As promised earlier this year, Minister of Economic Development, Ebrahim Patel, has begun the process of implementing changes to the Competition Act, 89 of 1998 (Competition Act).
On 9 June 2017, the Minister gazetted proposed amendments to the lower merger notification thresholds for compulsorily notifiable mergers, as well as the relevant merger filing fees.
These important amendments follow statements made during Minister Patel’s 2017 Budget Vote Speech where he stated that “to improve resources for the competition authorities, we will Gazette an adjustment to the filing fees for mergers.”
First amendment proposal
The first proposed amendment relates to raising the lower merger notification thresholds for intermediate mergers.
In terms of the proposed amendment, the threshold for an intermediate merger will be met where:
- the acquiring and target firms have combined turnover or assets, whichever combination is higher, of R600 million or more – currently the merger threshold amount is R560 million; and
- the target has turnover or assets, whichever is the higher, of at least R100 million – currently the merger threshold amount is R80 million. The higher thresholds for large mergers combined threshold of R6.6 billion and target firm threshold of R190 million remains unchanged, for the time being.
Second amendment proposal
The second proposed amendment relates to raising fees for merger notifications. In terms of the proposed amendment, the notification fee will be increased to
- R150 000 for filing an intermediate merger – the current filing fee for intermediate mergers is R100 000; and
- R500 000 for filing a large merger – the current filing fee for large mergers is R350 000.
Interested persons may submit written comments on the proposed amendments no later than 7 July 2017.
Although these amendments are yet to be passed into law, they may have an important effect on prospective transactions in the next few months. Also, while these amendments were expected, the swiftness by which the process of changes to the Competition Act has begun indicates that further significant amendments can be expected in the very near future.