ENS
  April 24, 2016 - South Africa

Bitter pill for hospital groups as Tribunal imposes record fine for missed merger filing
  by Lee Mendelsohn

The Competition Tribunal has imposed a record penalty of R10-million for failure to notify the competition authorities of a merger.

On 7 April 2016, the Tribunal confirmed that a consent agreement had been entered into between the Competition Commission, Life Healthcare Group Proprietary Limited and Joint Medical Holdings Limited, in terms of which the two hospital groups:

• admitted to failing to notify the competition authorities of their merger and to obtain the required approval prior to the merger being implemented; and

• agreed to pay an administrative penalty of R10-million.

Before this, the highest penalty for a failure to notify was just over R1-million.

For some time, the Commission warned that it intended to materially increase penalties for failure to notify mergers. It is clearly doing so now.

Transactions that are defined in the Competition Act, 1998 as “intermediate mergers” and “large mergers” may not lawfully be implemented prior to notification to, and approval by, the competition authorities. Merger thresholds remain as follows:

Acquiring group of companies and target firm

Target firm

Small merger

Assets and/or turnover in last financial year of less than R560-million.

or

Assets and/or turnover in last financial year of less than R80-million.

Intermediate merger

Assets and/or turnover in last financial year of at least R560-million but less than R6.6-billion.

and

Assets and/or turnover in last financial year of at least R80-million but less than R190-million.

Large merger

Assets and/or turnover in last financial year of at least R6.6-billion.

and

Assets and/or turnover in last financial year of at least R190-million.

Not all “mergers” as defined for competition law purposes necessarily look like mergers, as the term is generally understood commercially. Therefore, acquisitions, amalgamations and divestments should all be carefully scrutinised, and competition law advice should be sought, to ensure that no filings are inadvertently missed, with a costly result.

For more information, please contact: Lee Mendelsohn competition director [email protected] +27 82 904 5897




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