SOUTH AFRICA Trends and Developments Contributed by: Ezra Davids, Tholinhlanhla Gcabashe, Nanga Kwinana and Ricci Hackner, Bowmans
friction, modernise disclosure standards and enhance the competitiveness of South Africa’s capital markets. For M&A, the reforms may facilitate more efficient exe - cution of corporate actions by clarifying transaction categorisation, easing certain approval requirements and improving flexibility in capital raising and share issuances used to fund acquisitions. Competition South Africa’s merger control regime remains gov - erned by the Competition Act, enforced by the Com - mission, the Competition Tribunal, and the Competi - tion Appeal Court. Several significant developments are currently underway, each expected to materially affect the M&A landscape, which are discussed below. Revised notification thresholds and filing fees: pending changes Mandatory merger notification thresholds and asso - ciated filing fees are presently under review, follow - ing sustained stakeholder submissions advocating an upward adjustment to reflect inflation, transaction values and administrative burden. Considering the apparent alignment between regulators, practition - ers and business on the need for reform, it is reason- able to expect that the Minister of Trade, Industry and Competition will move expeditiously to publish revised thresholds once the public participation process con - cludes. If enacted as anticipated, the revised thresholds should reduce the volume of notifiable transactions at the margins, alleviating compliance costs for small - er and mid-market deals in the short term and, over time, easing case-load pressure within the compe - tition authorities. This may contribute to structurally improved review timelines for larger and more com - plex mergers, enhancing overall transactional cer - tainty and execution efficiency in the South African M&A market. Pre-merger filing consultations: a new voluntary process In a significant procedural development, the Com - mission has issued Guidelines for pre-merger filing consultations. These Guidelines establish an informal, voluntary and confidential process for early engage -
ment between merging parties and the Commission, in advance of formal notification. The Guidelines are specifically directed at transactions involving potential remedies, complex competition issues, material pub - lic interest concerns, or distressed transactions where purchaser selection may raise competition risks. This development is particularly notable for complex M&A transactions, as it offers parties an opportunity to engage with the Commission at an early stage and may reduce delays and procedural inefficiencies in the formal review process. Public interest: a more nuanced approach to ownership conditions The Commission’s approach to public interest condi - tions, historically one of the most commercially sig - nificant aspects of South African merger review, has evolved. While employment and historically disad - vantaged persons (HDP) ownership outcomes remain central to the Commission’s assessment, the Com - mission has adopted a more flexible stance in recent months. Rather than prescribing ownership restruc - turing in every notifiable transaction, the Commission is increasingly accepting bespoke undertakings tai - lored to the specific transaction, sector and business context. Recent examples of accepted public interest com - mitments include educational funding and skills development, including bursary funds; preferential employment for certain categories of employees; local manufacturing and procurement commitments; enterprise development initiatives supporting SMEs and HDP-owned businesses; and capital expenditure commitments in support of local operations. Employment conditions remain stringent: where merg - er-related retrenchments are anticipated, the Com - mission has either capped redundancies or imposed
moratoria, typically of two to three years. Escalating penalties for gun-jumping
Enforcement against pre-implementation of mergers (commonly referred to as “gun-jumping”) has contin - ued to tighten. The penalty framework has evolved from nominal or symbolic fines in early cases to mate - rially significant penalties, with Life Healthcare/JMH
1195 CHAMBERS.COM
Powered by FlippingBook