Public interest organisation Sakeliga has obtained records of 20 Competition Commission investigations into corporate transactions to evaluate how the regulator uses “public interest grounds” to block or impose conditions on proposed transactions.
In an attempt to challenge the commission's alleged political interference in business decisions, Sakeliga submitted requests under the Promotion of Access to Information Act (PAIA) to the competition body in 2022 after gathering information from companies that it claims reveals a consistent pattern in the commission’s operations.
The 20 merger reports include businesses involved in manufacturing, transportation, finance and banking, healthcare, education, construction and mining, energy, real estate and fuel services.
The chamber network, which supports more than 30,000 businesses, claims that since the amendments to the Competition Act in 2018, the commission has frequently used “public interest grounds” to impose detrimental concessions related to BEE, employment, local content and other government policy priorities on companies and their owners.
“Today, deals before the commission have a greater chance of being obstructed based on racial considerations and other government objectives than on competition considerations. This conduct by the Competition Commission is now a major impediment to corporate action for even medium-sized companies in SA, obstructing, delaying and deterring billions of rand worth of economic activity,” Sakeliga CEO Piet le Roux said.
According to the commission’s guidelines, the general approach is to assess the likely effects of a merger on public interest grounds and determine if those effects are substantial. If they are, the commission will explore possible remedies. If the effects cannot be remedied, it may consider equally significant countervailing grounds on a case-by-case basis.
Competition Commission spokesperson Siyabulela Makunga told Business Day the commission received a PAIA request for access to merger reports, and following a settlement process under the auspices of the Information Regulator, the commission provided redacted versions of 20 merger reports to Sakeliga.
Asked how the commission ensured transparency in the use of “public interest” in merger decisions, Makunga said: “In ensuring transparency in its application of section 12 A (3) of the Competition Act, the commission developed guidelines on the implementation of public interest provisions. The guidelines were gazetted and were subject to public participation.”
In its statement, Sakeliga lambastes amendments to the Competition Act in 2018 and calls them problematic.
“The commission has now moved far beyond the conventional mandate of competition regulators worldwide to establish itself as a super-regulator operating by its own rules and interfering in matters that have nothing to do with competition,” Sakeliga said.
Le Roux also argued that there was political interference in merger considerations, as indicated by the merger and acquisition reports they reviewed. The Competition Commission and department of trade, industry and competition require parties involved in intermediate and large mergers and acquisitions to make significant concessions, particularly regarding employment, racial ownership criteria and race-based procurement.
“The forced concessions are entirely political as they do not relate to the business at hand, market dynamics or antitrust conventions at all. These are political requirements that the government has imposed on itself — for instance race laws in public procurement — and now seeks to impose horizontally on private firms merely because they want to conduct business with each other,” Le Roux said.
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