For any foreign or domestic companies wanting to do mergers & acquisitions (M&A) in SA the events of the past couple of weeks have been a disturbing reminder of the perils of dealing with the competition authorities.
Good competition regulators treat mergers as inherently urgent. The world changes, companies change, stock market prices change. A deal that was attractive two or three years ago may no longer be so now. But SA’s competition process is anything but urgent. And the outcomes are wildly unpredictable.
Take, first, Sun International’s decision to walk away from its R7bn proposal to buy Peermont. The deal was struck in late 2023, but was prohibited by the Competition Commission, whose decision then went to the Competition Tribunal for scrutiny in October 2024. The tribunal set an October 2025 date for public hearings.
That would no doubt have meant a decision only well into next year, going on the tribunal’s form. Either way, it was after the September date the parties had agreed as the final date to meet the conditions for the deal, including regulatory approvals. Other companies have hung in there and extended. Sun International simply cancelled.
Then there is the bizarre settlement the commission reached this week with Vodacom and Maziv. After a four-year drama that saw the commission and tribunal prohibit the R14bn merger despite huge commitments by the parties to roll out affordable fibre across SA, the commission did an abrupt U-turn. All of a sudden all that was needed were a couple of minor extra conditions and the commission found its way to saying yes.
It’s surely no coincidence that it did so on the eve of Competition Appeal Court hearings on the case, which were due to start later this month. The tribunal took almost six months to come up with reasons for its October decision to prohibit the deal. Chances are its exceptionally weak judgment would not have held up in the appeal court. And the commission has been exceptionally tardy about filing its own heads of argument.
It’s all pretty disgraceful given the four-year-long process. But the process has been a puzzle in its own right. In prohibiting the deal the commission and tribunal suddenly seemed to rediscover competition as a priority, after years in which they seemed more focused on extracting an ever more burdensome range of public interest conditions from merging parties.
What’s more, their boss, trade, industry & competition minister Parks Tau came out against them on the Vodacom-Maziv deal, singing its praises as a way to unlock the mass digital infrastructure the government is pushing for. So did the U-turn reflect political interference? Or incompetence? The tribunal’s tardiness has been blamed on a shortage of panel members, but it’s Tau’s job to remedy that.
There’s no question that regulatory hurdles deter foreign investors from buying into SA companies, even if regulation is not the only deterrent. And the figures are bleak.
And whether interference or incompetence, for investors or potential investors in SA the fate of the two deals just serves to signal again how cumbersome and unpredictable the process has become. That can only be a deterrent. Yet when competition commissioner Doris Tshepe spoke on the role of the commission in stimulating foreign direct investment (FDI) and job creation at the recent RMB Think Summit, she seemed hardly interested in FDI deal-making, focusing instead on competition policy as an instrument of industrial policy and promising to speed up merger regulation processes only in response to a question from the audience.
There’s no question that regulatory hurdles deter foreign investors from buying into SA companies, even if regulation is not the only deterrent. And the figures are bleak. The UN Conference on Trade & Development’s latest World Investment Report shows inward M&A flows into SA fell to just $395m in 2024, from $7bn the previous year and $486m five years ago.
At this level SA was the destination for less than half the M&A flowing into Southern Africa, and a tiny fraction of the $24bn into developing economies. Foreign owners can provide crucial technology and market access, as well as capital. SA is missing out on that.
Fortunately or unfortunately, there is one more act to come in the long-running Vodacom-Maziv drama. The Competition Appeal Court will hear the case later this month. The commission will have to explain itself. It can expect some tough questions.
• Joffe is editor-at-large.
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