South Africa’s Competition Commission has announced plans to increase scrutiny on mergers in the technology sector, which may have previously gone unnoticed.<\/p>\n\n\n\n
This comes as the Commission has proposed amendments to the 2022 small merger notification guidelines and has called for public comments.<\/p>\n\n\n\n
The Competition Commission is tasked with ensuring that businesses in South Africa operate fairly and do not take part in anti-competitive behaviour.<\/p>\n\n\n\n
This can include limiting business competition by acquiring new businesses which could potentially threaten to take market share.<\/p>\n\n\n\n
The proposed amendments would respond to “concerns that potentially anti-competitive acquisitions in digital or technology markets are escaping regulatory scrutiny,” the commission said in a statement.<\/p>\n\n\n\n
The commission is particularly concerned about acquisitions that happen when a business is still in its early days, before it would have to disclose a mandatory merger notification.<\/p>\n\n\n\n
According to current guidelines, businesses only have to disclose mergers once they have generated enough turnover or reached a certain capital threshold.<\/p>\n\n\n\n
This means that potentially unfair mergers can occur when businesses are still young, before they reach these mandatory disclosure thresholds.<\/p>\n\n\n\n
As a result, the Commission has proposed that mergers be disclosed based on several new criteria.<\/p>\n\n\n\n
This includes whether any business involved in the merger is currently under active investigation by the Commission or is a respondent in pending proceedings.<\/p>\n\n\n\n
It would also include whether the acquiring business alone exceeds the existing turnover or capital thresholds for merger disclosure.<\/p>\n\n\n\n
The proposed amendments would also require the target firm to meet specific acquisition- and investment-related criteria.<\/p>\n\n\n\n
The proposed changes are specifically aimed at addressing anti-competitive issues in South Africa’s technology sector.<\/p>\n\n\n\n
The commission has argued that this sector has been able to shield itself from scrutiny due to the small size of businesses being acquired.<\/p>\n\n\n\n
While these businesses are small, this is largely because they are newly founded, leaving them with very little revenue at the time of a merger.<\/p>\n","protected":false},"excerpt":{"rendered":"
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