The good, the bad and the ugly: South African competition policy

GPI’s black investors, nearly 100% of whom supported the deal, were directly and negatively affected by the decision. GPI harmed its competitiveness as a black-owned company, and this precedent harmed the competitiveness of HDI-owned investment companies in general. The Commission lost sight of the fact that HDIs should be allowed to realize value by exiting investments when they see fit, as well as investing in alternative assets, thereby increasing black ownership elsewhere. Ultimately, then Trade and Industry Minister Ebrahim Patel and the parties reached an out-of-court settlement that included the establishment of a shareholding trust for employees. But the damage had been done: the arbitrariness of the application of public interest considerations was obvious to all.

In the Vodacom-Maziv case, the Competition Tribunal has not yet made public its reasons for blocking the deal. However, they are expected to be mainly related to concerns about market concentration. But not all market concentration is created equally. In some sectors, particularly renewable energy and telecommunications, concentrated players are better positioned to invest in the infrastructure needed for growth and inclusion. They can achieve the economies of scale needed to lower prices and improve operational efficiency. In this case, having larger players is not anti-competitive – it encourages a more competitive economy overall.