I’m becoming a stuck record on the Competition Commission. For years I have sounded the alarm about its overreach, its heavy-handedness, and its increasingly ideological approach to mergers & acquisitions (M&A).
Now, new research from North-West University Business School’s Anton van Wyk, Raymond Parsons and Lodewalt Venter, “Policy Uncertainty, Mergers & Acquisitions in the SA Business Environment”, adds fresh urgency to this debate, confirming what many in the business community have long suspected: the commission’s actions are not merely misguided, they are actively harmful.
Let’s not mince words here. The commission’s mandate has expanded well beyond its original remit of ensuring competitive markets. It has become an all-encompassing super-regulator, wielding a broad and often unpredictable range of “public interest” considerations to influence — and frequently block — mergers that make perfect economic sense. On paper, these public interest goals, such as supporting employment, fostering small businesses and promoting transformation, are admirable. But in practice they have become a blunt instrument, used to bludgeon companies into compliance with an ever-shifting set of political and social objectives.
The new research lays bare the true cost of this approach. Through a series of interviews with companies and competition lawyers, the authors reveal that businesses, both local and international, are increasingly wary of engaging in M&A activity in SA, not because they fear competition but because they fear the regulatory minefield laid out by the commission. Transactions that should be straightforward are dragged out for months, sometimes years, as the commission deliberates on whether they meet its nebulous criteria for the public good.
Consider the absurdity of this situation: company A is told to prioritise employment, yet when a merger is necessary to save a failing firm the same commission imposes conditions that prevent it from laying off redundant staff, even temporarily. It’s a classic case of trying to have one’s cake and eat it too, only here the cost is paid in millions of rand in delayed deals and lost opportunities.
This kind of uncertainty isn’t just an inconvenience; it is a deterrent. As I argued in this column in July, the commission seems “blinkered in its view of the issues”. It fails to see that its unpredictable and heavy-handed approach is driving away exactly the kind of investment SA needs. The research confirms this: prolonged regulatory reviews, unclear guidelines and the ever-present threat of additional conditions are pushing businesses to reconsider investing in SA. Why risk it, they ask, when the regulatory process is so fraught with ambiguity and potential pitfalls?
But perhaps the most damning revelation from the study is the sense of resignation among those who deal with the commission. It’s not just about the length of time it takes to get a deal approved — though that, too, is a major issue. Ask Afrimat CEO Andries van Heerden about the value destruction caused by the delay in the Lafarge deal. It’s about the way the commission operates, with an almost Kafkaesque level of unpredictability. One day a merger might be hailed as a model of economic prudence; the next, it is blocked on the basis that it does not do enough to promote BEE or fails to safeguard jobs in some vaguely defined future.
This is not regulation; this is roulette. Businesses are essentially gambling on the whims of a commission that has taken it upon itself to be the arbiter of SA’s economic and social future. And that’s a game many are choosing not to play. When faced with the choice between investing in a country where the rules of the game are clear and consistently applied, or one where they are not, the decision becomes a no-brainer.
Let’s be clear: I am not arguing against the principles of competition or public interest. Quite the opposite. A fair and competitive market, one that promotes growth, innovation and opportunity, is vital to SA’s future. But the current approach, as illustrated by the commission’s actions and the findings of this new research, is far from fair. It is capricious, costly and counterproductive.
If SA is to attract the kind of investment it so desperately needs, we must rethink how we approach competition regulation. This isn’t about dismantling the commission or gutting its powers. It’s about striking a balance to ensure the goal of promoting public interest does not come at the expense of economic growth and business confidence. It’s about making sure the commission focuses on what it was originally designed to do: maintain competitive markets and prevent monopolies, not serve as a gatekeeper for social policy.
SA’s economy is not growing at the rate it should be, and every obstacle we place in the path of potential investors only pushes us further away from the goal of increased growth. Isn’t that the lodestar and linchpin of the government of national unity? It’s time the minister in charge acted like it.
• Avery, a financial journalist and broadcaster, produces BDTV’s ‘Business Watch’. Contact him at Badger@businesslive.co.za.
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