SA Competition Commission plans to zoom in on digital markets

1st December 2020

SA Competition Commission plans to zoom in on digital markets

The Competition Commissioner during the Commission's Annual Conference (in November 2020), noted that the Commission will take a "decisive and proactive stance to ensure the balance of economic forces favour a shift to facilitating entry and a more competitive digital economy". 

Proposed changes for the industry may be far-reaching and may include a possible requirement for dominant tech companies to inform the Commission of all acquisitions, even those falling below the prescribed thresholds for mandatory merger notification to the authority. All players in the tech / digital markets space will need to be aware of the heightened focus of the competition authorities on this sector. Not only will this bring a change in transaction costs and deal time-lines – but also many more mergers being prohibited or approved with conditions.

The Commission's recently published paper on Competition in the Digital Economy notes that there may have been underenforcement of merger control laws in digital markets to date. One of the ways in which the Commission plans to promote competition, inclusive growth, increased and meaningful employment and shared prosperity in the sector is through more stringent merger regulation of the industry.

Statistics published by the SA Commission indicate that out of the 87 notifiable mergers relating to digital markets from 2011 to 2019, none were prohibited; 82 were approved unconditionally and 5 conditionally approved. The proposed merger between MIH and WeBuyCars was the first in this space to be prohibited, following a decision by the Competition Tribunal in March 2020. This decision appears to have encouraged the Commission to scrutinize more closely mergers in the digital space. 

Some of the common reasons for the perceived underenforcement in the sector are:

The Commission is developing a strategy to address these issues. Key merger control related measures suggested by the authority at this stage include:

Written By Burton Phillips, Partner at Webber Wentzel