Merger threshold nudged up
The lower threshold for notifying intermediate mergers has been nudged up to R100m from the R80m level set eight years ago. The threshold relates to the total asset value or turnover of the target company.
The lower threshold for notifying intermediate mergers has been nudged up to R100m from the R80m level set eight years ago. The threshold relates to the total asset value or turnover of the target firm.
The higher threshold, which refers to the combined asset value or turnover of the acquiring firm and the target firm (whichever is higher), has been increased to R600m, from R560m. The threshold for large mergers remains unchanged.
The increases will take effect on October 1.
Competition authorities’ fees for filing intermediate mergers will increase 50% to R150,000.
For large mergers, the fees will increase 43%, to R500,000 from R350,000.
Leana Engelbrecht, senior associate in the competition and antitrust practice at Baker McKenzie, said the revised thresholds were aimed at ensuring the competition authorities were charged with considering only material transactions. “The competition authorities have likely noticed that the current thresholds do not appropriately filter out a sufficient number of immaterial transactions,” she said.
The fact that large merger thresholds remained unchanged may indicate the commission believes it is appropriately conducting more extensive investigations that are subject to approval by the tribunal, said Engelbrecht. The fee increases reflect changes in currency value and will more appropriately align with the costs incurred by the commission and tribunal when considering mergers, she said.
One competition analyst said the increasing emphasis on consideration of public interest issues in mergers has considerably extended the scope of the competition authorities’ investigations in recent years.
This is particularly evident in cases such as the transaction between The Coca-Cola Company and SABMiller that was notified in 2014 and only approved in 2016. Economic Development Minister Ebrahim Patel was proposing a switch from accounts based on generally accepted accounting practices to accounts based on international financial reporting standards to calculate the notifiability thresholds, she said.