In South Africa's current transactional climate, regulatory risk is no longer an afterthought—it is a central consideration shaping the deal table. As the country grapples with economic recovery, rising protectionist sentiment and persistent inequality, regulators are increasingly using merger control and public interest tests as levers to drive broader policy outcomes. The Competition Commission has taken a far more assertive stance, not only assessing traditional anti-competitive effects but also scrutinising transactions through the lens of employment preservation, localisation, B-BBEE transformation and sectoral development.
Increased Scrutiny and Extended Timelines
Recent deals have been subjected to lengthy review periods, expansive information requests, and novel conditions—even where the transactions posed little to no market dominance concerns. Foreign acquirers, in particular, are encountering greater pushback on ownership, procurement and local participation, especially in industries deemed strategically important such as food and beverages, infrastructure, telecoms, and mining.
These shifts reflect broader policy and political dynamics: government and regulators are under pressure to ensure that large corporate deals deliver visible socio-economic benefits. The result is a transactional environment where approval is far from guaranteed, and even commercially compelling deals can stall or collapse if the regulatory strategy is not proactively managed from the outset.
A case in point is the Heineken/Distell merger, which was ultimately approved but only after significant delays and conditional undertakings related to local procurement, investment commitments, and transformation objectives. The precedent this sets is instructive—dealmakers must engage early, strategically, and with a clear understanding of the regulatory landscape.
De-Risking M&A: Practical Regulatory Insights
From a practitioner's perspective, there are several practical steps businesses and investors can take to mitigate risk and keep deals on track:
- Pre-emptive engagement with regulators to flag sensitive issues early and shape the narrative before opposition can form.
- B-BBEE alignment from the start—understanding how the deal will impact ownership, management control, and supply chains.
- Building local partnerships and structuring transactions with a visible socio-economic footprint that aligns with national policy objectives.
- Scenario planning for delays and extended timelines, including bridging finance, interim governance arrangements, and stakeholder communications.
Cross-Border Transactions: Strategic Solutions
In cross-border transactions these challenges are often magnified. Multinationals accustomed to jurisdictions where regulatory approvals are more procedural can find South Africa's conditionality-driven model frustrating. However, with the right local guidance, deal structuring know-how, and an early focus on stakeholder alignment, even complex transactions can be successfully closed.
M&A in South Africa now demands more than a sound business case. Success depends on anticipating regulatory expectations, adapting transaction structures, and aligning with policy priorities from the outset. Rather than seeing regulatory scrutiny as an obstacle, savvy acquirers are using it as a blueprint—designing deals that are not only commercially viable but socially and politically attuned. In this new normal, the best-prepared investors will be those who approach the regulatory process not as a hurdle, but as part of the strategic architecture of the deal itself.
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