Gold Fields Limited v Harmony Gold Mining Company Limited and The Competition Commission

In March 2004, Norimet Ltd (a wholly owned subsidiary of Norilsk) acquired a 20.03% shareholding in Gold Fields (appellant). On 11 August 2004, Gold Fields announced an agreement with Canadian mining company IAMGold Corporation to pool its non-SADC assets, which required shareholder approval at a meeting scheduled for 7 December 2004. Norilsk opposed this transaction. On 16 October 2004, Harmony (first respondent) approached Gold Fields' board with a merger proposal. On 18 October 2004, Harmony publicly announced a bid to acquire the entire issued share capital of Gold Fields through a two-stage structure: (1) an "early settlement offer" to acquire up to 34.9% of shares with minimal conditions, closing 26 November 2004; and (2) a "subsequent offer" for the remaining shares, subject to multiple conditions including Competition Authority approval and failure of the IAMGold transaction. Norilsk provided Harmony with an irrevocable undertaking to vote its 20.03% shareholding against the IAMGold transaction and to accept the subsequent offer. Gold Fields applied to the Competition Tribunal for an interdict to prevent Harmony from implementing the merger without prior approval from competition authorities. The Tribunal dismissed the application on 18 November 2004.

• Whether the Competition Tribunal has jurisdiction to grant interdictory relief in merger proceedings under section 27(1)(d) of the Competition Act 89 of 1998
• Whether Harmony's proposed transaction constituted a 'proposed merger' requiring notification to the Competition Commission under section 13A(1) of the Act
• Whether the early settlement offer alone or together with Norilsk's irrevocable undertaking constituted an acquisition of 'control' as defined in section 12(2) of the Act
• Whether the two-stage transaction structure (early settlement offer and subsequent offer) constituted a single transaction or two discrete transactions
• What constitutes 'implementation' of a merger for purposes of the prohibition in section 13A(3) of the Act
• Whether Gold Fields established the requirements for final interdictory relief

The appeal was upheld. An order was granted on 26 November 2004 interdicting Harmony from voting or otherwise exercising any rights attached to shares acquired pursuant to the early settlement offer pending final approval of the acquisition by the Competition Tribunal or Competition Appeal Court. Harmony was ordered to pay the costs of the appeal, including costs of two counsel.

The binding legal principles established are: (1) Section 27(1)(d) of the Competition Act empowers the Competition Tribunal to grant interim interdictory relief necessary or incidental to the performance of its merger review functions, as without such power the Tribunal would be unable to prevent violations of the Act and give effect to its orders. (2) Courts must examine the substance rather than the form of merger transactions, looking to the parties' true intentions as evidenced by their conduct and statements. (3) 'Control' under section 12(2)(g) includes the ability to materially influence key strategic policies of a firm, and there is no distinction between short-term and long-term control for merger notification purposes. The ability to block a single strategically critical transaction can constitute control. (4) Where an announced transaction demonstrates an intention to acquire control, notification obligations arise when the merger is 'proposed', not only when it is completed. (5) 'Implementation' of a merger under section 13A(3) includes exercising voting rights or other incidents of control acquired through a notifiable merger, not merely the completion of share transfers. Parties may not exercise control before obtaining regulatory approval. (6) Joint control can be established through formal undertakings between shareholders giving them the collective ability to control key decisions, even absent evidence of broader common interests or permanent structural arrangements.

Davis JP made several non-binding observations: (1) He cautioned against adopting a purposive interpretation that elevates one policy objective (such as promoting hostile mergers) above the multiple purposes set out in section 2 of the Act, stating this would 'jettison the principle of interpretative integrity.' (2) He noted that great care should be taken to ensure purposive interpretation engages with the wording and overall architecture of the Act rather than ignoring statutory language to promote particular contested policy objectives. (3) He implicitly criticized the Competition Tribunal President's concurring judgment below, which had expressed concern about target company management using competition law to 'chill hostile mergers' and protect themselves from shareholders' wishes, noting that hostile mergers are 'an important part of the very competitive process' to be promoted. Davis JP suggested this approach inappropriately prioritized one policy consideration over the balanced objectives in section 2. (4) The Court referenced comparative provisions from the EC Merger Regulation and Canadian Competition Act to illuminate the interpretation of 'implementation,' though these were not binding authority.

This is a landmark case in South African competition law that established several important principles: (1) It confirmed the Competition Tribunal's broad jurisdiction to grant interim interdictory relief in merger proceedings under section 27(1)(d), even in the absence of an express provision equivalent to section 49C for prohibited practices. (2) It applied the substance-over-form doctrine to merger analysis, requiring examination of the parties' true intentions rather than merely the legal structure of transactions. (3) It established that 'control' under section 12(2)(g) includes the ability to materially influence key strategic policies of a target firm, even on a short-term or transaction-specific basis, not just permanent structural control. (4) It clarified that 'implementation' of a merger for purposes of section 13A(3) includes exercising voting rights or other incidents of control before regulatory approval, not merely the completion of share transfers. (5) It demonstrated the courts' willingness to prevent parties from structuring transactions to evade regulatory oversight. The case is significant in hostile takeover contexts and for understanding when notification obligations arise in multi-stage transactions.