Merger regulations level economy playing field

BALANCING the Competition Commission’s mandate to safeguard competition whilst fostering a growing and deconcentrated economy is no small task. 

This is partly because, as alluded in our concentration tracker report, “persistent concentration by historically dominant firms is also associated with a lack of transformation of the economy, denying opportunities to those that were historically excluded to participate and grow their share of economic value.

A dynamic, growing economy requires markets that are contestable and that reward innovation, ideas and responsiveness to the needs and wants of consumers. 

Regulating mergers and acquisitions (M&A) forms an important part of the work that we do to contribute towards a growing and de-concentrated economy for the country. At times narratives in the media present skewed criticism of the Commission’s merger regulation processes asserting that it creates uncertainty for investors. 

Understandably, predictability may well be an important factor for investors, and the Commission has been consistent in its transparency and accountability by, among other things, publishing guidelines and communicating its decisions on all cases. 

We do so in line with the provisions of the Competition Act (89 of 1998) as amended, which provides a clear structure of the factors that will be considered in conducting both the competition and public interest assessment in an M&A transaction and sets firm timelines (a maximum of 60 days) for the assessment of intermediate mergers. 

The Commission takes this even further by committing itself to service standards for large mergers where no firm deadline is set in the Act. It bears emphasis that the Commission regularly concludes reviews at a much faster rate than its published service standards: 1) Phase I (less complex) merger reviews, took an average of 18 days to conclude in 2019.

In the 2024/2025 financial year, these merger reviews were completed, on average, in 14 days. 2) The target turnaround time for Phase II (complex) mergers is 45 days. We averaged 35 days in 2024/25. 3) For small or intermediate Phase III (highly complex) mergers our target turnaround time is 60 days. 

We typically completed these reviews within 51 days in the last financial year. 4) The review of large Phase III (highly complex) mergers was concluded on average within 76 days of the financial year ending on  31 March 2025. 

It is an unfortunate misperception that merger review times regularly extend between six to nine months. Reviews of mergers more often than not take place well below the levels set in the Competition Act, or service standards.

The inaccurate perception stems from outlying cases that were complex, and required many consultations with different sector stakeholders who might be affected by the merger or a merger between two competitors that operate in the same or a concentrated industry. 

Let me break this down even more. In the past five years, the Commission assessed 1 364 mergers. In 2020, 2021, 2022, and 2024, more than 50% of cases were completed in less than 40 days. 

In 2023, over 50% of the cases were completed in less than 60 days. In the past five years there have only been a handful of complex cases, 24 to be exact, that have taken more than 120 days to complete. Stakeholders are able to access the Commission’s merger review turnaround times on our website, www.compcom.co.za

At a recent forum with legal practitioners and business representatives, concerns were raised that public interest provisions might also require additional clarity and consistent application during merger reviews. 

First, I need to highlight that the public interest provisions in the Competition Act must be seen within the context of South Africa’s unjust past and the deliberate exclusion of black South Africans from meaningful participation in economic activity. 

The 2019 amendments to the Competition Act acknowledged that even at that stage, 25 years after the first democratic election, the South African economy remained highly concentrated and untransformed.

Small and black-owned firms were not able to enter into and compete in markets on the merits. The Act was amended to deal more decisively with the preferencing of insiders against outsiders and dealing with barriers to entry and participation. 

One of the areas of amendment was the merger provisions dealing with public interest which now made it clear that any merger must be assessed on both competition and public interest grounds. Although this was made more explicit by the 2019 amendments, the competition authorities have a long and proud history of addressing public interest in merger control. 

The focus on public interest is not new; it has been a fundamental feature of merger control since 1999 and has delivered substantial support to the ability of workers, small firms, and historically disadvantaged persons to participate meaningfully in economic activity. 

 The widespread impact of public conditions cannot be underscored enough. Between 2019 and 2025, public interest conditions resulted in an estimated R16bn in terms of HDP transactions, more than R60bn in worker ownership (ESOP) deals, and more than R130bn in support for small and black-owned firms through procurement commitments, skills development, capex commitments, and supplier development commitments. 

Second, in a further effort to provide guidance and certainty post the amendments to the Act in 2019, the Commission released public interest guidelines in March 2024 to indicate how the Commission is likely to approach the public interest assessment. These guidelines were subject to public comments and incorporated much of the useful guidance provided by practitioners.

 This is in keeping with the Commission’s practice of regularly issuing practice notes and guidelines to provide clarity on its approach to, for example, indivisible transactions (issued in Sept 2024), what constitutes an internal restructuring (issued in Apr 2025), and the application of merger provisions to risk mitigation transactions (issued in 2017).These guidelines are also available on our website.

The Commission’s merger regulation mandate seeks to level the playing field so that all firms, big or small, can compete fairly and expand or grow in their respective industries. A fair market is not only good for growth and for investment but also for consumers, enabling them to access greater products or services at more competitive prices and at an improved quality.

 Equipped with the facts and statistics outlined above, I hope that the public, legal fraternity, and firms alike have gained more insight into our work, the impact of public interest provisions, and finality on our merger review turnaround times.

Makunga is the spokesperson for the Competition Commission of South Africa