The public interest test in the South African merger control regime

Mark Griffiths (Norton Rose) and Wiri Gumbie (Barclays) explore The public interest test in the South African merger control regime.

ABSTRACT:   The public interest test in the South African merger control regime plays a fundamentally different role to the type of public interest defence typically seen in other jurisdictions. Not only can the public interest test resurrect a merger that would harm competition, it can also prohibit a merger even if it does not have an anti-competitive effect. The public interest test in the South African merger control regime has attracted much criticism since the high-profile Wal-Mart merger. While the public interest test has always been applied, the South African competition authorities were initially somewhat cautious in their application. The article probes whether the public interest test continues to assume an increasingly important role in the application of the Competition Act 89 of 1998, as amended. It also examines the potential justification that an expansive application of the public interest test is necessary in developing economies. The article argues that, irrespective of the merits of this justification, the public interest test should not be used as a means of regulatory opportunism or a means to absolve the South African competition authorities from fulfilling their responsibility to provide transparency and certainty in the South African merger control regime.