While the Competition Commission's new block exemptions offer some relief to South African exporters, they need to be aware that this doesn’t offer indemnity from being prosecuted internationally.
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Freepik"You cannot export your cartel problem to another place in the world," warned Nicole Kar, partner at Paul Weiss in London, speaking from Tokyo. "If it's a cartel domestically that's immunised by domestic laws, it will be enforceable and challengeable under foreign laws if there's an effect in the jurisdiction."
This was the key message from a recent webinar hosted by Nortons Inc, where competition law specialists unpacked two exemptions hastily introduced following US tariff pressures in August 2025.
It should also be noted that the stakes are high. European Union competition authorities can impose fines of up to 10% of global turnover for cartel conduct.
Fast response, complex implications
The Competition Commission deserves credit for speed. Within 12 days of Donald Trump imposing tariffs on South Africa on 1 August, the draft block exemption for the promotion of exports was published. A second block exemption covering ports, rail and key feeder road corridors is already operational.
Unfortunately, the draft promotion of exports exemption is quite ambiguous, and contains some internal contradictions that could trap unwary businesses.
What the exemptions actually allow
The draft promotion of exports exemption permits coordination on logistics costs, joint infrastructure investment, and "collective marketing of South African goods as a brand in export markets". But what does ‘collective marketing’ mean? Can apple producers jointly approach Tesco's with unified pricing? The exemption doesn't say.
More troubling: the draft simultaneously permits and prohibits market allocation. It exempts market allocation agreements but excludes "market allocation of goods and services sold to end customers or consumers". Whether "end customer" means a retailer like Sainsbury's or the final consumer also remains unclear.
The ports, rail and key feeder road corridors exemption is more targeted. It allows coordination on port capacity, cargo diversion, joint infrastructure investment, and crucially, fixing purchase prices for inputs - but explicitly prohibits fixing selling prices to customers or collusive tendering.
Heather Irvine, Andrew Pike and Nazeera Mia 22 May 2025 The process: no carte blanche
Neither of the exemptions operate on self-assessment. Companies must obtain "in scope confirmation" from the Commission, which typically responds within 30 to 60 days.
Nortons Inc directors, Anton Roets and Nina Greyling, who have recent experience with the ports, rail and key feeder road corridors exemption encourages engagement with the Commission. In their experience, the Commission responded within 48 hours and is very focused on trying to make this process work.
It should be noted that the approval comes with certain strings in the sense that the Commission imposes strict safeguards, which can include minute-keeping, recording discussions and regular reporting.
The European dimension
Kar explained that the European Commission operates differently. Its block exemptions are self-assessed, with market share thresholds typically under 15%. No agency approval is required.
EU authorities also offer "comfort letters" for borderline cases, which could be regarded as informal guidance that provides high confidence against prosecution. These take one to two months to obtain.
But here's the rub: South African exporters need both.
Consider a consortium of deciduous fruit producers obtaining SA approval for collective marketing to UK supermarkets. If this involves unified pricing that eliminates competition, it could constitute a hardcore cartel violation in Europe - regardless of the SA exemption.
"You should treat this as a very narrow South African-only channel," Kar advised. "Think about whether any joint conduct could fall foul of international laws".
Documentation dangers
A chilling reality: everything can be used against you. WhatsApp messages, meeting minutes, emails - all are discoverable by competition authorities, both domestic and foreign.
The UK Competition and Markets Authority recently obtained records held in Germany by Volkswagen for a UK investigation.
"Even if you don't intend it to mean something, if you're very quick and informal about the way you send things, that could get you into difficulty," the panellists warned.
Kar pointed to European experience: collaborations that begin legitimately often expand over time until they cross into prohibited territory. "You need to assess at the beginning and then assess as you're running through your cooperation."
The verdict
These exemptions offer genuine opportunities for South African businesses struggling with logistics bottlenecks and tariff pressures. The Commission's willingness to engage quickly and constructively is encouraging. But this is pioneering territory with significant legal complexity.
Companies must:
- Obtain detailed legal advice in South Africa before approaching the Commission
- Secure separate advice in every export destination market
- Consider whether comfort letters or foreign block exemptions apply
- Maintain rigorous documentation practices
- Keep external counsel involved throughout to prevent "scope creep"
This is not an ‘open sesame’ to go and collude or collaborate on whatever you like. “The price of getting it wrong - both reputationally and financially - could dwarf any benefits the exemptions provide,” added Anthony Norton, managing director at Nortons Inc.
The draft export promotion exemption remains subject to finalisation. Companies should monitor the Competition Commission's website for the final version.
