In 2014, Hosken Consolidated Investments Limited (HCI) acquired de facto control of Tsogo Sun Holdings Limited (Tsogo) when SABMiller divested its shareholding. HCI's shareholding increased to 47.61%, making it the largest shareholder. The Competition Commission approved this merger. HCI informed the Commission that it intended to ultimately increase its shareholding beyond 50% to acquire de jure control. In 2017, HCI proposed a restructuring transaction that would increase its shareholding in Tsogo to between 50.91% and 51.63%, consolidating all its gaming interests under Tsogo. The Commission issued an advisory opinion that this 2017 transaction was notifiable as a merger because HCI would cross the "bright line" of 50% shareholding under section 12(2)(a) of the Competition Act. HCI and Tsogo disagreed, seeking a declaratory order from the Competition Tribunal that no notification was required. The Tribunal declined jurisdiction, but the Competition Appeal Court reversed this decision and granted the declaratory order, holding that HCI was not obliged to notify the 2017 transaction.
Leave to appeal granted. Appeal upheld in part. The order of the Competition Appeal Court was amended to declare: (a) HCI is not obliged to notify the 2017 transaction under section 13A; and (b) this does not preclude the Commission from investigating assurances made in the 2014 merger under sections 15 and 16(3). No order as to costs.
The acquisition of control over a firm for purposes of merger control under the Competition Act is a once-off event. Where a firm has already obtained merger approval for acquiring one form of control over another firm (such as de facto control under section 12(2)(g)), it need not notify a subsequent transaction that merely changes the nature of that existing control to another form (such as de jure control under section 12(2)(a)). The different instances of control set out in section 12(2) are alternative ways in which control may be acquired, not separate and independent forms of control each requiring notification. Section 12(1) requires the acquisition of control over "another firm" - once that control has been acquired and approved, a change in the quality or nature of that control does not constitute acquisition of control over "another firm". The Competition Tribunal has jurisdiction under sections 27(1)(d) and 58 to grant declaratory orders on whether transactions constitute notifiable mergers. The Commission retains investigatory powers under sections 15 and 16(3) to investigate compliance with merger conditions and assurances even after approval is granted.
Froneman J's concurring judgment added an important cautionary note that while the declaratory order was appropriate in this case, the judgment should not be read as an invitation to flood the Tribunal with applications for declaratory orders. Where the Commission explicitly states it needs more time to investigate a transaction, particularly regarding substantive competitive assessment and public interest issues, this is a factor the Tribunal should consider in exercising its discretion whether to grant declaratory relief. The Court noted (but did not need to decide definitively) that the so-called "bright lines" in section 12(2) vary in their clarity, with section 12(2)(a) (more than 50% shareholding) being the clearest bright line, while section 12(2)(g) (material influence) is "anything but bright". The terminology should be used with circumspection and does not imply a hierarchy of importance among the different forms of control. The Court observed that declaratory orders are flexible remedies that can clarify legal and constitutional obligations, promote protection and enforcement of constitutional values, and may stand on their own without accompanying mandatory or prohibitory orders.
This judgment clarifies fundamental aspects of South African merger control law. It establishes the "once-off principle" whereby the acquisition of control is a single event that does not require re-notification merely because the nature or quality of that control changes. This provides certainty and prevents the unduly burdensome requirement of multiple notifications for what is essentially the same transaction. The judgment also confirms the Competition Tribunal's power to grant declaratory orders on jurisdictional questions, which is essential given that ordinary courts cannot adjudicate competition matters. Importantly, the judgment balances this by affirming the Commission's ongoing powers to investigate compliance with merger conditions and assurances, even after approval. The case illustrates the proper interpretation of section 12(2)'s non-exhaustive list of control instances as alternative ways of establishing control rather than separate forms requiring independent notification. It provides important guidance on the forward-looking nature of merger assessment and the finality of merger approval subject to revocation powers.