Section Title

Report Abuse

0 0 Reviews

Shepstone & Wylie Attorneys

Compliance and Competition

Every time you open the newspaper it seems that yet another company has been price fixing or colluding on tenders. It's easy to forget that competition compliance isn't only about the headline making cases. Sifiso Msomi, property specialist at Shepstone & Wylie, advises that developers must check whether their property acquisitions are reportable "mergers" in terms of the Competition Act for which they need permission from the Competition authorities. Msomi warns that "Failing to report a notifiable transaction may result in a "divestiture order", which means that the transaction is unwound, and big fines".  While the merger notification thresholds increased on 1 April 2009, it's still easy to hit these thresholds, particularly in substantial property transactions, says Msomi. Unfortunately, deciding whether a transaction is reportable or not can be complicated. "While for threshold purposes, you look at the asset values and turnovers of the parties, the critical issue is whether the transaction causes control of all or part of a business to change hands" says Msomi.

Competition law specialist Jennifer Finnigan adds that while the Tribunal has ruled that acquiring a bare asset is not a merger for the purposes of the Competition Act, the Tribunal went on to say that the real question is whether the transaction improves the acquiring firm's competitive position. Finnigan comments, "That is a much trickier proposition because, on the face of it, capital investments are aimed at improving market share. Unfortunately the Tribunal didn't clarify this test. We can only hope that it does when next it deals with this question ...".   Finnigan warns that competition law now pervades almost every aspect of corporate life. She suggests that companies factor it into their thinking at a practical and compliance level, "For example, by limiting data use and storage on networks to necessary information only, the company can minimise disruption during possible dawn raids by the Competition Commission".

Compliance and Competition

Contact Information