The Competition Tribunal has confirmed, as an order, a consent agreement wherein four firms admit that they unintentionally contravened the Competition Act, specifically that parties to a large merger may not implement that merger until it has been approved, with or without conditions, by the Competition Commission.
The parties were said to have implemented a transaction prior to the approval of the transaction by the commission and agreed to jointly pay an administrative penalty of R1.49-million.
The firms voluntarily informed the commission of the transaction’s implementation during 2021. According to the firms, they became aware that the transaction could constitute a notifiable merger during May 2021, while preparing a merger notification for a different transaction.
Following their engagements with the commission, the firms, in good faith, acceded to the commission’s request that the transaction be notified in April this year.
The firms, I Group Consolidated Holdings, U Reit Collins, Tradegro Holdings and Collins Property Projects, had been of the view that the transaction did not constitute a notifiable merger and requested guidance from the commission.
"In the commission’s opinion, the transaction resulted in I Group, through U Reit, acquiring de facto control over Collins, which it did not exercise before the transaction. The firms argued that they were bona fide in forming their opinion that U Reit had not acquired de facto control over Collins.
"Ultimately, the commission found that the firms’ conduct was in contravention of a section of the Act. For the purpose of conducting a full and final settlement with the commission, the firms said that, notwithstanding their bona fide view, they were willing to admit that they unintentionally contravened the Act," the commission said.
Further, the firms also agreed to notify the commission of any future transactions that constituted a notifiable merger and to refrain from engaging in prior implementation of notifiable mergers.
They will also implement a competition law compliance programme.
The I Group - Collins transaction was notified in April. The commission assessed the merger and recommended that it be approved without conditions. The tribunal approved the merger without conditions on May 20.