South African Competition Commission

The South African Competition Commission has since the beginning of 2017 prohibited eleven intermediate mergers and has recommended that four large mergers be prohibited.  This number is substantially higher than 2016, when the Commission prohibited three intermediate mergers and recommended that one large merger be prohibited.  For the period end of September to October 2017, the Commission prohibited five mergers.

This note will briefly look at two important and interesting trends that followed from the prohibitions of proposed mergers in South Africa since the beginning of 2017.

A move to take “coordinated effects” of the proposed merger into account

The first trend in the prohibition of mergers is a move to look at the “coordinated effects” of a proposed merger (a change in the market structure which better facilitates tacit collusion). In this regard the Commission adopted a policy favouring less concentration in markets and looking at a history of collusion in the market.


Continue Reading A significant increase in the prohibition of mergers in South Africa

One might think that competition law would applaud a firm that submits an independent and competitive bid, in response to a tender aimed at lowering prices.  Recent experience in South Africa suggests that this is not always the case, and that such a firm may face investigation by the competition authorities precisely because it won the competitive tender.

In October 2017, the South African Competition Commission announced that it has initiated, and is investigating, a complaint of abuse of dominance by Vodacom, the country’s largest cellular network services provider.

The subject of the complaint is a four year exclusive contract, in terms of which Vodacom will supply mobile telecommunications services to 20 government departments.

Although Vodacom bid for the contract in a competitive tender process, the Commission “is of the view” that the contract will (1) further entrench Vodacom’s dominant position in the relevant market; (2) raise barriers to entry and expansion in the relevant market; (3) distort competition in the market; and (4) result in a loss of market share for other network operators.

Leaving aside the merits of the complaint, the announcement is interesting and controversial for a number of reasons.  In particular, it raises important questions about the Commission’s advocacy strategy, and about the obligations on business when participating in significant tenders.


Continue Reading South Africa: When a competitive bid is not enough