Do I Need Competition Commission Approval for My Transaction?

One of the most dangerous assumptions in any transaction is that competition approval is a technical issue that can be checked later. In South Africa, that assumption can be costly. If a transaction is notifiable and the parties implement before approval, the Competition Commission can treat that as unlawful prior implementation, commonly called gun-jumping. That can lead to penalties, delay and serious deal risk. The Commission’s current guidance says a merger arises where one or more firms directly or indirectly acquire or establish direct or indirect control over the whole or part of another firm’s business.

Barter McKellar advises clients on whether a transaction is notifiable, how to assess control and how to avoid merger filing mistakes before they become regulatory problems. Where there is doubt, the cost of getting advice early is usually far lower than the cost of getting it wrong.

The Short Answer

You may need Competition Commission approval if your transaction results in one firm acquiring direct or indirect control over all or part of another business and the financial thresholds for an intermediate or large merger are met. Even if the thresholds are not met, a small merger can still become a regulatory issue because the Commission may require notification within six months after implementation in certain cases.

That is why this question cannot safely be answered by looking only at the label on the deal. Share sale, asset deal, joint venture or restructuring are commercial descriptions. Competition law looks at control, thresholds and risk.

What Counts as a Merger?

Under the Commission’s merger guidance, a merger occurs when one or more firms directly or indirectly acquire or establish direct or indirect control over the whole or part of another firm’s business. The Commission expressly says this can happen through a purchase or lease of shares and assets, joint ventures or a pure amalgamation of firms or businesses.

That means transactions often trigger competition analysis even where the parties do not think of the deal as a conventional acquisition.

It Is Not Just About Majority Shareholding

A common mistake is to assume approval is only needed if the buyer takes more than 50% of the target. The Commission’s own guidance is much broader. It lists control as including ownership of more than 50% of issued share capital, majority votes at general meetings, the ability to appoint or veto the appointment of the majority of directors or the ability to materially influence the policy of the firm.

That last category is where deals often become risky. Minority investments, shareholder arrangements, governance rights and joint venture structures can all create control issues even where the equity stake looks modest.

The Current Thresholds

According to the Competition Commission’s current merger guidance, the lower threshold is met where the combined turnover or asset value of the acquiring and target firms is R600 million and the target’s turnover or asset value is at least R100 million. The higher threshold is met where the combined turnover or asset value is R6.6 billion and the target’s turnover or asset value is at least R190 million. The Commission uses these thresholds to distinguish small, intermediate and large mergers.

In practical terms:

• if the lower threshold is met, the deal may be an intermediate merger and must be notified

• if the higher threshold is met, the deal may be a large merger and faces a more intensive approval path

• if neither threshold is met, the transaction is generally treated as a small merger, but that does not always mean it is safe to ignore

What If My Deal Is a Small Merger?

Small mergers are generally not mandatorily notifiable. But they are not risk-free. The Commission states that parties may voluntarily notify a small merger and that section 13(3) allows the Commission to require notification within six months after implementation if the merger may substantially prevent or lessen competition or cannot be justified on public interest grounds. The Commission also says that once such a requirement is issued, the parties may not take further steps to implement until approval or conditional approval is obtained.

This is where businesses get caught. They assume “small” means “irrelevant”, only to face a call-in after signing or implementation.

Intermediate and Large Mergers Cannot Be Implemented First

For notifiable mergers, approval is not optional and it is not something to tidy up after closing. The Commission’s guidance makes clear that intermediate mergers must be notified and that large mergers are subject to the higher threshold and Tribunal involvement. The Competition Tribunal’s merger procedures page also confirms that merger review is governed by Chapter 3 of the Act and the applicable Commission and Tribunal merger rules.

If your transaction is notifiable, implementing before approval exposes the parties to avoidable regulatory risk.

How Long Does Approval Take?

The Commission’s published timing guidance says the initial investigation period for small or intermediate mergers is 20 business days, with a once-only extension of 40 business days. For large mergers, the initial period is 40 business days, with one or more extensions of up to 15 business days each, subject to the necessary consents. The same guidance also states that incomplete filings delay when the review period begins.

That matters for transaction planning. A rushed or poorly prepared filing can affect signing mechanics, long-stop dates, financing and integration planning.

Common Transactions That Need a Competition Assessment

The Commission specifically identifies share acquisitions, asset acquisitions, joint ventures and amalgamations as transactions that can amount to mergers. It also treats control broadly enough to catch arrangements involving board rights, veto rights and material influence.

In practice, you should assess competition approval risk if your deal involves:

• acquiring shares in a South African business

• buying a business or a substantial asset base

• entering a joint venture

• restructuring group holdings where control shifts

• taking governance rights that amount to material influence

Why Businesses Get This Wrong

Most filing mistakes happen for one of three reasons.

First, the parties focus on percentage shareholding and ignore broader control rights. The Commission’s own control test shows why that is dangerous.

Second, the parties look only at deal value and not at the statutory turnover or asset thresholds. The current thresholds are based on combined turnover or asset value and separate target thresholds, not just purchase price.

Third, the parties assume a small merger cannot become a problem. The Commission’s small-merger guidance says otherwise.

What If You Are Unsure?

The Commission says that if a business is uncertain whether a proposed transaction results in a merger that should be notified, it may submit a written request for a non-binding advisory opinion to the Chief Legal Counsel: Legal Services division, for a fee of R2,500. The Commission also states that pre-notification meetings can be requested with the manager of the Mergers and Acquisition division for procedural guidance.

That does not remove the need for legal advice. The Commission itself says the advisory opinion is non-binding and the merger threshold calculator is not a substitute for independent legal advice.

How Barter McKellar Can Assist

Barter McKellar assists with:

• assessing whether your transaction constitutes a merger

• analysing whether control is being acquired

• determining whether thresholds are met

• advising on small-merger call-in risk

• preparing notifications and managing the approval process

• aligning transaction documents with regulatory timing

Our focus is practical: identify the approval risk early, avoid implementation mistakes and protect deal certainty.

Get Advice Before You Close

If your transaction may involve a change of control, do not assume approval is unnecessary. In South Africa, the real danger is often not obvious from the headline structure of the deal. It lies in control rights, thresholds and timing.

If approval is required and you move too soon, the regulatory consequences can be expensive.

Speak to a competition law specialist at Barter McKellar. Request advice before signing or implementing your transaction.