Threshold for merger notifications set to change
On 10 October 2008, the Minister of Trade and Industry published a notice in the Government Gazette informing the public that he intends to change the threshold applicable to merger notifications. The current thresholds are determined in accordance with section 11 of the Competition Act No. 89 of 1998 read with Government Notice No. 254 of 1 February 2001. This has implications both for local businesses ventures and for certain forms of foreign investment into the country.
In terms of the current legislation, before a proposed merger is implemented in South Africa, the Competition Commission will need to be notified of such a merger. However mergers are categorized into a small, intermediate and large mergers. Small mergers do not have to notify the Competition Commission before implementing a merger, but may subsequently be ordered to do so. Intermediate and larger mergers need to notify the Competition Commission of their proposed mergers. Due to this distinction it is important that thresholds be determined so that corporations know when they should notify the Competition Commission.
The current thresholds therefore are:
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| , | Lower Threshold | Higher Threshold | |
| Small Merger | Lower than R30 million | Lower than R200 million | |
| Intermediate Merger | Equals or exceeds R30 million |
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| Large Merger | Equals or exceeds R100 million | Equals or exceeds R3,5 billion |
The newly proposed thresholds are:
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| Lower Threshold | Higher Threshold | |
| Small Merger | Lower than R80 million | Lower than R560 million |
| Intermediate Merger | Equals or exceeds R80 million | Equals or exceeds R560 million |
| Large Merger | Equals or exceeds R190 million | Equals or exceeds R6,6 billion |
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The proposed changes will classify more mergers as small mergers which would previously have been considered as intermediate mergers which would have to be notified to the Competition Commission.
All interested parties are invited to submit their comments on the proposed amendment by the 31st of October 2008. For further information or assistance in competition law matters, kindly contact Rian Geldenhuys.
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