Casino case shines light on rights to input to South African merger investigations

Anthony Crane, Mark Thomas, and Andrew Attieh of Pinsent Masons in Johannesburg were commenting after Sun International wrote to shareholders earlier this month to advise them that the parties had taken the decision to terminate their plans for Sun International to acquire Peermont’s gaming business.  This was the second time that Sun International has tried to acquire Peermont, following an unsuccessful attempt in 2015. 

Sun International, Peermont and another company, Tsogo Sun, are the only three casino operators in central Gauteng, an important economic province in South Africa. The deal was approved by Sun International’s and Peermont’s shareholders in March 2024, and subject to obtaining merger approval from South Africa’s competition authorities before 15 September 2025.  The deal was then notified to the South African competition regulators.

The Competition Commission of South Africa is the investigatory and compliance body responsible for, amongst other duties, examining the potential effects of a proposed transaction on competition. As part of its investigation, the Commission will engage with third parties, including competitors and suppliers, to obtain their views on the possible effects of the proposed transaction on the market. Once the deal was notified to the Commission, Tsogo, a rival of Sun International and Peermont, used this an opportunity to raise its concerns about the deal with the Commission.

In concluding its investigation, the Commission said it was concerned about the “dampening [of] competitive rivalry in central Gauteng”, citing the reduction of competitors and concentration in the market that would materialise, as well high barriers to entry in the market which it said would reduce the likelihood of new competitors emerging. It further warned about the risk that the new merged entity and Tsogo may cooperate, rather than compete, with one another. Sun International and Peermont proposed possible remedies to address those concerns, but the Commission was of the view that the proposed remedies would not be sufficient to address its concerns. 

While the Commission has the power to approve, prohibit, or approve with conditions, small and intermediate mergers, the Tribunal holds the final decision-making power in respect of large mergers, as well as in cases of an appeal raised by the parties against the Commission’s decision in a small or intermediate merger. As the Sun International and Peermont merger was classified as a large merger, the matter proceeded to the Competition Tribunal in October 2024. The Commission recommended to the Tribunal that the Tribunal prohibit the proposed transaction.

As part of its processes, the Tribunal will hear submissions from the parties involved – as well as any others that have a right to make submissions or those parties that it grants rights to intervene. Tsogo applied to the Tribunal for a right to intervene in the proceedings.

In relation to merger hearings before the Tribunal, section 53(c)(iii) of the Competition Act provides scope for third parties to participate in proceedings, at the discretion of the Tribunal. Case law has confirmed that the Tribunal can only permit a third party to intervene in merger proceedings if it has shown a material and substantial interest in the matter, or if it has shown that it can provide evidence of its ability to assist the Tribunal. Typically, for the purposes of section 53(c)(iii), customers and competitors are considered to have a ‘material interest’ because of their knowledge of market dynamics and parameters of competition in the relevant market.

The Tribunal granted Tsogo the right to participate in the proceedings in January 2025. When granting the right, the Tribunal also defined the scope of Tsogo’s participation and their procedural rights.

According to a case timetable recently published by the Tribunal, closing arguments were not scheduled to be heard until 2 October 2025, being three weeks after the agreed long-stop date. With the long-stop date not being extended, Sun International and Peermont announced that the deal was off.

Mark Thomas said: “The ability of competitors or suppliers to make submissions to the Commission and Tribunal is a powerful tool that can be used to voice concerns and potentially assist the regulators in arriving at a decision. However, make no mistake, the Commission and Tribunal are wise to corporate gamesmanship and only those competitors who can show a real and substantial interest in a matter will be permitted to participate in proceedings before the Tribunal.”

Andrew Attieh said: “It is important for third parties to assist the Commission in its investigations into the potential effects of a proposed transaction on the relevant market. Without their input, the Commission may not be able to assess the long-term consequences.”

Anthony Crane said: “The Sun International/Peermont transaction faced intense regulatory scrutiny. This is not always the case in South Africa, but when it comes to a transaction that raises questions around the lessening of competition in a market, the merging parties should take a considered view of their risks, and long-stop dates, to manage expectations that the approvals are reasonably achievable within the timeframes of the deal”.