COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No’s. : 63/AM/May00
In re: Request for Consideration of Intermediate Merger
Bubble Pac (Pty) Ltd Applicant
and
The Competition Commission of South Africa Respondent
Case No. : 64/AM/May00
In re: Request for Consideration of Intermediate Merger
Sealed Air Africa (Pty) Ltd Applicant
and
The Competition Commission of South Africa Respondent
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Decision of the Competition Tribunal
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1. In this matter the Competition Commission has prohibited the intermediate
merger between Bubble Pac (Pty) Ltd and Sealed Air Africa (Pty) Ltd. The
applicants have each filed a separate request for consideration of intermediate
merger, which were heard together on 28 June 2000 since both applications
involve the same set of procedural facts.
2. The applicants have requested the Tribunal to consider the prohibitions of the
Commission in terms of sections 15 and 16 of the Competition Act 89 of 1998
(the Act). At the outset the applicants indicated that they wished to raise certain
procedural points challenging the validity of the prohibition, which, if resolved in
their favour, would obviate the need for any further inquiry.
3. The question we have to decide is whether the Notice of Prohibition was issued
within the requisite time period allowed by section 14(1) of the Act. If not, since
it is an intermediate merger, it is deemed to have been approved, regardless of the
merits of the Commission’s decision on competition grounds. If, however, the
prohibition was made within the period contemplated then the Tribunal has
jurisdiction to hear whether the Commission’s decision was correct on substantive
grounds.
Background
4. On 9 February 2000 Sealed Air Africa (Pty) Ltd (Sealed Air) gave notice in terms
of section 13 of a merger between Sealed Air as the primary acquiring firm and
Bubble Pac (Pty) Ltd (Bubble Pac) as the primary target firm.
5. On 3 March 2000 the Competition Commission issued to the parties an extension
certificate in terms of section 14(1)(a), extending the time for consideration of the
merger to 9 April 2000 (the first extension certificate).
6. On 7 April 2000, the Competition Commission issued to the parties a second
extension certificate in terms of section 14(1)(a), to extend the time for
consideration further to 27 April 2000 (the second extension certificate).
7. On 25 April 2000, the Competition Commission issued to Bubble Pac only a third
extension certificate in terms of section 14(1)(a), to extend the time for
consideration further to 8 May 2000 (the third extension certificate).
8. On 8 May 2000 the Competition Commission prohibited the merger without
8. On 8 May 2000 the Competition Commission prohibited the merger without
providing reasons, as required by section 14(4) of the Act. The applicants have
asked us to reconsider the decision.
Grounds for Consideration
9. The applicants argue that the prohibition is ineffective because the Notice of
Prohibition was not issued within the time period allowed for by section 14(1) of
the Act in that the first and only permissible certificate only extended the time
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period in which the Competition Commission was entitled to consider the merger
to 9 April 2000 and subsequent further extension certificates issued by the
Commission on 7 April 2000 and 25 April 2000 were ultra vires and invalid. The
Commission, therefore, must be deemed to have approved the mergers in terms of
section 14(2) of the Act. The applicants also sought to rely on other grounds for
the invalidity of the purported prohibitions but because of our decision on section
14(2) it is not necessary for us to consider them.
10. The relevant portions of section 14 of the Act are the following:
(1) “Within 30 days after receiving notice of an intermediate merger, the
Competition Commission must either –
a) extend the period in which it has to consider the proposed
merger by a period not exceeding 60 days, and in that case,
issue an extension certificate to any party that notified it of the
merger; or
b) after considering the merger in terms of section 16 –
(i) Approve the merger by issuing a clearance
certificate;
(ii) Approve the merger subject to any condition;
(iii) Prohibit the implementation of the merger.
(2) If, upon the expiry of the 30 day period provided for in subsection (1),
the Competition Commission has not issued any of the certificates
referred to in that subsection, or upon the expiry of an extension
period contemplated in subsection (1)(a), the Commission has not
issued a certificate referred to in subsection 1(b), the Commission will
be deemed to have approved the merger, subject to subsection (5).”
11. Similarly, rule 33(1) of the Commission’s Rules provide that:
“If the Commission extends, or is deemed to have extended, the time
period for considering an intermediate merger, it must serve a copy of
the Extension Certificate in Form CC 14 on each participant in the
proceedings within 30 days after receiving the Merger Notice.”
proceedings within 30 days after receiving the Merger Notice.”
12. The Commission argues that it is entitled to a sixty days extension period and that
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section 14 is not specific as to whether the Commission can or cannot divide the
extension period into shorter successive periods. Therefore, they can issue more
than one extension certificate, as long as it is within sixty days.
13. Section 14(1) clearly states that the extension certificate must be issued within the
thirtyday period from the date of filing of the notice. Even if the Act
contemplated that the Commission was not confined to a single extension period,
an interpretation which we doubt is correct, the Commission cannot escape the
problem that the act of extension must take place within the thirtyday time
period. On this point the language of the Act is clear and unambiguous. It is
common cause that the second and third certificates were issued only after this
thirty day period had expired. In our view they are for this reason invalid and
since the prohibition was issued during the currency of the third extension period
it was issued at a time that no valid extension was in force and is therefore a
nullity.
Finding
14. We find that the Commission’s purported prohibition of the merger is invalid. The
merger is deemed to have been approved in terms of section 14(2). We direct the
Commission to issue a clearance certificate to the parties and to otherwise comply
with Rule 33(2) of the Commission Rules.
____________ 11July 2000
D.H.Lewis Date
Concurring: N.M.Manoim, D.R. Terblanche
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