The impact of the Competition Amendment Act

Capital gains tax and withholding tax for non-resident sellers
March 6, 2019

by Caitlin Harvey

Competition law in South Africa is an area of law that aims to maintain and promote competition in the South African market. Since 1998, competition law in South Africa has been regulated by way of the Competition Act (“the Act”). It is relevant to many businesses, as companies naturally compete with each other and gain market power in the course of their business.

The Competition Commission is the governing statutory body and has the duty to investigate, control and evaluate restrictive business practices, abuse of dominant positions and mergers to achieve equity and efficiency in the South African economy.

It has the following objectives:

  • promoting the efficiency, adaptability and development of the economy;
  • providing consumers with competitive prices and product choices;
  • promoting employment and advancing the social and economic welfare of South Africans;
  • expanding opportunities for South African participation in world markets and recognising the role of foreign competition in the Republic;
  • ensuring that small- and medium-sized enterprises have a fair opportunity to participate in the economy; and
  • promoting a greater spread of ownership, in particular to increase the ownership stakes of historically disadvantaged people.

The Competition Amendment Act (“the Amendment Act”) was assented to on 13 February 2019 and has been the subject of much legal debate and controversy. The Amendment Act aims to give effect to what the Act set out to achieve for the most part, to address the on-going issues of concentration and racially-skewed ownership. It sets out to achieve this, by radically changing the provisions relating to collusion, abuse of dominance, price discrimination, administrative penalties, merger control and market enquiries.

The Amendment Act has been described as ‘giving teeth’ to the market inquiry process, as it gives the Competition Commission more power in assessing a specific market, as opposed to just the conduct of the firm in question. This will allow competition authorities to truly change the structure of a market through specific remedies.

One of the proposed new provisions deals with mergers that involve a ‘foreign acquiring firm’ and entitles the President, via a committee, to assess whether a proposed merger with a foreign acquiring firm would have ‘an adverse effect on the national security interests of the Republic’.

The introduction of the Competition Amendment Act is an interesting development that will undoubtedly have a significant impact on the way companies, both South African and foreign, conduct their business in the South African market.

For more information regarding commercial matters, please contact:

 

Henning Pieterse | Partner

E: h.pieterse@bissets.com

Areas of Expertise: Corporate & Commercial Law

 

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)