SA still grappling with competition, labour law intersection

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Article by: Nicola Mawson

Published: 20 Apr 2005

SA still grappling with competition, labour law intersection

The application of competition law has been given heightened attention lately as a result of two cases that have captured the public eye.

The first was the case where Nationwide Poles took on petrochemicals giant Sasol alleging price discrimination and succeeded; while the second is the high-profile bid by gold-miner Harmony for Gold Fields, which is has passed through the Competition Commission but still has a Tribunal hearing pending.

Competition Law specialist Advocate David Unterhalter, who is also representing Harmony, told a gathering of lawyers at a South African Society for Labour Law (Saslaw) seminar this week that Competition Law and Labour Law intersect primarily in the merger and acquisition area, and that this intersection is a prominent feature of Harmony-Gold Fields case.

One of the issues to be dealt with in the Harmony case is what consequences there will be for employment should the merger succeed.

Unterhalter explained that, in instances of intermediately- and large-sized mergers, the competition authorities must be notified of the merger.

The commission would investigate the merger and make a decision on whether to approve, disallow or set conditions to a merger. Any appeal of the decision would be forwarded to the tribunal for appeal.

In the case of a notifiable merger, affected trade unions must also be informed, followed by consultation.

Unions are also able to make presentations to the competition authorities, on issues such as employment consequences and any other issue that could arise in the case of any restructuring that would follow a takeover.

Unions and companies will usually seek to negotiate to minimise job losses.

Such negotiation is encourages as, once concluded, it allows companies to expedite a merger.

But despite the role given to employment consequences at competition proceedings, Unterhalter says that, to date, no merger has failed on this basis. Instead most mergers have been judged on the basis of the effect that they will have for competition in a specific market.

Once grey area it the timeframe during which a company it prevented from retrenching.

Questions have been raised as to whether, if a company reneges on its retrenchments commitments, the merger can be undone. This question is unlikely to be put to rest anytime soon.