Final guidelines: small merger notification

18 October 2022
Accounting
South African Accounting Academy

These guidelines on small merger notification are published approximately sixteen months after the Commission issued a draft for public comment.

According to the Commission's media statement, the Final Guidelines are aimed primarily at assisting the Commission in clearly identifying small mergers and acquisitions in digital markets. Furthermore, the Commission's media statement states that the Final Guidelines are a response to increased concerns that acquisitions of new and innovative companies in digital markets may be escaping regulatory scrutiny because acquisitions take place at an early stage in the life of the target companies.

Large and intermediate merger transactions require mandatory notification and approval by the competition authorities. Small mergers do not require mandatory notification, but in terms of section 13(3) of the Act, the Competition Commission may require, up to six months after the small merger has been implemented, that such mergers be notified and approved by the Commission if, in the opinion of the Commission, the merger may substantially prevent or lessen competition or cannot be justified on public interest grounds.

Click here to download the Guidelines:

https://www.compcom.co.za/wp-content/uploads/2022/09/Guidelines-on-small-merger-notification.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

The Competition Act is yet another piece of legislation that your clients must comply with, and which you must assess compliance with. If they don’t comply with the relevant laws and regulations, you have certain reporting obligations in terms of NOCLAR (NOn-Compliance with Laws And Regulations) – this could include reporting to management, qualifying your audit opinion, reporting a Reportable Irregularity, etc.
As an auditor and independent reviewer, you also need to assess compliance with guidance issued by the regulator (in this case the Competition Commission).

Relevance to Your clients:

Merging entities have a duty to comply with the Competition Act, and they also need to adhere to guidance issued by the regulator (in this case the Competition Commission).

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