Proposed Increase to Merger Notification Thresholds - Cox Yeats

The Minister of Trade, Industry and Competition has published draft amendments to

the Determination of Merger Thresholds under section 11 of the Competition Act,

which envision an increase in merger notification thresholds and merger filing fees.

The method for calculating turnover and asset values remains unchanged.

Under the draft amendments, an intermediate merger will be notifiable only if the

combined annual turnover or asset value of the acquiring and target firms in, into or

from South Africa is R1 billion or more, and the annual turnover or asset value of the

target firm is R175 million or more, increased from the current thresholds of R600

million and R100 million respectively.

A large merger will be triggered where the combined annual turnover or asset value of

the parties is R9.5 billion or more, and the target firm’s turnover or asset value is R280

million or more, increased from the current R6.6 billion and R190 million thresholds.

Transactions falling below the intermediate thresholds will remain classified as small

mergers and will not be subject to mandatory notification, subject to the Competition

Commission’s existing call-in powers.

The draft also proposes increased filing fees. The fee for notifying an intermediate

merger would rise to R220 000 from R165 000, and R735 000 from R550 000 for

notifying a large merger. While fewer transactions are likely to require notification if the

revised thresholds are adopted, the cost of notification for those that do will be

materially higher.

From a market perspective, the combined effect of higher thresholds and higher filing

fees is likely to shift deal activity at the margins. Mid-market transactions that

previously required clearance may proceed without regulatory delay, while larger

transactions will face increased upfront costs that may influence transaction timing,

structuring and allocation of risk between parties.

The draft amendments are open for public comment for 30 business days from the

date of publication.