There has been much hand-wringing in recent weeks about the time taken by the competition authorities to investigate and adjudicate large mergers.
Some of the criticism is warranted, particularly in the application of public interest considerations, but the overriding suggestion that the time taken to determine the outcome of several problematic large mergers is unreasonable in all cases is not accurate.
Several competition law practitioners have suggested the extensive time taken in certain merger cases is primarily attributable to unduly bureaucratic practices at the Competition Commission and the Competition Tribunal.
Curiously, the comments made by several of the practitioners are made in circumstances when they weren’t involved in the cases and, as a result, have little insight into what occurred in the matters. In this context, the desktop criticisms should be seen for what they are, opportunistic attempts to generate publicity.
While some criticisms levied at the Competition Commission and the department of trade, industry and competition for how they deal with public interest considerations in terms of the Competition Act are justified, it is not reasonable or fair to suggest every lengthy tribunal merger process is the fault of the competition authorities
However, the criticisms are often divorced from reality and, in many instances, do not reflect what transpired. Accordingly there is a great danger in attributing too much store to the musings of the armchair commentators.
Having been personally involved in most of the recent contested merger cases, in some cases for the merger parties and other cases against them, I would like to suggest the truth is far more nuanced than some critics would have the public believe.
The recent matter involving Sun International and Peermont is a case in point. Some have sought to suggest this is another case, similar to the Vodacom/Maziv matter, where considerable time has been taken in determining the matter and, had the matter been determined expeditiously, the axiomatic result would have been an approval of the merger.
The facts in the Sun International case, however, demonstrate the time taken to assess and adjudicate the matter at the tribunal level was not primarily a function of bureaucratic regulatory processes, but was largely due to the merger parties’ repeated failure to timeously provide relevant internal documents they had been required to provide.
The tribunal dates for hearing the matter were pushed out as a result of the discovery issues, not because the tribunal could not operate efficiently. Moreover, the decision to abandon the merger must also be seen in the context of the fact that this was an attempt to resurrect a merger, which had previously been abandoned by the same parties in 2015 in the face of serious competition concerns. In other words, the decision to abandon the merger for the second time was as much a function of a problematic merger as it was anything else.
It is important to understand the real facts before making judgments about the processes of the competition authorities.
Most mergers are adjudicated promptly and efficiently, and it is only a small number of transactions that end up being the subject of protracted processes, but those transactions, with limited exceptions, are generally speaking ones that pose significant competition concerns.
While some of the criticisms levied at the Competition Commission and the department of trade, industry and competition (DTIC) for how they deal with public interest considerations in terms of the Competition Act are justified, it is not reasonable or fair to suggest every lengthy tribunal merger process is the fault of the competition authorities.
While in an ideal world merger processes would be fast-tracked in the interests of commercial certainty and efficiency, one has to bear in mind the competition authorities are there for a reason. They are there to protect the interests of customers and consumers. If the competition authorities don’t carefully scrutinise problematic transactions, there is no reason for them to be there.
Perhaps the solution in part is that mergers that don’t present any issues should be approved as quickly as possible, and the Competition Commission and the DTIC should not try to use the public interest provisions of the Competition Act to achieve some form of economic realignment. One must also distinguish delays occasioned by the tribunal being understaffed from timing issues associated with a proper and careful assessment of transactions. The tribunal is understaffed, and there needs to be a concerted effort between the DTIC, the tribunal and the competition law community to seek to address the issue as soon as possible. Hopefully, if the situation can be remedied, this could fundamentally improve timing difficulties that arise from there not being sufficient tribunal members.
However, the shortage of tribunal members does not detract from the responsibility and statutory obligation of the tribunal to carry out its mandate in relation to complex transactions.
Ultimately it must be remembered there will always be a certain category of mergers that will require very careful scrutiny, and the competition authorities must be allowed to do their job in the interests of discharging their mandate to the public.
Potentially the more insidious outcome from all the armchair criticism is that the competition authorities feel under pressure to wave transactions through that require more careful consideration. An appropriate balance needs to be struck between not compromising commercial efficiency and economic growth that comes from transaction-based commercial activity, while at the same time ensuring the competition authorities deliver on their statutory mandate and safeguard the interests of consumers and the public as a whole.
Anthony Norton is MD of Nortons Inc
For opinion and analysis consideration, email Opinions@timeslive.co.za
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