The R200 Million Trap Door: Why "Non-notifiable" Mergers Still Carry Risk

South Africa's new merger notification thresholds are good news for many mid-market transactions. They are, however, not a safe harbour.

In May 2026 amended merger notification thresholds were introduced. Under the revised thresholds, an intermediate merger is triggered where the combined South African turnover or asset value of the acquiring and target firms equals or exceeds R1 billion and the target firm's South African turnover or asset value is at least R200 million. A large merger is triggered where the combined figure is at least R9.5 billion and the target firm's figure is at least R280 million. Intermediate and large mergers are compulsorily notifiable to the Competition Commission. Transactions below the intermediate merger thresholds are small mergers and are, typically, not compulsorily notifiable.

The significance of the increase becomes apparent when compared with the previous thresholds, which had been in force since 1 October 2017. At that time an intermediate merger was triggered where the combined turnover or asset value reached R600 million and the target firm's turnover or asset value was at least R100 million. The large merger threshold was R6.6 billion combined, with a target firm threshold of R190 million. The revised thresholds therefore represent a meaningful upward shift, particularly for intermediate mergers.

The immediate effect is that fewer transactions will require mandatory notification. Parties may also avoid a filing fee of R220,000 for an intermediate merger or R735,000 for a large merger. No filing fee is payable for a small merger notification. A transaction that would previously have qualified as an intermediate merger but now falls below the revised thresholds could therefore save R220,000 in Commission filing fees alone, before professional fees, management time and delay costs are taken into account. It is worth noting that South Africa's filing fees have long been criticised as being high by international standards and not necessarily reflective of the work required to assess individual notifications.

That does not mean small mergers fall outside the Commission's reach.

While the Competition Act 89 of 1998 permits parties to notify a small merger voluntarily at any time, section 13(3) empowers the Competition Commission, within six months after implementation, to require notification if it considers that the merger may substantially prevent or lessen competition or cannot be justified on public interest grounds. The Commission need not wait until implementation. Section 13(3) has been interpreted as allowing the Commission to require notification once it becomes aware that a merger is contemplated.

This is particularly relevant in digital and technology markets, where potentially anti-competitive acquisitions can fall below the turnover and asset thresholds because early-stage businesses are often valued for the future potential of their concepts, technology, intellectual property or talent rather than for revenue or assets reflected in their financial statements. If the Commission requires notification, section 13(4) prevents the parties from taking any further implementation steps until the merger has been approved or conditionally approved. The merger must then be notified within 20 business days of the Commission's notice.

The Commission's Revised Small Merger Guideline, effective from 1 December 2022, provides further practical guidance. Under the Guideline, the Commission must be notified in writing before implementation of all small mergers where the transacting firms, or firms within their group, are subject to a Competition Commission investigation when the transaction is concluded; where they are respondents in pending proceedings before the Competition Tribunal following a referral by the Commission; or where the acquiring firm's turnover or asset value alone exceeds the large merger combined threshold (currently R6.6 billion under the previous regulations, and presumably to be updated in line with the revised thresholds) and specified target firm criteria are met. Although the Guideline is not legally binding, parties who disregard it are unlikely to find much sympathy if the Commission later requires formal notification.

This is where the risk arises. A transaction may close on the assumption that no filing is required, only for the Commission to intervene after funds have changed hands and integration has already begun. By then employees, systems, customers, suppliers and management control may already have shifted. If the parties are required to notify and fail to do so within 20 business days, the Tribunal may impose an administrative penalty. A breach of the implementation prohibition carries the same consequences as gun-jumping in intermediate and large merger cases.

Nor is the risk confined to traditional competition concerns. The public interest considerations in section 12A(3) of the Act now play a central role in merger control. These include the effects on employment, specific industries or regions, small and medium-sized businesses, businesses owned or controlled by historically disadvantaged persons, the ability of South African industries to compete internationally, and the promotion of a greater spread of ownership by workers and historically disadvantaged persons.

Parties should not assume a below-threshold transaction requires no merger control analysis. Before signing, and certainly before closing, they should assess whether the transaction raises plausible competition or public interest concerns, document that assessment and consider whether voluntary engagement with the Commission is appropriate. Transaction documents should also allocate this residual risk through conditions precedent, interim covenants, integration planning, long-stop dates, cooperation obligations and, where appropriate, remedy provisions.

The revised thresholds create greater flexibility for many transactions, but they do not remove the need for careful merger control analysis. A transaction that falls below the notification thresholds can still become a regulatory issue if the Commission decides to intervene. Understanding that risk at the outset, and allocating it appropriately in the transaction documents, is considerably easier than dealing with the consequences after implementation.