Corporate merger thresholds, which were recently increased and gazetted by the Minister of Trade and Industry, would not be applied with retrospective effect, assured Webber Wenztel partner Candice Meyer on Thursday.

"Companies in the midst of merger processes initiated under the old thresholds are confused. But the position is clear; merger notification and approval processes notified under the old thresholds must be completed with all the commensurate fees, cooperation and investigations," Meyer said.

This meant that if a merger was notified under the old thresholds and the merger did not exceed the new threshold for a small merger (meaning that the notification may no longer be compulsory), that merger must nonetheless be approved by the Competition Authority prior to implementation.

Merger thresholds were increased in March, and although it was the first increase since 2001, it was described as a "quantum leap".

Effective April 1, a merger had to be notified as an intermediate merger if the value of the proposed merger equalled or exceeded R560-million. This was calculated by either combining the annual turnover of both firms, or their assets.

If the combined annual turnover or assets of both the acquiring and target firms are valued at or above R6,6-billion, the merger had to be notified as a large merger.
Fees for filing a merger notice increased from R75 000 to R100 000 for an intermediate merger, and R250 000 to R350 000 for a large merger. There was no fee for notifying a small merger.
Meyer said that small mergers were voluntarily notifiable but section 13(3) of the Competition Act empowers the Commission to require parties to a small merger to notify them of that merger.

Meyer said companies should also take note that the Commission has also issued a new guideline on Small Merger Notification, which clarifies the scenarios where the Commission will require the notification of small mergers.

The guidelines provided that where firms involved in the small merger were subject to an investigation by the Commission in terms of Chapter 2 of the Act, which dealt with prohibited practices, or were respondents to pending proceedings referred by the Commission to the Competition Tribunal in terms of Chapter 2, they must notify the Commission of the intended merger. This would have to be done in writing and provide details of the proposed transaction and the markets in which they compete.