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Competition Commission applies for leave to appeal Competition Appeal Court decision – Fundamental issues at play...

31st July 2012

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The Competition Commission has filed an application for leave to appeal the Competition Appeal Court’s decision giving the merger between Pannar Seed and Pioneer Hi-Bred the green light.

Jac Marais explains: “the Competition Commission contends that the Competition Appeal Court’s judgment is fatally flawed in that it in effect upheld a ‘failing firm’ defence when such defence was from the outset held to not be available in the circumstances.

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“In addition,” says Marais “the Commission contends that the Competition Appeal Court misapplied the ‘failing firm’ defence in that it required the Commission to show that, but for the merger, Pannar Seed would continue in existence – this moved the onus from the merging parties, who would ordinarily have had to show that the firm would cease to exist if the merger were not approved.”

The Competition Appeal Court overturned the Competition Tribunal’s decision to prohibit the merger, stating that the Tribunal’s decision placed ‘too much emphasis upon the interests of competitors rather than upon the key principle, of maintaining or promoting competition in the relevant market.’

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“Basically, the Competition Appeal Court held that allowing the merger would, instead of leading to a lessening of competition as feared by the Tribunal, lead to increased competition as the merged entity would provide a stronger competitor for the leader in the hybrid maize seed breeding market, Monsanto, which would lead to long-term dynamic efficiency gains,” concludes Marais.

Contact:
Jac Maria, partner Competition Law, or Alexis Apostolidis, Patent Litigation and Head of Competition at Adams & Adams

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