Southern Africa Competition Update

South Africa

Competition Commission of South Africa launches market inquiry into data services

On 18 August 2017, the Competition Commission of South Africa launched an inquiry into the data services market - an inquiry that was prompted by a request from the Minister of Economic Development for the competition regulator to investigate the high cost of data in South Africa.

The focus of the market inquiry will be on:

Obtaining a clear understanding of the data services value chain.

Assessing the state of competition at every level of the value chain, including assessing whether the market participants hold market power, whether consumers and customers are exploited and whether the current regulatory framework contributes to any structural or behavioural aspects in the market that could impact on competition.

To benchmark the cost of data in South Africa against the cost of data in other countries.

The inquiry is expected to launch on 18 September 2017 and to be concluded by 31 August 2018.

Competition Commission of South Africa issues draft information exchange guidelines

On 14 July 2017, the Competition Commission of South Africa published Draft Guidelines on the Exchange of Information between Competitors under the Competition Act, 89 of 1998 . The CCSA is empowered in terms of the Act to publish non-binding guidelines that indicate its policy approach to competition law matters falling within its jurisdiction. This follows the implementation of Guidelines for the Assessment of Public Interest Provisions in Mergers and Guidelines for the Determination of Administrative Penalties (for prohibited conduct) and the publication of Draft Guidelines for the Determination of Administrative Penalties for Failure to Notify a Merger and Implementation of a Merger (which is still to be finalised).

The Draft Information Exchange Guidelines are aimed at providing guidance on when the exchange of information between competitors could facilitate coordination and may be harmful to competition, whether such an exchange occurs directly, through an industry or trade association, joint ventures or via a third party.

The Commission's guidelines propose safeguards to mitigate the risks associated with the exchange of competitively sensitive information between competitors, including exchanging historic, disaggregated information on an infrequent basis and only for legitimate purposes. The Guidelines are further informative in indicating that the Commission is highly likely to be suspicious of the exchange of competitively sensitive information related to current or future market opportunities and conduct - this includes the dissemination of this information through public announcements (generally referred to as signalling).

Interested parties can make submissions on the draft guidelines to the Commission until 14 September 2017.

Competition Commission of South Africa increasingly concerned with coordinated effects in mergers

Worldwide, there is increased concern by competition authorities that mergers could result in market participants aligning their behaviour due to the consolidation in the industry. In South Africa, this trend is also being observed.

The Competition Commission of South Africa in 2016 prohibited the proposed acquisition by packaging manufacturer Corruseal of Boxlee and Price Pak, based on coordinated effects concerns. In light of the ongoing collusion investigation in the affected market, the Commission found that coordination was likely as increased vertical integration in the industry made it easier to coordinate in the downstream market. The merging parties appealed this decision but decided in May 2017 to abandon the transaction before the appeal could be heard by the Tribunal.

In June 2017, the CCSA bucked the international trend of approval when it prohibited the proposed merger in which Nippon Yusen Kabushiki, Mishui O.S.K Lines Ltd and Kawasaki Kisen Kaisha Ltd propose to merger their container liner shipping businesses to form a joint venture. This prohibition was based entirely on a perceived likelihood of coordinated effects arising based on a history of collusion in an adjacent market.

During June 2017, the CCSA also prohibited a proposed merger between two firms involved in the market for the manufacturing of polypropylene-based mining support bags, Timrite (Pty) Ltd and the Mining Bag Division of Tufbag (Pty) Ltd on the basis that the transaction will potentially facilitate and enhance market allocation arrangements in the industry. Interestingly the merging parties are already in a joint venture for the manufacturing of polypropylene-based mining support bags and it is unclear why a further consolidation of these businesses would have exacerbated any risks of coordinated effects in this market.
In July 2017 the CCSA prohibited a proposed merger between Jasco Electronics Holdings Limited, a provider of smart technology and solutions, and Cross Fire Management (Pty) Ltd, a company active in the fire protection systems market. A Jasco subsidiary is also active in the fire protection industry and the Commission found that the further concentration in the market is likely to perpetuate existing cartel conduct in this market - conduct that the CCSA is currently prosecuting.
The CCSA also imposed conditions on a merger between VKB Milling Proprietary Limited and Progress Milling (Lydenburg) (Pty) Ltd . The conditions are aimed at preventing the exchange of competitively sensitive information in light of concerns regarding the merger creating concentration in the white maize market and increasing the probability of collusion taking place in this market (a market that the CCSA believes is already conducive to collusion).

In July 2017, the CCSA also recommended a prohibition to the Tribunal for the proposed large merger between one of the three largest private hospital operators in South Africa, Mediclinic South Africa (Pty) Ltd, and Matlosana Medical Health Services (Pty) Ltd stating that the CCSA has concern regarding concentration in the market (although specific coordinated effects were not mentioned).

Passenger transport market inquiry launched in South Africa

The Competition Commission of South Africa has launched an inquiry into the public passenger transport sector - a sector that is frequently plagued with violence and uncertainty with the most recent conflict arising between metered taxi operators and app-based taxi services. This inquiry was prompted by numerous complaints related to public transport in South Africa.

Interested parties are asked to make submissions on the proposed scope of the market inquiry by 24 August 2017.

Further dawn raids in South Africa

During 2017, the Competition Commission of South Africa has continued actively pursuing prohibited practices matters and, in line with this approach, conducted three dawn raids since March 2017.

On 23 and 24 March 2017, the CCSA raided various fresh produce agents - the raids were conducted over two days in four different cities.

In June 2016 the CCSA raided three meat suppliers in three different provinces in South Africa on suspicions of price fixing in respect of the purchase price of weaner calves and selling prices to wholesalers and retailers.

On 3 August 2017, the CCSA conducted its largest simultaneous dawn-raid in respect of its ongoing and intensive investigation into alleged collusion in the fire control and protection market. The dawn raid involved 25 companies that are all members of the Automatic Sprinkler Inspection Bureau (ASIB).


Swaziland Competition Commission requires payment of higher merger filing fees

In Swaziland, mergers are classified as either small mergers or large mergers. A small merger is a merger where the combined annual turnover or asset values of the merging parties does not exceed SZL 8 million (approximately USD 600 000). A large merger is a merger where the combined annual turnover or asset value of the merging parties exceeds this amount.

The purpose of this distinction is to determine whether a merger filing fee is payable by the merging parties in respect of the notification of the merger to the Swaziland Competition Commission . Merging parties notifying a small merger are not required to pay a merger filing fee and merging parties notifying a large merger are required to pay a merger filing fee equal to 0.1% of the combined turnover and asset values of the merging parties (whichever is the higher), capped at a maximum of SZL 600 000 (approximately USD 45 000).

This merger filing fee regime is determined in accordance with the Competition Commission Regulations Notice, 2010. The Regulations are silent on whether the calculation of the merger filing fees should take into account only the local turnover and assets of the merging parties (as is usually the case in most merger control regimes).

The SCC had, however, previously published External Merger Guidelines that state that the combined global turnover and asset values of the merging parties are relevant for purposes of calculating the merger filing fee payable to the SCC. Since December 2016, the SCC has implemented this specific section of its External Merger Guidelines, forcing merging parties to calculate the relevant merger filing fees with reference to global combined asset values and turnover. This approach, naturally, impacts on transactions involving multinational entities and inevitably lead to higher merger filing fee being payable to the SCC.

It appears that neither the Swaziland Competition Act, 2007 nor the Regulations empower the SCC to charge merger filing fees with reference to the global asset values and turnover of the merging parties and further neither the Act nor the regulations empower the SCC to publish any binding guidelines (such as the External Merger Guidelines) of this nature. Nevertheless, this is the practice presently adopted by the SCC and this practice will remain until such time as local courts pronounce on this issue.


Zimbabwe Competition Commission streamlining its processes in respect of the enforcement of competition laws

The Zimbabwe Competition and Tariff Commission has adopted a policy document setting out its approach to the regulation of competition law in Zimbabwe. We understand that this policy document will not be relied on for purposes of amending the existing competition laws in Zimbabwe, but rather serves as a guideline indicating the policy approach that the ZCC will follow in respect of matters related to merger control, cartel enforcement and abuse of dominance.

The policy regulates, amongst other matters, the dovetailing of the ZCC processes with the processes of the Common Market for Eastern and Southern Africa . Although the COMESA competition law regime has not yet been adopted in Zimbabwe, in terms of the policy the ZCC will adopt processes similar to the competition law processes prescribed by COMESA. This includes reducing the time period in which it will consider mergers from 90 days to 60 days.

The policy is the latest in an era of competition law developments in Zimbabwe, where there has been an increased focus on ensuring the effective functioning of its competition regulator and enforcement of its competition policies. Time will tell how the ZCC implements the policy and whether the policy will, in fact, lead to reform of competition regulation in Zimbabwe.


Namibia's Supreme Court overturns high court decision regarding regulation of medical aid funds under Namibian Competition Law

During December 2014, the Namibian Competition Commission instituted proceedings against the Namibian Association of Medical Aid Funds in respect of the alleged collusive behaviour in its tariff setting activities (including the determination and publishing of tariffs). The appeal was concerned with whether medical aid funds regulated under the Medical Aid Funds Act, 23 of 1995 are undertakings as defined in the Competition Act, 2 of 2003 and, hence, subject to regulation under the Act.

An undertaking is defined in the Act as "…any business carried on for gain or reward by an individual, a body corporate, an unincorporated body of persons or trust in the production, supply or distribution of goods or the provision of any services." The Act applies to all economic activity within, or which has an effect in, Namibia but specifically excludes, among other things, collective bargaining activities, concerted conduct aimed at achieving a non-commercial socio-economic objective and activities specifically exempted from the Act by the NaCC.

The High Court, in its decision, found that medical aid funds were undertakings for purposes of the Act irrespective of whether the profits of the funds were distributed to their members as the funds still operated for gain or reward.

The Supreme Court, on the other hand, found that medical aid funds operate to protect the interest of their members and this does not mean that the funds operated for gain or reward - the fact that funds are specifically prohibited from distributing a surplus to their members in terms of the MAF Act rendered the funds non-profit concerns. The Supreme Court concluded that medical aid funds, as highly regulated entities established for very specific socio-economic purposes, are not enterprises for purposes of the Act and, accordingly, do not fall within the jurisdiction of the NaCC. Similarly, NAMAF as an industry body of medical aid funds did also not fall within the definition of an enterprise and was excluded from the application of the Act.


Competition Commission of Mauritius makes position in respect of minimum resale price maintenance clear

During June 2017, the Competition Commission of Mauritius published a media release inviting suppliers that engage in minimum resale price maintenance to come forward and apply for immunity from financial penalties. The CCM's amnesty programme runs until 5 October 2017 and suppliers will have the opportunity to disclose to the CCM's the enforcement of minimum resale price maintenance against their distributors and to undertake to correct this behaviour.

For a supplier to participate in the amnesty programme the supplier must:

  • report its engagement in minimum resale price maintenance to the CCM;
  • provide binding undertakings that it will cease engaging in minimum resale price maintenance and address the competition concerns with this conduct; and
  • collaborate with the CCM throughout its investigation of the conduct.

Competition Commission Of Mauritius launches a market inquiry into the construction industry

The Competition Commission of Mauritius announced during April 2017 that it has launched a market study to investigate the state of competition in the construction industry in Mauritius. This decision follows on the CCM's involvement in the African Competition Forum's multijurisdictional study into the construction industry which also involves South Africa, Swaziland, Kenya, Malawi, Gambia and Gabon. The CCM has identified perceived structural issues within the construction industry in Mauritius that will be assessed during the market study, including regulatory barriers, market structure, the level of vertical integration in the construction industry.

COMESA signs MOU with Competition Commission of Mauritius

During March 2017, the Competition Commission of the Common Market for Eastern and Southern Africa concluded a Memorandum of Understanding with the Competition Commission of Mauritius.

The MOU is aimed at facilitating cooperation between the two competition regulators and follows on similar MOUs concluded between the Competition Commission and COMESA and the competition authorities of Malawi, Swaziland, Seychelles, Kenya, Egypt, Madagascar and Zambia.

Notably, the CCM is one of the local competition law regulators (another being the Competition Authority of Kenya) that disputes the exclusive jurisdiction of the Competition Commission of COMESA in respect of competition law matters. Practically this means that merging parties are, generally, required to notify both the CCM and Competition Commission of COMESA of a transaction that satisfies the notification thresholds of both competition regulators. The MOU does not address this issue of dual jurisdiction but states that the CCM and Competition Commission of COMESA will each notify the other in respect of particular information the bodies may obtain regarding mergers that could be relevant to the other body - which implies that the enforcement of dual jurisdiction will remain unchanged.

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