South Africa’s Competition Act is now 13 years old. Every year has seen enormous advancement of the competition law itself, and in in the abilities and activities of the main competition authorities - the Commission, Tribunal and Appeal Court.

2012 was no different. There were a number of merger and enforcement cases which expanded, changed and clarified the content of this dynamic area of South African law. The authorities have continued with their impressive enforcement record – a number of long-running cases were completed, and many new investigations and enforcement procedures were initiated.

As with any development in competition law or policy, each of the noteworthy South African cases discussed below has raised as many questions as answers. Many cases are also subject to appeal, which will hopefully be concluded in the next twelve months. Therefore, 2013 promises to be an equally fascinating and eventful year for South African competition law.


Merger Regulation Trends

More than 290 mergers were notified to the Competition Commission during 2012. Most of these were in the manufacturing, property and mining sectors. This steady growth represents a 21% increase from the previous year.

A strong feature of transactions analysed during 2012 is the ever increasing emphasis on public policy considerations in merger analysis, which is required by the South African Competition Act. A number of mergers were approved with conditions to address concerns with the effect of the transaction on employment (which the authorities are required to consider as part of their assessment).

Some of the mergers considered in 2012 have looked at previously unexplored public policy priorities, beyond employment. The potentially harmful effect of large-scale international procurement policies on the development of small, local business was a critical feature of the Walmart merger decision. Some firms voluntarily offered upfront conditions to address these effects and increase the probabilities of approval.

In the three months from December 2011 to February 2012, the Commission prohibited three intermediate mergers, and recommended to the Tribunal that one large merger be prohibited. These were in the healthcare, copper, chemicals and pamphlets markets. It is unhelpful to draw inferences on the reasons for this unusual spate of prohibitions. However, the clear message is that the Commission is prepared to take a strong and decisive stance, and prohibit mergers where it identifies likely harmful effects, no matter how unpalatable this may be for the firms involved.

Merger Cases

In 2012, the Walmart / Massmart merger approval process was finally concluded. The global retailing giant, Walmart, sought to acquire a large South African retailer, Massmart. The merger did not raise any competition concerns, as Walmart had no presence in South Africa pre-merger. The focus of the analysis was on the transaction’s effect on the ‘public interest’.

In March 2012, the transaction was approved by the Competition Appeal Court ("CAC") subject to a number of conditions to address employment and local procurement concerns. The conditions imposed ranged from a 2 year moratorium on retrenchments, to commitments on the merged firm paying R200 million into a fund established to assist small South African businesses.

A number of government departments - Trade and Industry, Economic Development, and Agriculture intervened in the process. Their arguments for remedies protecting local employment and small business have been criticised as protectionist measures which should have been implemented by formal regulation, rather than through the ‘back door’ of the competition law enforcement process. There is some concern that government’s involvement in the case may have the effect of threatening large-scale foreign direct investment in South Africa.

The acquisition by the international seed company, Pioneer Hi-Bred (part of DuPont) of the local seed business - Pannar Seed – was prohibited by the Competition Tribunal. On appeal, the CAC conditionally approved the merger. The case provides useful insights on the so-called “failing firm defence” and the instances in which it is likely to apply – a concept of merger regulation which has not been widely explored in South Africa.

Early in 2012 the Tribunal issued reasons for its conditional approval of the hostile takeover by the Japanese Kansai Paint of South African-listed Freeworld Coatings – based on revised conditions agreed with the merging parties. This was another case in which there had been active participation by government in the merger approval process.


In August 2012, the Competition Tribunal made its first finding of a denial of access to an essential facility, in the Telkom SA case.

The monopoly provider of fixed line telecommunications infrastructure (Telkom) was fined R449 million for a number of exclusionary practices, including preventing downstream Value Added Network Service providers (VANS) from connecting to its network in their own name.

The case began before 2004. Its hearing on the merits had been delayed by a range of procedural challenges and appeals by Telkom. This included a significant dispute about the competition authorities' jurisdiction to deal with a matter regulated by the telecoms regulator – ICASA.

The case develops significantly South Africa's abuse of dominance law, including in the complex area of concurrent jurisdiction with sector-specific regulators. It also demonstrates the Commission's willingness to contest significant procedural challenges by deep pocketed respondents.

The second major development in South Africa’s abuse of dominance law in 2012 was in the Senwes matter. The Constitutional Court upheld the Tribunal’s finding of a margin squeeze by a dominant provider of grain storage services, which also trades in the downstream grain market.

This case recognises margin squeeze as an important new component of South Africa’s abuse of dominance law. However, because it is not described as a specific offence in the Act itself, margin squeeze conduct was held to contravene the catch-all section 8(c) of the Act. The result is that it does not carry an administrative penalty for a first time contravention.


In 2012 the Commission made significant progress in its fight against cartels.

The vast majority of cartel cases in South Africa are concluded by settlement with the Commission. Although pragmatic and effective, the prevalence of settlement agreements had left South African law lacking in case precedent on how the cartel provisions of the Competition Act should be applied.

Prior to 2012, there had only been one cartel case which had been fully ventilated before, and decided upon by the Tribunal. This was the bread cartel, which was decided in early 2010.

In 2012 there were three notable cartel decisions in the wire mesh, plastic pipes and mining roof bolts markets. The effect has been to close the door on a range of potential defences that might previously have been available to respondent firms. South Africa's cartel law has in 2012 been largely brought into line with the principles followed in Europe and the US.

The Commission also continued its admirable progress in settling cartel cases with respondents in a range of industries, including poultry, bricks, air cargo, pelagic fishing, cement, bitumen, freight forwarding and milling.

One notable case was referred to the Tribunal in late 2012 against the oil industry. The Commission alleges that systemic exchanges of certain diesel sales information amounts to price fixing and market allocation. This case promises to test, for the first time under South African law, the limits of permissible information exchange between competitors.


Determining appropriate administrative penalties applicable to firms that contravene competition law inevitably involves discretion. South African competition law has searched for an predictable and consistent framework for the exercising that discretion.

The May 2012 decision in the wire mesh cartel, mentioned above, provided much-needed clarity on the approach that will be followed by the Tribunal. The basis is adapted from the European Commission's fining methodology. A portion of the firm's turnover 'affected' by the infringement is multiplied by the number of years that the infringement continued. Aggravating and mitigating factors prescribed by the Act are then factored in, subject to an overall cap of 10% of the firm's most recent annual South African turnover.

The effect is that long running infringements can very easily result in fines in the region of the statutory cap of 10% of total turnover.

This methodology was applied by the Tribunal in the two further cartel cases in 2012, and the major abuse of dominance case of the year – the Telkom case.


Exemptions by their very nature deal with the interaction of competition law and other pressing economic policy priorities. The exemptions provisions of the South African Competition Act are narrow, intricately worded, and peculiar in a number of respects.

Exemptions are decided upon by the Commission, which is not required to issue detailed reasons for its decisions. Appeals lie to the Tribunal, but before 2012, there had never been such an appeal. As a result, in this difficult area there has been a gap for some time.

In late 2011, the Commission granted a significant exemption to the South African Petroleum Industry Association (SAPIA) and its members. The exemption related to necessary coordination to optimise limited supply chain infrastructure in the South African oil industry, to ensure security of liquid fuel supply - a critical, on-going national priority.

In 2012, the SAPIA exemption was appealed by a third party – Gas2Liquids. The Tribunal has, in early 2013, dismissed the appeal.

The precedent set by the decision is an important first step in clarifying this difficult and complex area of South African competition law. The Tribunal's decision not only recognises the sensible engagement between the oil industry and the Commission in the exemption process, but also appreciates the delicate balance required when weighing competition policy considerations against key economic policy priorities.


Third party damages claims remains a largely untested area of South African competition law. Only a few damages actions have been launched in the past, and none have yet run their course.

In November 2012 the Supreme Court of Appeal handed down a ground-breaking judgment, which paves the way for affected parties to seek collective redress in so-called class actions. A number of public interest organisation had planned to sue the participants in a cartel in the bread industry, and sought certification by the High Court of their status as a class.

The judgment explains the legal requirements that must be met for a class action to succeed under South African law. The claimants' case has been remitted to the High Court, where it will effectively begin afresh, following the Supreme Court of Appeal's new test.

The prospect of class action suits increases significantly the risk faced by firms found to have contravened the Competition Act. South African competition law practitioners will closely monitor this developing area.


The flexibility of the Commission and the Tribunal’s powers in performing their duties under the Act has been the subject to several challenges before the Tribunal, the CAC, the Supreme Court of Appeal and Constitutional Court in 2012.

The Senwes case, mentioned above dealt with the authority of the Commission to prosecute before the Tribunal an allegation of margin squeeze, where this had not been specifically mentioned in the complaint referral document.

The Constitutional Court in 2012 confirmed that the Tribunal is empowered to hear and decide upon allegations outside the scope of the complaint referral document, where this would not result in unfairness to the respondent firm. In other words, following this case, the Commission may adapt its allegations, or even introduce new allegations, during a hearing before the Tribunal, in certain circumstances. The ambit of the Tribunal hearing and decision need not be confined to the referral document.

A related ‘hot topic’ has continued to dominate policy debate in the South African competition law community in 2012. The question is whether the Commission is empowered to include in a complaint referral to the Tribunal allegations which were not contained in the complaint initiation document (which triggers the Commission’s powers to investigate a complaint)?

The Commission says ‘yes’ – the complaint procedure should be flexible enough for new allegations to be added as they are discovered. Respondent firms say ‘no’ – the Act specifies that the complaint, as initiated, must be referred to the Tribunal, and overly expansive referrals therefore fall to be set aside.

Each of the Tribunal, the CAC, Supreme Court of Appeal and Constitutional Court appear to have different views on the question.

This issue was raised before the Constitutional Court in 2012 in the Yara and Loungefoam cases, but direct leave to appeal to that court was denied, and the cases have been returned to the High Courts of appeal for determination. It is likely nonetheless that these powers will ultimately have to be determined by the Constitutional Court (hopefully during 2013). The tide appears to be turning in favour of the authorities for a broader and more purposive interpretation of powers, as against a stricter, 'black letter law' approach.

Other interesting developments during 2012, which are expected to be clarified over the next year include:

  • Access to leniency documents

In 2012 the CAC ruled that, in certain circumstances, respondents to allegations of cartel conduct may access leniency documents submitted by a whistle-blower. The CAC’s judgment has been appealed to the Supreme Court of Appeal. The case involves ArcelorMittal South Africa Limited and Cape Gate. Many similar cases have been pended awaiting the outcome of this matter.

  • Healthcare

The scoping and management of what is expected to be a major inquiry by the Commission into the private healthcare market was announced in 2012, and is expected to commence in 2013. Indications are that it may run well into 2014. Private hospitals, funding and supply arrangements are likely to be the first line of focus with implications for the public sector to follow. This is all against the backdrop of government policy review of national healthcare insurance.  

  • Amendment Act

The Competition Amendment Act was signed into law in 2009, but has still not come into operation. The controversial provisions relating to imprisonment for cartel activity remains likely to suffer constitutional challenge. Regrettably the other useful provisions for market inquiries remain on the shelf in the meantime. It is possible that a partial implementation of the amendments may be introduced, which would be a very useful tool in the pending investigation into the healthcare market.


Key appointments to the Enforcement and Exemptions as well as the Merger portfolios at the Commission have been made and hopefully will steady the personnel movement and bring necessary expertise to the Commission. The influential Dr Simon Roberts leaves the Commission for academia, following a tenure in which his approach and leadership in economic policy for the Commission has been significant.


COMESA (Common Market for Eastern and Southern Africa) is a regional body established to foster economic development within its 19 member countries. In January 2013 the COMESA Competition Regulations came into effect.

The Regulations are especially important since they require notification of mergers to the COMESA competition authority at a regional level. Filing requirements are triggered if a merger involves parties operating in two or more member countries, and the prescribed financial thresholds are exceeded. Currently, the thresholds are zero, so all such transactions are notifiable.

Failure to notify exposes the merging parties to the risk of a maximum penalty of 10% of their turnover within the common COMESA market during the preceding financial year.

In light of these recent developments, firms doing business within the COMESA (and broader Africa) region are advised to be mindful of the possibility of their merger transactions requiring COMESA approval.