The Competition Commission is also an enforcer of BEE

Companies showing substantial growth, are likely to attract the interest of investors who may want to acquire the company. Should a company be black-owned and such ownership be dramatically affected by an acquisition, such acquisition my run the risk of being blocked by the Competition Commission.

When the Competition Commission or Competition Tribunal has to consider whether a merger or acquistion is justifiable and in the public interest, both the Competition Commission and Competition Tribunal will also consider whether historically disadvantaged persons will be part of the entity’s ownership following the merger.  

The Broad-Based Black Economic Empowerment Commission (B-BBEE Commission) and the Competition Commission have established a joint working committee in which the Competition Commission can consult with the B-BBEE Commission to advise on whether a merger aligns with the Broad-Based Black Economic Empowerment Act as well as other applicable legislation and policies. This ensures that the BEE impact of any merger or acquisition is always considered.

In a recent review of a proposed merger in South Africa, the Competition Commission had prohibited a merger from continuing on the basis that the BEE-shareholding of the entity that would have been acquired, would drop from 68% to 0%, effectively removing all BEE shareholding from the merged entity. 

Given the danger of a merger or acquistion being blocked, it would certainly be worthwhile to consider and discuss options with a new investor regarding the BEE position of the company following the transaction if necessary, it may even be worthwhile to go so far as to approach the B-BBEE Commission to obtain their views on how to proceed and what options would meet their approval, rather than risk the transaction being prohibited. 

February 8, 2022
Human Rights: Upholding the right to education

Human Rights: Upholding the right to education

The right to education is outlined in section 29 of the Constitution of the Republic of South Africa, 1996 (hereinafter “the Constitution”). This section guarantees that everyone has the right to basic education and the right to further education, which the state, through reasonable measures, must make progressively available and accessible. In South Africa the right to basic education can be described as a fundamental socio-economic right, that is, an entitlement to conditions and resources necessary for the material well-being of people.

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