There has been much hand-wringing in recent weeks about the time taken by the competition authorities to investigate and adjudicate large mergers.
Some of the criticism is warranted, particularly in the application of the public interest considerations, but the overriding suggestion that the time taken to determine a number of problematic large mergers is in all cases unreasonable, is not accurate.
A number of competition law practitioners have sought to suggest that the extensive time taken in certain merger cases is principally attributable to unduly bureaucratic practices at the Competition Commission and the Competition Tribunal.
Keyboard critics
Curiously, the comments made by several of these practitioners are made in circumstances when they weren’t even involved in the cases in question and, as a result, have very little insight into what actually occurred in these particular matters. In this context, the desktop criticisms should be seen for what they are, opportunistic attempts to generate some publicity.
However, these criticisms are often divorced from reality and in many instances do not reflect what actually transpired. Accordingly, there is a great danger in attributing too much store to the musings of these armchair commentators.
Having been personally involved in the majority of the recent contested merger cases, in some cases for the merger parties and in other cases against them, I would like to suggest that the truth is far more nuanced than the armchair critics would have the public believe.
Mark Garden, Dudu Mogapi and Monde Mbali 27 Mar 2024 Sun International and Peermont
The recent matter involving Sun international and Peermont is a case in point. Some have sought to suggest that this is another case, similar in nature to the Vodacom/Maziv matter, where considerable time has been taken in determining the matter and that had the matter been determined expeditiously, the axiomatic result would have been an approval of the merger.
The facts in the Sun International case, however, demonstrate that the time taken to assess and adjudicate the matter at the Tribunal level, was not primarily a function of bureaucratic regulatory processes, but was largely due to the merger parties repeated failure to timeously provide relevant internal documents that they had been required to provide.
The Tribunal dates for hearing the matter were pushed out as a result of these discovery issues, not because the Tribunal could not operate efficiently.
Moreover, the decision to abandon the merger must also be seen in the context of the fact that this was an attempt to resurrect a merger, which had previously been abandoned by the very same parties in 2015, in the face of serious competition concerns.
In other words, the decision to abandon the merger for the second time was as much a function of a problematic merger as it was anything else.
In short, it is important to understand the real facts before making judgments about the processes of the competition authorities.
Significant competition concerns
The majority of mergers are adjudicated promptly and efficiently, and it is only a very small number of transactions that end up being the subject of protracted processes, but those transactions with some limited exceptions are generally speaking ones that pose significant competition concerns.
While some of the criticisms levied at the Competition Commission and the DTIC for the manner in which they deal with public interest considerations in terms of the Competition Act are justified, it is not reasonable or fair to suggest that every lengthy Tribunal merger process is the fault of the Competition Authorities.
While in an ideal world, merger processes would be fast tracked in the interests of commercial certainty and efficiency, one has to bear in mind that the competition authorities are there for a reason.
They are there to protect the interests of customers and consumers. If the Competition Authorities don’t scrutinise problematic transactions carefully, then frankly there is no reason for them to be there in the first place.
Perhaps the solution in part is that mergers that don’t present any issues should be approved as quickly as possible and that the Competition Commission and the DTIC should not try to use the public interest provisions of the Competition Act to achieve some form of economic realignment.
Short-staffed
One also must distinguish delays occasioned by the Tribunal being understaffed from timing issues associated with a proper and careful assessment of transactions.
The Tribunal is understaffed and there needs to be a concerted effort between the DTIC, the Tribunal and the competition law community to seek to address this issue as soon as possible.
Hopefully, if this situation can be remedied, this could fundamentally improve timing difficulties that arise from there not being sufficient Tribunal members.
However, the shortage of Tribunal members does not detract from the responsibility and statutory obligation of the Tribunal to carry out its mandate in relation to complex transactions.
Let them do their jobs
Ultimately, it must be remembered that there will always be a certain category of mergers that will require very careful scrutiny and the competition authorities must be allowed to do their job in the interests of discharging their mandate to the public.
Potentially the more insidious outcome from all of the armchair criticism is that the competition authorities feel under pressure to wave transactions through that require more careful consideration.
An appropriate balance needs to be struck between not compromising commercial efficiency and economic growth that comes from transaction based commercial activity, while at the same time ensuring that the Competition authorities deliver on their statutory mandate and safeguard the interests of consumers and the public as a whole.
