Internal restructurings and merger control: What businesses need to know

The South African Competition Commission (Commission) recently published draft guidelines setting out its approach to intra-group reorganisations and when merger control approval will be needed.

Businesses frequently restructure their shareholdings, transfer assets between subsidiaries or consolidate entities. Whilst the restructuring may occur within the same group of companies, they are not automatically exempt even if there is no change in the ultimate controller of the group – see Competition Appeal Court judgment in Competition Commission v Distillers Corporation (SA) Limited and Another.

The Guidelines attempt to offer much-needed certainty regarding when an intra-group reorganisation requires merger approval.
Intra-group reorganisations are only notifiable in terms of the Guidelines if the control rights of an external minority shareholder are affected. Merger control is therefore not required where:

• there is no external minority shareholder in the group of companies;
• where the entire or part of the shareholding of the external minority shareholder is sold/transferred but the external minority shareholder holds no control rights; or
• where part of the shareholding of the external minority shareholder is sold/transferred but the control rights of the external minority shareholder remain unaffected.

The Guidelines are open for public comment until 21 February 2025.

Please reach out to Werner Rysbergen, Janine Simpson and Dharshini Naidoo if you have any questions.