Abstract
There has been considerable debate internationally around the relative advantages and disadvantages of structural and behavioural remedies. In mergers which raise competition concerns, prohibition or divestiture may prevent merger efficiencies from being realised, and therefore behavioural remedies may seem attractive. However, these can prove difficult or impossible to enforce in practice. The merger approval rates of the South African competition authorities are in line with the practice of international agencies, but the number of behavioural remedies imposed is relatively high. This paper briefly considers the international literature on merger remedies before analysing South African merger decisions and making a comparison with other jurisdictions. It then presents a review of a decision made by the Tribunal in the merger between Astral Foods and National Chick in 2001, which was approved with both structural and behavioural conditions. Finally, the paper draws conclusions for the design of remedies in future.
Highlights
Merger remedies are conditions that the competition authority (CA) may impose on merging parties in order for a merger to be permitted in cases where it is likely that competition in the relevant market will be negatively impacted by the transaction
The ICN (2005) study concludes that behavioural remedies may be appropriate in the following circumstances: when a structural remedy is not feasible or would be very risky and where prohibition is not feasible; when competitive detriments caused by the merger are expected to be of limited duration; and, when the merger benefits are believed to be significant
In order to reflect further on the relative merits of the different types of remedy we present a case study of a South African merger decision involving both structural and behavioural conditions, and consider how effective each was in restoring the pre-merger level of competition
Summary
Merger remedies are conditions that the competition authority (CA) may impose on merging parties in order for a merger to be permitted in cases where it is likely that competition in the relevant market will be negatively impacted by the transaction. There is not always an obvious and neat divestiture package of which to dispose and the sale may reduce or eliminate the efficiencies associated with the merger Despite these shortcomings, a number of CAs, including those in the EC, US and UK, have all expressed preferences for the use of structural remedies wherever possible. A number of jurisdictions, including France, Spain, Italy, Switzerland and the Eastern European bloc of countries, favour the use of behavioural remedies In this context, the paper uses data compiled from Competition Commission and Tribunal records in order to consider South African policy and experience in using merger remedies.
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