Advisory Board

  • Cai Hongbin
  • Peking University Guanghua School of Management
  • Peter Clarke
  • Barry Diller
  • IAC/InterActiveCorp
  • Fu Chengyu
  • China National Petrochemical Corporation (Sinopec Group)
  • Richard J. Gnodde
  • Goldman Sachs International
  • Lodewijk Hijmans van den Bergh
  • De Brauw Blackstone Westbroek N.V.
  • Jiang Jianqing
  • Industrial and Commercial Bank of China, Ltd. (ICBC)
  • Handel Lee
  • King & Wood Mallesons
  • Richard Li
  • PCCW Limited
  • Pacific Century Group
  • Liew Mun Leong
  • Changi Airport Group
  • Martin Lipton
  • New York University
  • Wachtell, Lipton, Rosen & Katz
  • Liu Mingkang
  • China Banking Regulatory Commission (CBRC)
  • Dinesh C. Paliwal
  • Harman International Industries
  • Leon Pasternak
  • BCC Partners
  • Tim Payne
  • Brunswick Group
  • Joseph R. Perella
  • Perella Weinberg Partners
  • Baron David de Rothschild
  • N M Rothschild & Sons Limited
  • Dilhan Pillay Sandrasegara
  • Temasek International Pte. Ltd.
  • Shao Ning
  • State-owned Assets Supervision and Administration Commission of the State Council of China (SASAC)
  • John W. Snow
  • Cerberus Capital Management, L.P.
  • Former U.S. Secretary of Treasury
  • Bharat Vasani
  • Tata Group
  • Wang Junfeng
  • King & Wood Mallesons
  • Wang Kejin
  • China Banking Regulatory Commission (CBRC)
  • Wei Jiafu
  • Kazakhstan Potash Corporation Limited
  • Yang Chao
  • China Life Insurance Co. Ltd.
  • Zhu Min
  • International Monetary Fund

Legal Roundtable

  • Dimitry Afanasiev
  • Egorov Puginsky Afanasiev and Partners (Moscow)
  • William T. Allen
  • NYU Stern School of Business
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Johan Aalto
  • Hannes Snellman Attorneys Ltd (Finland)
  • Nigel P. G. Boardman
  • Slaughter and May (London)
  • Willem J.L. Calkoen
  • NautaDutilh N.V. (Rotterdam)
  • Peter Callens
  • Loyens & Loeff (Brussels)
  • Bertrand Cardi
  • Darrois Villey Maillot & Brochier (Paris)
  • Santiago Carregal
  • Marval, O’Farrell & Mairal (Buenos Aires)
  • Martín Carrizosa
  • Philippi Prietocarrizosa & Uría (Bogotá)
  • Carlos G. Cordero G.
  • Aleman, Cordero, Galindo & Lee (Panama)
  • Ewen Crouch
  • Allens (Sydney)
  • Adam O. Emmerich
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Rachel Eng
  • WongPartnership (Singapore)
  • Sergio Erede
  • BonelliErede (Milan)
  • Kenichi Fujinawa
  • Nagashima Ohno & Tsunematsu (Tokyo)
  • Manuel Galicia Romero
  • Galicia Abogados (Mexico City)
  • Danny Gilbert
  • Gilbert + Tobin (Sydney)
  • Vladimíra Glatzová
  • Glatzová & Co. (Prague)
  • Juan Miguel Goenechea
  • Uría Menéndez (Madrid)
  • Andrey A. Goltsblat
  • Goltsblat BLP (Moscow)
  • Juan Francisco Gutiérrez I.
  • Philippi Prietocarrizosa & Uría (Santiago)
  • Fang He
  • Jun He Law Offices (Beijing)
  • Christian Herbst
  • Schönherr (Vienna)
  • Lodewijk Hijmans van den Bergh
  • De Brauw Blackstone Westbroek N.V. (Amsterdam)
  • Hein Hooghoudt
  • NautaDutilh N.V. (Amsterdam)
  • Sameer Huda
  • Hadef & Partners (Dubai)
  • Masakazu Iwakura
  • TMI Associates (Tokyo)
  • Christof Jäckle
  • Hengeler Mueller (Frankfurt)
  • Michael Mervyn Katz
  • Edward Nathan Sonnenbergs (Johannesburg)
  • Handel Lee
  • King & Wood Mallesons (Beijing)
  • Martin Lipton
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Alain Maillot
  • Darrois Villey Maillot Brochier (Paris)
  • Antônio Corrêa Meyer
  • Machado, Meyer, Sendacz e Opice (São Paulo)
  • Sergio Michelsen Jaramillo
  • Brigard & Urrutia (Bogotá)
  • Zia Mody
  • AZB & Partners (Mumbai)
  • Christopher Murray
  • Osler (Toronto)
  • Francisco Antunes Maciel Müssnich
  • Barbosa, Müssnich & Aragão (Rio de Janeiro)
  • I. Berl Nadler
  • Davies Ward Phillips & Vineberg LLP (Toronto)
  • Umberto Nicodano
  • BonelliErede (Milan)
  • Brian O'Gorman
  • Arthur Cox (Dublin)
  • Robin Panovka
  • Wachtell, Lipton, Rosen & Katz (New York)
  • Sang-Yeol Park
  • Park & Partners (Seoul)
  • José Antonio Payet Puccio
  • Payet Rey Cauvi (Lima)
  • Kees Peijster
  • COFRA Holding AG (Zug)
  • Juan Martín Perrotto
  • Uría & Menéndez (Madrid/Beijing)
  • Philip Podzebenko
  • Herbert Smith Freehills (Sydney)
  • Geert Potjewijd
  • De Brauw Blackstone Westbroek (Amsterdam/Beijing)
  • Qi Adam Li
  • Jun He Law Offices (Shanghai)
  • Biörn Riese
  • Jurie Advokat AB (Sweden)
  • Mark Rigotti
  • Herbert Smith Freehills (Sydney)
  • Rafael Robles Miaja
  • Robles Miaja (Mexico City)
  • Alberto Saravalle
  • BonelliErede (Milan)
  • Maximilian Schiessl
  • Hengeler Mueller (Düsseldorf)
  • Cyril S. Shroff
  • Cyril Amarchand Mangaldas (Mumbai)
  • Shardul S. Shroff
  • Shardul Amarchand Mangaldas & Co.(New Delhi)
  • Klaus Søgaard
  • Gorrissen Federspiel (Denmark)
  • Ezekiel Solomon
  • Allens (Sydney)
  • Emanuel P. Strehle
  • Hengeler Mueller (Munich)
  • David E. Tadmor
  • Tadmor & Co. (Tel Aviv)
  • Kevin J. Thomson
  • Barrick Gold Corporation (Toronto)
  • Yu Wakae
  • Nagashima Ohno & Tsunematsu (Tokyo)
  • Wang Junfeng
  • King & Wood Mallesons (Beijing)
  • Tomasz Wardynski
  • Wardynski & Partners (Warsaw)
  • Rolf Watter
  • Bär & Karrer AG (Zürich)
  • Xiao Wei
  • Jun He Law Offices (Beijing)
  • Xu Ping
  • King & Wood Mallesons (Beijing)
  • Shuji Yanase
  • OK Corporation (Tokyo)
  • Alvin Yeo
  • WongPartnership LLP (Singapore)

Founding Directors

  • William T. Allen
  • NYU Stern School of Business
  • Wachtell, Lipton, Rosen & Katz
  • Nigel P.G. Boardman
  • Slaughter and May
  • Cai Hongbin
  • Peking University Guanghua School of Management
  • Adam O. Emmerich
  • Wachtell, Lipton, Rosen & Katz
  • Robin Panovka
  • Wachtell, Lipton, Rosen & Katz
  • Peter Williamson
  • Cambridge Judge Business School
  • Franny Yao
  • Ernst & Young

SOUTH AFRICAN UPDATE – Public Interest a Key Factor in Merger Analysis

Editors’ Note: This article was contributed by Michael Katz, chairman and senior partner of Edward Nathan Sonnenbergs and a member of XBMA’s Legal Roundtable. It was authored by Edward Nathan Sonnenbergs director Ryan Goodman and associates Tebogo Hlafane and Kirsty van den Bergh.

Executive Summary:  Recently, public interest considerations (with particular reference to employment) in merger proceedings have become a focus area such that it is now common practice that the competition authorities are required to consider the effect which a proposed transaction will have on (i) a particular industrial sector or region, (ii) employment, (iii) the ability of small businesses or those controlled or owned by historically disadvantaged persons to become competitive, and (iv) the ability of national industries to compete in international markets.  While public interest considerations have frequently been viewed as a constraint to merger implementation, the tribunal’s expedited favorable ruling in the acquisition by Stefanutti Stocks of the business of Energotec indicates that public interests may, in certain circumstances, possibly provide a basis for an expedited merger approval.

Main Article: 

For a number of years, public interest considerations were considered to be ancillary to the competitive considerations in a merger analysis. Recently, however, public interest considerations (with particular reference to employment) in merger proceedings have become a focus area. It is now common practice that, in addition to establishing whether a proposed transaction will “substantially lessen or prevent competition”, the competition authorities are required, in terms of the Competition Act, to consider the effect which a proposed transaction will have on (i) a particular industrial sector or region, (ii) employment, (iii) the ability of small businesses or those controlled or owned by historically disadvantaged persons to become competitive, and (iv) the ability of national industries to compete in international markets.

The Metropolitan/Momentum merger in 2010 was the first indication of an increased focus on employment considerations in merger analyses. This trend has continued to develop in the cases of Kansai/ Freeworld, MassmartfWalmart and the Glencore/Xstrata merger. This increased focus has translated into the imposition of conditions by the competition authorities concerning the protection of jobs. Since this has generally resulted in increased costs, merging parties are often unhappy with this approach.

Notwithstanding this, recent experience shows that public interest concerns can possibly provide a basis for an expedited merger approval. In this regard, on August 14 2013 the Competition Tribunal heard and “conditionally” approved within four hours of having been provided with a copy of the Competition Commission’s recommendation, an acquisition by Stefanutti Stocks Proprietary Limited (a subsidiary of Stefanutti Stocks Holdings Limited) (Stefanutti Stocks) of all the assets which comprised the business carried out by Energotec, a division of First Strut (RF) Limited t/a the First Tech Group (First Strut) based on public interest considerations.

By way of background, due to severe financial distress, First Strut had, earlier this year, filed resolutions placing itself (and its various subsidiaries) under business rescue. After the appointed business rescue practitioners determined that there were no reasonable prospects for the Group to be rescued, they resolved to place the entire First Strut Group (including its subsidiary, Energotec) under provisional liquidation. In response to First Strut’s financial situation and a notice to the public issued by the liquidators that certain assets/businesses within the First Strut Group were up for sale, Stefanutti Stocks proposed acquiring the failing firm.

In its competitive analysis, the tribunal was comfortable that the proposed transaction was unlikely to result in a substantial prevention or lessening of competition. Importantly, however, the tribunal noted that the proposed transaction was likely to have a positive impact on public interest considerations. In this regard, due to First Strut’s financial distress, failure to speedily approve the transaction by the competition authorities would have resulted in job losses for about 667 Energotec employees.

In light of the foregoing negative impact on employment if the proposed transaction was not implemented, the tribunal conditionally approved it on the basis that Stefanutti Stocks not retrench more than 16 administrative employees as a consequence of the transaction. This has been one of the quickest turnaround times in which the tribunal has made a decision to approve a merger. The proposed transaction, which comprised a large merger, was filed with the commission, which investigated and referred same to the tribunal within three business days. The tribunal then urgently scheduled and conducted a hearing about four hours after receipt of the commission’s recommendation.

It is important to contrast the competition authorities’ prompt approval with the legislated time periods afforded to the commission and tribunal in respect of large merger proceedings. In this regard, the Competition Act allows the commission a 40-business day period within which to assess a proposed transaction and same can be extended by an unlimited number of 15 business day periods. Further, once the commission has made its recommendation, the tribunal is then required to set down a hearing date within 10 business days of receipt thereof. It is therefore clear from the foregoing that the competition authorities are beginning to view the protection of the public interest as one of the top priorities in merger analysis.

Although the commission had, during 2010, done away with its “fast track” procedure, the expedited completion of its investigation and the tribunal’s approval of the current transaction within a matter of hours of receipt of the commission’s recommendation is reflective of the competition authorities’ willingness to go the extra mile in expediting approval of mergers where there are no concerns from a competition law perspective but significant ramifications from a public interest perspective if not approved timeously.

While public interest considerations have frequently been viewed as a constraint to merger implementation, the tribunal’s expedited ruling in this regard indicates that public interests may, in certain circumstances, come as a blessing in disguise for those in need of expedited competition approval. Although it is clear that the competition authorities’ expedited approval of the Stefanutti transaction was as a result of circumstances peculiar to the transaction itself, the tribunal’s decision sparks hope that the competition authorities will give thorough consideration to public interest grounds when required by the facts on hand. Such an approach may be beneficial to merging parties and consumers if a failure to approve the proposed transaction would negatively impact on public interest.

ENS acted for First Strut/ Energotec in the merger proceedings before the commission and the tribunal in this matter.

The views expressed herein are solely those of the author and have not been endorsed, confirmed, or approved by XBMA or any of the editors of XBMA Forum, nor by XBMA’s founders, members, contributors, academic partners, advisory board members, or others. No inference to the contrary should be drawn.

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