The Competition Commission has published revised guidelines on small merger notifications, which primarily aim to assist the commission in clearly identifying small mergers and acquisitions in digital markets.
Small mergers do not require mandatory notification; however, in terms of the Competition Act, the commission may require, up to six months after the small merger has been implemented, that such mergers be notified and approved by the commission.
According to the new guidelines, the commission must be informed in writing before implementation of all small mergers that meet certain criteria.
The commission must be notified of mergers and share acquisitions where the acquiring firm’s turnover or asset value alone exceeds the large merger combined asset or turnover threshold, currently R6.6-billion, and if the consideration for the acquisition or investment exceeds the combined asset or turnover threshold for intermediate mergers, currently R190-million, or the consideration for the acquisition of a part of the target firm is less than the threshold but effectively values the target firm at R190-million or more.
Further, the commission must be notified of mergers and acquisitions if any of the firms, or firms within their group, at the time of entering into the transaction, are subject to an investigation by the commission, or are respondents to pending proceedings referred by the commission to the Competition Tribunal.
The revised guidelines respond to increased concerns that acquisitions of new, innovative companies in digital markets may be escaping regulatory scrutiny due to the acquisitions taking place at an early stage in the life of the target companies, the commission points out.
The guidelines will further address concerns that target companies may be acquired before they have generated sufficient turnover or accumulated capital assets to trigger mandatory merger notification.
Parties to notifiable small mergers must inform the commission in writing of their intention to enter into the transaction and provide sufficient detail on the acquiring and target firms, the proposed transaction and the relevant markets in which the firms compete.