Competition law is one of the most frequently overlooked aspects of a business sale. When a transaction crosses prescribed financial thresholds, the parties are legally obliged to notify and obtain approval from South Africa's Competition Commission or Competition Tribunal before implementing the deal. Implementing a notifiable merger without approval — a practice known as "gun-jumping" — can result in penalties of up to 10% of the acquiring firm's annual turnover and invalidation of the transaction itself.
The Competition Act 89 of 1998 applies to all mergers and acquisitions in South Africa, including the sale of a business as a going concern, the acquisition of a controlling interest in shares, and asset acquisitions that result in a change of control over a business or division. Both seller and buyer carry obligations under the Act.
This guide explains what constitutes a merger under the Act, the current financial thresholds that trigger mandatory notification, the filing process and timelines, the conditions that may be imposed on approval, and the public interest considerations that can delay or block a transaction.
The Competition Act 89 of 1998
The Competition Act 89 of 1998 (as amended) is the primary legislation governing competition law in South Africa. It prohibits restrictive practices, regulates market dominance, and establishes a regime for merger control. The Act created three institutions to administer and enforce its provisions.
Competition Commission
An independent regulatory body responsible for investigating, controlling, and evaluating restrictive business practices, abuse of dominant positions, and mergers. For intermediate mergers, the Commission is the primary decision-maker. It investigates mergers, receives notifications, and may approve, prohibit, or approve subject to conditions. For large mergers, the Commission makes a recommendation to the Tribunal.
Competition Tribunal
An independent adjudicative body with the status of a High Court. For large mergers, the Tribunal holds a public hearing and makes the final decision to approve, approve with conditions, or prohibit the merger. The Tribunal may also hear appeals against Commission decisions on intermediate mergers in limited circumstances.
Competition Appeal Court
A specialist appellate court established under the Act with the status of a Division of the High Court. It hears appeals on questions of law and fact from decisions of the Tribunal. Decisions of the Competition Appeal Court may be appealed to the Supreme Court of Appeal on questions of law.
Legislative History
The Competition Act has been amended significantly since its enactment. The Competition Amendment Act 18 of 2018 introduced important changes including provisions dealing with buyer power, complex monopoly situations, and expanded public interest grounds. The amended Act also broadened the scope of prohibited practices and strengthened the Commission's investigative powers. Practitioners must work with the Act as amended and with the relevant regulations and merger guidelines issued from time to time.
What is a "Merger"?
The Competition Act defines "merger" broadly. A merger occurs when one or more firms directly or indirectly acquire or establish direct or indirect control over the whole or part of the business of another firm. The definition is deliberately wide to capture all transactions that result in a change of control, regardless of how the transaction is structured.
The key concept is "control" — defined as the ability to exercise decisive influence over the activities of a firm. Control can arise from various circumstances.
Transactions That Constitute a Merger
- Acquisition of all or a controlling interest in the shares of a company
- Acquisition of the business or assets of another firm as a going concern
- Acquisition of a division or undertaking of another firm
- Formation of a full-function joint venture that constitutes an autonomous economic entity
- Acquisition of a minority stake that confers veto rights over strategic decisions
Indicators of "Decisive Influence"
- Ownership of a majority of the issued share capital with voting rights
- Right to appoint a majority of the board of directors
- Contractual right to veto decisions on budget, business plan, or key appointments
- Ability to determine strategic commercial direction through shareholder agreements or other arrangements
- De facto control resulting from widely dispersed remaining shareholding
Merger Thresholds (2025 Figures)
Whether a merger must be notified depends on the combined asset value or annual turnover of the merging parties. The Act distinguishes between three tiers of merger. Thresholds are set by Government Notice and are adjusted from time to time — parties must always verify current figures with their legal advisors.
| Tier | Threshold Test | Obligation | Review Period |
|---|---|---|---|
| Small Merger | Target turnover/assets below R190m OR combined below R600m | No mandatory notification — Commission may require notification within 6 months of implementation | N/A (unless called in) |
| Intermediate Merger | Target turnover/assets > R190m AND combined turnover/assets > R600m | Mandatory — notify Competition Commission before implementation | 20 business days (extendable to 40) |
| Large Merger | Target turnover/assets > R190m AND combined turnover/assets > R6.6bn | Mandatory — notify both Commission and Tribunal before implementation | 40 business days (extendable) |
Verify Current Thresholds
Merger thresholds are set by Government Notice and are adjusted from time to time by the Minister of Trade, Industry and Competition. The figures above reflect 2025 thresholds. Parties to a proposed transaction must always verify the current applicable thresholds with qualified competition law counsel before concluding that no notification is required. The turnover and asset figures used are the South African turnover and South African assets of the merging parties.
What Triggers Notification?
Both asset sales and share sales can trigger notification obligations. The structure of the transaction does not determine whether notification is required — the economic effect of the transaction and whether it results in a change of control is what matters.
Asset Sales
A sale of the business as a going concern — or of a discrete division or undertaking — that results in the buyer acquiring control over that business will constitute a merger if the thresholds are met. This includes franchise arrangements, licence acquisitions, and management contracts that confer control. The seller's and buyer's turnover and assets are aggregated for threshold purposes.
Share Sales
Acquisition of a majority shareholding obviously triggers notification. Less obviously, acquisition of a minority stake may also be notifiable if it confers veto rights over strategic commercial decisions — such as approval of the annual budget, capital expenditure above a threshold, appointment of senior management, or entry into material contracts. The Commission has consistently taken a broad approach to the concept of "control" in this context.
Gun-Jumping — The Prohibition on Pre-Implementation
Section 13A(3) of the Competition Act prohibits the implementation of a notifiable merger before it has been approved. "Gun-jumping" occurs when parties take steps to implement the transaction — or begin sharing competitively sensitive information — before obtaining Commission or Tribunal approval. Even partial implementation can constitute a contravention.
Gun-jumping carries a penalty of up to 10% of the acquiring firm's annual turnover in South Africa and in exports from South Africa. The transaction may also be declared void. Always include an appropriate condition precedent in the sale agreement requiring merger approval before implementation.
The Filing Process
The notification process requires completion of the prescribed merger notification form and payment of the applicable filing fee. Both the acquiring firm and the target firm (or its controlling firm) must file or join in the notification.
Intermediate Merger — Form CC4(1)
- Filing fee: R150,000
- Filed with the Competition Commission
- Commission has 20 business days to decide (extendable to 40)
- Commission may approve, approve with conditions, or prohibit
Large Merger — Form CC4(2)
- Filing fee: R500,000
- Filed with both the Commission and the Tribunal
- Tribunal holds a public hearing and makes the final decision
- 40 business days from date of referral by Commission to Tribunal
Information Required for Filing
Party Information
Full particulars of acquiring and target firms, their holding companies, and subsidiaries; shareholders and directors; group structure charts
Financial Data
Annual turnover and asset values in South Africa for the most recent financial year; certified financial statements
Market Information
Description of the product and geographic markets in which each party operates; market shares; identification of competitors and customers
Transaction Documents
Signed or substantially agreed sale agreement; term sheet or heads of agreement; any shareholders agreement to be entered into post-merger
Penalty for Failure to Notify
Implementing a notifiable merger without prior approval is a contravention of the Competition Act. The Competition Tribunal may impose an administrative penalty of up to 10% of the annual turnover of the firm in South Africa and in exports from South Africa. The Tribunal may also declare the merger void and order its unwinding. These consequences apply to both the acquiring and target firms. There is no de minimis exception.
Review Period
The review periods prescribed by the Act are the minimum timeframes. In practice, complex transactions involving multiple markets, significant market shares, or public interest concerns frequently take longer. Parties must plan their transaction timelines accordingly.
Phase I — Initial Review
Intermediate: 20 business days | Large: 40 business days
Upon receipt of a complete filing, the Commission conducts its initial review. The period runs from the date the filing is deemed complete — the Commission will often raise requests for further information ("RFIs") which can pause or extend the review period. If the Commission is satisfied that the merger will not substantially prevent or lessen competition and has no adverse public interest effects, it will approve the merger unconditionally. If concerns arise, it will either impose conditions or refer the matter for Phase II review.
Phase II — Extended Review
Commission refers to Tribunal — no fixed outer limit
For complex transactions where Phase I review does not resolve the Commission's concerns, the matter proceeds to Phase II — a more intensive review involving market inquiries, third party submissions (from competitors, customers, trade unions, and industry bodies), and in some cases economic expert evidence. For large mergers, the Tribunal holds a public hearing. Phase II proceedings can take 6 to 18 months for highly contested transactions.
Merger Conditions
Rather than prohibiting a merger outright, the Commission and Tribunal may approve a merger subject to conditions designed to address competition or public interest concerns. Conditions are categorised as structural or behavioural.
Structural Remedies
Structural conditions change the composition of the merged entity on a permanent basis. They are generally preferred by competition authorities because they do not require ongoing monitoring.
- Divestiture of a business unit, brand, or set of assets
- Licensing of intellectual property to competitors on FRAND terms
- Reduction or cap on shareholding in specified entities
Behavioural Remedies
Behavioural conditions regulate the merged entity's conduct going forward. They require ongoing compliance monitoring and are typically more contentious.
- Pricing undertakings — price caps or price freeze for a defined period
- Supply commitments — obligation to supply specified customers on certain terms
- Open access conditions — obligation to provide access to infrastructure or networks
Employment & BEE Conditions
Public interest concerns under section 12A of the Act frequently result in employment and BEE conditions being imposed, even where the merger raises no competition concerns. These conditions are typically agreed between the merging parties and the Commission or trade unions as part of settlement negotiations to avoid a prohibition recommendation.
Employment Conditions
No retrenchments (or limited retrenchments) for a fixed period — typically 2 to 3 years post-implementation — with exceptions for operational performance or misconduct
BEE / Transformation Conditions
Maintaining or improving existing BEE ownership levels, preferential procurement targets, or skills development commitments for a specified period
Prohibited Mergers
The Commission or Tribunal must prohibit a merger if it is satisfied that the merger is likely to substantially prevent or lessen competition and there are no technological, efficiency, or other pro-competitive gains that offset those effects, or if the merger cannot be justified on public interest grounds.
Substantially Preventing or Lessening Competition
The primary test is whether the merger will substantially prevent or lessen competition in a relevant market. Factors the Commission considers include:
- The combined market share of the merging parties in the relevant market
- The degree of concentration in the market — measured by the Herfindahl-Hirschman Index (HHI)
- The likelihood of coordinated effects — the possibility of collusion between remaining competitors post-merger
- Barriers to entry and expansion in the relevant market
- Countervailing buyer power and the availability of substitute products
The Efficiency Defence
A merger that would otherwise be prohibited may be approved if the merging parties can demonstrate that the merger will result in technological, efficiency, or other pro-competitive gains that would not be attained if the merger were prevented, and that such gains outweigh the anti-competitive effects. The burden of proving these gains rests on the merging parties and is typically discharged through economic evidence.
Public Interest Considerations
South Africa's merger control framework is distinctive in its explicit incorporation of public interest considerations alongside competition analysis. Section 12A of the Competition Act requires the Commission and Tribunal to consider the public interest effects of every merger that is notified, regardless of whether competition concerns arise.
Effect on Employment
The Commission assesses the likely impact on employment levels at the merging parties and their suppliers and customers. Trade unions have the right to make submissions and to appear before the Tribunal in large merger hearings. Employment conditions are frequently imposed even where the merger is unproblematic from a competition perspective.
Ability of Small Firms to Compete
The Commission considers whether the merger will foreclose markets to small and medium enterprises, or whether the merged entity's enhanced buying power will adversely affect small suppliers. Remedies may include supply commitments or procurement targets favouring SMEs.
Ability of BEE Firms to Compete
The Competition Amendment Act 18 of 2018 strengthened the BEE public interest ground. The Commission now actively considers whether the merger will promote or hinder the ownership and participation of historically disadvantaged persons in the economy.
Ability to Compete Internationally
For mergers in export-oriented industries or industries competing against imports, the Commission considers whether the merger will enhance the competitiveness of South African firms in international markets — sometimes favouring large mergers in concentrated global industries.
The Section 12A Public Interest Test
Section 12A(1)(b) of the Competition Act provides that when determining whether a merger can or cannot be justified on public interest grounds, the Commission or Tribunal must consider the effect of the merger on a particular industrial sector or region, employment, the ability of small businesses or firms controlled by historically disadvantaged persons to become competitive, and the ability of national industries to compete in international markets. The Competition Amendment Act expanded the scope of these considerations and raised the profile of public interest review in merger proceedings.
Timing and Deal Planning
Merger review timelines must be integrated into deal planning from the outset. Parties who leave competition approval as an afterthought frequently encounter long-stop date failures, cost overruns, and collapsed transactions.
Condition Precedent
Every sale agreement for a transaction that may be notifiable must include a condition precedent requiring merger approval before implementation. The condition precedent should specify the relevant threshold (intermediate or large), the filing deadline, and whether either party has the right to waive the condition if the merger is approved with conditions that are unacceptable to one party. The agreement should allocate responsibility for filing costs between the parties — by convention, filing fees are typically borne equally or by the acquirer.
Long-Stop Date
The long-stop date — the date on which either party may terminate the agreement if conditions precedent have not been satisfied — must be set generously enough to accommodate the full merger review process including potential extensions. For intermediate mergers in uncomplicated markets, 90 to 120 days from signature may be sufficient. For large mergers or transactions in concentrated markets, 6 to 12 months or longer may be necessary. An insufficient long-stop date creates renegotiation leverage for the counterparty.
Pre-Filing Engagement
For complex transactions, informal pre-filing engagement with the Competition Commission can significantly streamline the formal review process. The Commission's merger division is generally willing to discuss the proposed notification, the relevant market definition, and anticipated concerns before the formal filing is made. Pre-filing discussions are confidential and can help parties understand the Commission's perspective and tailor their submission accordingly.
Gun-Jumping — A Critical Warning
Gun-jumping does not only include physical implementation of the transaction — it also encompasses the sharing of commercially sensitive information between the merging parties (pricing, customer lists, future strategy) before approval, as well as any coordination of competitive behaviour. Information barriers ("clean teams") and information-sharing protocols must be established at the time of signing to ensure that due diligence and integration planning activities do not constitute gun-jumping. Penalties of up to 10% of annual South African turnover apply.
Sector-Specific Regulators
Competition Commission approval is not the only regulatory approval that may be required for a business sale. In regulated sectors, parallel approval from a sector-specific regulator is often required. These parallel processes may run concurrently with the competition review but can have different timelines and criteria.
| Sector | Regulator | Notes |
|---|---|---|
| Banking | Prudential Authority (PA) — hosted by the SARB | Section 18(3) of the Banks Act requires PA approval for acquisition of a qualifying holding in a bank |
| Insurance | Financial Sector Conduct Authority (FSCA) | FSCA approval required for change of control of an insurer, FSP, or other licensed entity under the FAIS Act and Insurance Act |
| Broadcasting & Media | Independent Communications Authority of South Africa (ICASA) | ICASA must approve transfer of broadcasting, electronic communications, or postal licences — additional public interest test applies |
| Mining | Department of Mineral Resources & Energy (DMRE) | Section 11 of the MPRDA requires Ministerial consent for transfer of any interest in a mining right or prospecting right |
| Healthcare | Council for Medical Schemes (CMS) | CMS approval required for amalgamation or transfer of medical schemes or scheme administrators |
| Financial Markets | FSCA / Financial Sector Tribunal | FSCA approval for change of control of market infrastructure, exchange operators, or clearing houses |
Plan for Multiple Parallel Approvals
In regulated sectors, multiple parallel approval processes must be coordinated carefully. Each regulator has its own application form, information requirements, assessment criteria, and timeline. The long-stop date in the sale agreement must accommodate the longest of these approval processes. Some approvals — particularly in mining and broadcasting — can be significantly slower than competition approval and should be identified and commenced at the earliest possible stage.