Dennis Davis: SA Competition Authority Collapse Impedes Mergers

• Retired judge Dennis Davis warns of a "collapse" in South Africa's competition authorities, hindering business acquisitions.
• The Competition Tribunal is severely under-resourced, lacking lawyers, which causes significant delays in merger hearings.
• A recent Constitutional Court ruling established a precedent making it easier for rival firms to intervene and prolong merger approval processes.
• Businesses are increasingly abandoning South African merger plans or seeking approvals in other African countries due to extended timelines.
• Large mergers require approval if the target firm is valued at R280 million or more and combined turnover exceeds R9.5 billion.

The systemic challenges within South Africa's competition framework are actively deterring significant business acquisitions, with companies opting to forgo deals rather than navigate protracted approval processes.

Retired judge Dennis Davis, formerly the president of the Competition Appeal Court, has issued a stark warning regarding the state of South Africa's competition authorities, describing their current condition as an "almost significant collapse." This systemic breakdown, according to Davis, is actively impeding businesses from completing acquisitions, making it exceedingly difficult to secure merger approvals within the country. He articulated these concerns during a discussion with former finance minister Trevor Manuel at Ninety One’s Beyond Alpha 2026 conference, where the conversation centered on the significant disparity between South Africa's robust competition legislation and the practical ability to implement it effectively.

Davis elaborated on his concerns, noting that numerous businesses have ultimately decided against pursuing acquisitions in South Africa due to the excessively long timelines required for competition authority approval. He emphasized the time-sensitive nature of mergers, stating that if a deal cannot be finalized within a window of two to four months, market dynamics often compel companies to abandon the transaction. This situation has led to a noticeable trend where businesses are increasingly exploring opportunities in other African nations, where they report receiving quicker decisions and more efficient approval processes for their mergers and acquisitions.

The challenges highlighted by Davis are bifurcated into two primary categories: institutional and jurisprudential. On the institutional front, a critical issue is the severe under-resourcing of the Competition Tribunal, which lacks an adequate number of legal professionals. This shortage directly impacts the Tribunal's capacity to conduct hearings expeditiously, thereby contributing to significant South Africa merger approval delays. Davis clarified that his observations are not a critique of the Tribunal itself, but rather an expression of bewilderment as to why the Department of Trade, Industry and Competition has failed to ensure the recruitment of additional personnel necessary to manage urgent merger cases.

The jurisprudential concern revolves around a legal precedent that now enables rival firms to prolong the merger approval process for years. Davis cited the ongoing acquisition of Shoprite’s furniture businesses, OK Furniture and House & Home, by Pepkor for R3 billion, a deal initiated in September 2024 that remains uncompleted. Furniture retailer Lewis sought to intervene in this transaction, raising concerns about potential competition and pricing impacts. While the Competition Tribunal initially granted Lewis limited intervention rights, this decision was subsequently overturned by the Competition Appeal Court. However, the Constitutional Court, in late 2025, ultimately ruled in favor of Lewis, allowing their intervention.

Davis, who formerly served as a Competition Appeal Court judge, had a role in the Pepkor/Shoprite case and underscored that the Constitutional Court's judgment has established a precedent that simplifies the process for parties seeking to obstruct mergers through intervention. He explained that once the right to intervene is granted, parties can initiate discovery procedures, which inherently slow down the entire process. This protracted timeline, he argues, often causes companies to reconsider entering into mergers in the first place. Davis asserted that he is aware of many mergers that are simply not proceeding in South Africa precisely because of these systemic problems.

For context, large mergers in South Africa are subject to approval by competition authorities when the target firm's value reaches R280 million or more, and the combined annual turnover of the involved entities exceeds R9.5 billion. The Competition Commission is responsible for making recommendations on whether a merger should proceed, while the Competition Tribunal, functioning akin to a court, holds the ultimate authority to approve or reject the transaction. Manuel further contributed to the discussion by pointing out that the damage incurred during the "Zuma years" led to a significant exodus of skilled individuals from key regulatory institutions, exacerbating the challenges faced by South Africa's competition law framework.

Lawyers advising on M&A in South Africa must anticipate significantly extended timelines for competition authority approval and increased risk of third-party intervention, which could impact deal viability and necessitate robust strategic planning to mitigate delays.

Source: Original reporting via Moneyweb