On the 25th of March 2021, proposed new merger filing forms were published in the Government Gazette for public comment. These forms propose significant changes in order to bring them in line with the amendments to the Competition Act of 1998, which were introduced in 2018. While not yet effective, the proposed forms provide insight into how the Competition Commission intends to investigate applications for merger approval commonly known as merger filings.
A merger filing typically consists of the existing forms, schedules which answer the forms, a competitiveness report and other applicable documents which are submitted by the parties to a notifiable transaction to the Commission for investigation. While not a strict requirement, it has become common practice for a competitiveness report to be included with the filings. This report sets out, amongst others, the markets that the merging parties participate in, their market shares and the pros and cons of the merger from a competition and public interest perspective. Simply put, the competitiveness report summarises the effect of the merger on competition in the applicable market and on the public interest.
However, the proposed forms go a long way to eliminate the need for a competitiveness report, especially in transactions where the issues are less complex in nature. The information required to answer the questions and complete these forms is comprehensive and encompasses much of the information usually provided in the competitiveness report. For example, the proposed forms will require the parties to a merger to specifically provide a detailed analysis of the public interest considerations outlined in S12A(3) of the Competition Act where the proposed merger has an effect on those considerations. This would include instances where there is an effect on (i) a particular industrial sector or region; (ii) employment; the ability of small and medium sized firms to compete; (iv) the ability of national industries to compete in international markets and (v) the promotion of ownership by historically disadvantaged individuals. Addressing these concerns effectively means that the schedules submitted in answer to these forms will be more extensive and perhaps onerous in the sense that they become the most important documents submitted to the Commission as part of the merger filing.
The requirements arising from the proposed forms also go a long way in dealing with common follow up questions which the Commission often poses to the merging parties during the investigation. As a result of the number of questions and the extent of the answers required in terms of the proposed forms to address these questions, requests for additional information from the Commission are likely to become less prevalent.
On the face of it, the proposed forms may appear daunting due to their scope and complexity. However, if dealt with and answered systematically, the investigation may be streamlined by requiring specific information, eliminating repetition and the need for follow up correspondence from the Commission. Should that be the case, the proposed forms may in fact assist in obtaining merger approval faster. The proposed forms may change again after comments have been received (comments close on 23 April 2021). But should they stay substantially the same as proposed, the news is certainly not all bad.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
