SA merger filing thresholds set for major overhaul: What businesses need to know

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An increasing burden on competition authorities

The proposed amendments come in the wake of an increasingly onerous workload premised on the number of cases that are being assessed by the South African competition authorities. For example, the number of mergers being assessed by the competition authorities average well above 250 per year, with the number of merger assessments completed in the Commission’s financial year having increased from 220 in 2020/21 to 330 in 2024/25.

This is an approximately 47% increase in the Commission’s case load. While the Commission’s staff complement in the mergers division, which is headed by Tamara Mokoka, is made up of an average of 30 with an array of capable junior and senior staff members, the case load facing this division has increased materially both in terms of scope and complexity.

As a result, investigators have been saddled with an increased number of filings to assess. While the Competition Commission has sought to assess transactions timeously, the increased workload has resulted in merger filings taking longer to be finalised.

This increase also impacts on the Competition Tribunal, which has fewer members at present who are able to hear an increasing number of merger cases. The Tribunal panel members have decreased from 11 members in 2017 to only 6 members in 2026.

Thus, while the case load facing competition authorities continues to increase, the available expertise to adjudicate these complex matters has not kept pace and, in the case of the Tribunal, has actually decreased. This places a considerable burden on the Tribunal and also means that it is often difficult to find dates for the hearing of contested merger proceedings.

Moreover, the current thresholds have not been adjusted for nearly a decade, meaning that no account has been taken of inflation and the like.

The rationale for merger thresholds is that smaller transactions are less likely to have a material impact on the economy and, therefore, the intuition is that the competition authorities should focus their attention on mergers that are more likely to have an impact on the economy.

As such, the increased thresholds are likely to result in fewer mergers requiring mandatory notification to the competition authorities and, therefore, reduce their workload.

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Merger classifications and when mergers should be notified

Currently, merger transactions in South Africa are classified into three categories (small, intermediate and large mergers), based on two specific financial thresholds.

Transactions that fall between the lower financial thresholds but do not meet the higher thresholds are classified as intermediate mergers, whereas transactions that meet the higher financial thresholds are classified as large mergers.

The financial thresholds require two separate thresholds to be met – a target threshold and a combined threshold - for a transaction to require the approval of the competition authorities before it may be implemented.

If only one threshold is met, then such a transaction will be classified as a small merger which can be implemented without requiring the approval of the Competition Commission (for intermediate mergers), or the Competition Tribunal (in the case of large mergers) – unless the Commission requires its notification.

The lower thresholds currently require a minimum target firm value of R100m and a combined value of at least R600m. The higher thresholds currently require a minimum target firm value of R190m and a combined value of R6.6bn.

In terms of the lower merger thresholds, where the greater of the turnover or asset value of a target firm exceeds R100m, merger parties are required to consider the second criterion, being the value of the combined business of the acquiring group and the target firm.

Should this combined value exceed R600m, then both the minimum criteria for the lower thresholds are met and a merger would require the approval of the Competition Commission before it can be implemented.

In the case of the higher large merger thresholds, the target firm criterion is currently set at R190m. Should this be met, then the parties must consider whether the combined threshold of R6.6bn will be met.

Where this latter criterion is met, the transaction will be classified as a large merger and will require the approval of the Competition Tribunal. If the combined value falls below R6.6bn but above R600m, the merger will be classified as being an intermediate merger.

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The implications of merger classifications on timing

The classification of mergers has a material bearing on the timing of merger assessments. In terms of the Competition Act, intermediate mergers must be assessed and determined within 60 business days.

In the case of large mergers, there is no specific time limit as, while the Commission has an initial 40 business days within which to consider the transaction, provision is made for extensions of up to 15 days at a time.

The proposed amendments to the financial thresholds

The proposed amendments to the lower thresholds will see the target threshold increasing from the current level of R100m to R175m, while the combined threshold increases from R600m to R1bn.

In this respect, for all mergers where the value of the target firm is less than R175m, these transactions will no longer require the mandatory notification to and approval of the competition authorities.

In addition, in circumstances where the target firm value exceeds R175m, but the combined value falls below R1bn, these transactions will equally no longer require mandatory notification to, and approval by, the Competition Commission.

The proposed amendments to the higher thresholds will see the target firm threshold increasing from R190m to R280m, while the combined threshold will increase from R6.6bn to R9.5bn.

This change in the higher thresholds should have a material effect on the number of large mergers notified to the competition authorities requiring the approval of the Competition Tribunal.

The amendments to the higher thresholds will see a greater number of transactions falling into the intermediate merger category and thus only requiring the approval of the Competition Commission.

This will be a welcome relief not only to merger parties looking to obtain regulatory approvals in a much shorter timeframes (ie. within 60 business days), but it will also bring relief to the Competition Tribunal, which is currently significantly short staffed.

Some may ask why the thresholds have not been increased to a much greater level, perhaps set at R300m to R500m for target firm thresholds and R2bn and R11bn for combined thresholds. This would have the effect of significantly reducing the number of transactions which would require the scrutiny of the already overworked competition authorities.

However, it would mean that a significant number of potentially problematic transactions could no longer require the scrutiny of our competition authorities. While even higher thresholds will alleviate the burden on competition authorities, a balance must be struck as the competition authorities have a key role to play in ensuring the efficient operations of our economy.

Overall, the proposed amendments are long overdue as has been evidenced by the increasing strain which mandatory notifications have placed on the competition authorities’ limited resources.

For business, the amendments will bring relief for many organisations as smaller transactions will no longer require competition approval.