guidelines, the Commission conducted a review and comparison of guidelines developed by other competition authorities including India, Brazil, the European Commission and the US Fair Trade Commission, as well as the Act, the Tribunal’s decisions in failure to notify and prior implementation cases6 and the principles laid out by the Tribunal (and endorsed by the CAC) in the Aveng case. In doing so, the Commission was mindful of the nuances and variations in each jurisdiction, including the statutory mandate that the competition authorities in these jurisdictions have to impose administrative penalties. The Commission was further mindful of the different considerations for prohibited practices under Chapter 2 of the Act and failure to notify and prior implementation contraventions under Chapter 3 of the Act.

 

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1 Section 59(1)(d)(i)
2Section 59(1)(d)(iv)
3Competition Commission and Fruit & Veg Holdings (Pty) Ltd and others – consent agreement (Case No. FTN131Sep15)
4The Competition Commission v Aveng (Africa) Limited t/a Steeledale and others (84/CR/DEC09)
5See Competition Commission v Deican Investments (Pty) Ltd and New Seasons Investments Holding (Pty) Ltd (FTN151Aug15 / Competition Commission v Dickerson Investments (Pty) Ltd and Nodus Equity (Pty) Ltd (FTN127Aug15) and Competition Commission v Standard Bank of South Africa Ltd (FTN228Feb16).
6The cases include, inter alia, The Competition Commission v Aveng (Africa) Limited t/a Steeledale and others (84/CR/DEC09), Competition Commission v Deican Investments (Pty) Ltd and New Seasons Investments Holding (Pty) Ltd (FTN151Aug15 / Competition Commission v Dickerson Investments (Pty) Ltd and Nodus Equity (Pty) Ltd (FTN127Aug15), Competition Commission and Fruit & Veg Holdings (Pty) Ltd and others (Case No. FTN131Sep15), Competition Commission / Edgars Consolidated Stores Limited and others (95/FN/Dec02), Competition Commission / Structa Technology (Pty) Ltd and others (83/LM/Nov02), Competition Commission / The Tiso Consortium and others (82/FN/Oct04), Competition Commission v Standard Bank of South Africa Ltd (FTN228Feb16).