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The Commission welcomes the decision by the Minister of Economic Development, Mr Ebrahim Patel, to increase the merger filing fees for intermediate and large mergers, as well as the New Determination of Merger Thresholds.

The Minister has, in consultation with the Commission, amended Rule 10(5) of the Rules for the Conduct of Proceedings in the Competition Commission (“the Commission’s Rules”) and the Determination of Merger Thresholds as set out in General Notice 216 of 2009.  The Notices for the amendments to the Commission’s Rules and the new Determination of Merger Thresholds were published on 15 September 2017 in Government Gazette No. 41121.

In terms of the Competition Act No. 89 of 1998, as amended, the Minister, in consultation with the Commission, has powers to determine the thresholds for mergers and to prescribe Regulations for matters relating to the functioning of the Commission, including, inter alia, the merger filing fees.

The Minister previously published the above amendments to the Commission’s Rules and the Determination of Merger Thresholds for public comment on 9 June 2017 in Government Gazette No. 40902.  Following public comments received, the Minister has now published the final amendments.

The amended Commission’s Rules and the new Determination of Merger Thresholds, which are effective from 1 October 2017, are set out below:

THE MERGER FILING FEES

In terms of the old Rule 10(5) of the Commission’s Rules, the merger filing fees were R100 000 (one hundred thousand Rand) for intermediate mergers and R350 000 (three hundred and fifty thousand Rand) for large mergers.  The merger filing fees have been increased to R150 000 (one hundred and fifty thousand Rand) for an intermediate merger and R500 000 (five hundred thousand Rand) for a large merger, respectively.  The merger filing fees were last revised in 2009 and as a result of inflation, the real value of the filing fees have been significantly eroded since the last revision of the merger filing fees in 2009.

THE NEW DETERMINATION OF MERGER THRESHOLDS

The Minister has also amended the Determination of Merger Thresholds by increasing the lower threshold for intermediate mergers as set out in General Notice 216 of 2009.  The lower threshold is the minimum threshold for an intermediate merger. The lower threshold for intermediate mergers has been increased from R560 million to R600 million for the combined turnover/asset values and from R80 million to R100 million for the turnover/asset value of the target firm.

The last revision of the merger thresholds was in 2009 and since then the economy has seen a moderate real GDP growth between 2010 and 2016.  As a result, intermediate transactions are being notified that would otherwise have been categorised as non-notifiable small mergers.

The threshold for large mergers remains unchanged.

PROPOSED AMENDMENTS TO THE METHOD OF CALCULATION

The Minister has also published in the same Government Gazette the proposed amendments to the Method of Calculation used for the purposes of calculating the asset value or the turnover of a firm for purposes of merger notification (“the Method of Calculation”), for public comment. In terms of the Gazette, the Minister has invited public comment on the proposed amendments to the Method of Calculation by no later than 30 days from the date of publication of the Gazette.

The proposed amendments to the Method of Calculation seek to clarify the valuation of assets and the calculation of turnover of firms, and to replace the reference to the generally acceptable accounting principles (GAAP), which is no longer in use, with reference to the International Financial Reporting Standards (IFRS) as well as the replacement of the repealed Companies Act No. 61 of 1973 with the current Companies Act No. 71 of 2008.

Issued by Competition Commission of South Africa