Since the inception of the Competition Commission in 1999 firms which meet certain turnover or asset values have had to notify the competition authorities of their intention to merge or face possible penalties of up to 10 per cent of their turnover and the prospect of having to unbundle their newly acquired business.

The Minister of Trade and Industry recently gazetted new merger thresholds and fees effective from 1 April 2009. In terms of the new thresholds merging parties which have a combined annual turnover or assets below R560 million and where the annual turnover or asset value of the target firm is below R80 million will no longer have to notify the Competition Commission of their intention to merge as a matter of course. This is unless their proposed transaction is likely to impact negatively on competition in any of the markets in which the firms operate.

If firms are concerned that a proposed transaction below the threshold is likely to raise competition concerns, it would be wise to voluntarily notify the Commission, rather than face the prospect of having to divest after the transaction has been implemented. The Competition Commission has the power to require parties to notify such mergers up to six months after implementation if it believes that the proposed transaction will negatively affect competition and cannot be justified on public interest grounds.

The increase in the merger notification thresholds is significant when compared to the thresholds that the Commission has applied until now. The new values are more than one and a half times greater than the thresholds that have applied until now.

Fortunately, the increase in merger notification fees has not shown a commensurate increase. The notification fees for an intermediate merger have increased by a third.

As from April 2009 mergers will be classified as intermediate if they cross the thresholds mentioned above. If the combined assets or turnover value of the firms is above R6.6 billion and the asset or turnover value of the target firm is above R190 million a merger will be classified as large and the requisite filing fee will increase by 40 per cent to R350 000.

The increase in the merger notification thresholds is a positive move in terms of Competition legislation and a welcome relief for business in the present economic climate. It reduces the regulatory burden and allows many more businesses to implement their transactions without having to wait for regulatory approval.

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