Parties contemplating merger transactions involving more than one step are often unsure whether they can notify the transaction as one indivisible transaction, or whether they will need to file multiple notifications. This is an important question having implications for the filing fee – each merger filing attracts a fee of R165 000 for an intermediate merger, and R550 000 for a large merger.
If a transaction does not meet the requirements of indivisibility and parties have filed the transaction as a single merger, the Commission may require the merging parties to file the transactions separately. This may have implications on the applicable merger filing fee payable by the merging parties and lead to delays in the merger approval process.
The Competition Commission recently released the final Guidelines on Indivisible Transactions, which are aimed at giving prospective merging parties more predictability on when multiple transactions can be notified as a single merger with the Commission. Fundamentally, the guidelines provide that multiple transactions are typically interdependent where one transaction would not be implemented without the other. The guidelines also state that the indivisibility of a transaction must also occur on a factual and/or legal basis.
To make the determination on indivisibility, the Commission looks at a range of factors as set out in the guidelines, such as the structure and rationale of the transaction and, in cases where there are multiple acquiring or target firms, whether there are common shareholders in the target or acquiring firms.
Other factors include whether the transactions would involve similar competitive and public interest assessments and likely similar conditions. The guidelines also provide that the assessment of indivisibility is a holistic assessment and no one factor is determinative. The Commission does however warn that it will assess whether the single notification is aimed at circumventing filing fees.
In an annexure to the guidelines the Commission sets out examples of instances where transactions are indivisible. Transactors should use the examples with caution due to the inherent complexity of the facts of every case, and not assume that the examples can simply be applied to their own matter/s.
Overall, while these guidelines are a welcome move towards providing greater clarity. Merging parties need to consider the factors of their matters carefully before making a determination as to whether their transactions must be filed as more than one notification, or whether they can successfully be filed as one indivisible transaction.
