South African merger revocation bid puts spotlight on disclosure obligations

The Commission alleges that the parties failed to disclose that the closure of RFG’s Tulbagh canning facility was under consideration during the merger review, notwithstanding that the Commission had expressly sought confirmation of the parties' post-merger intentions regarding their manufacturing operations.

The facility is one of only two fruit-canning operations in the country, and its closure would effectively concentrate the sector in the hands of a single producer, while placing over 400 permanent and fixed-term roles at risk and having knock-on effects for seasonal employment across the agricultural value chain.

Anthony Crane, an expert in competition law at Pinsent Masons, said: "This case serves as a stark reminder that merger parties are required to make full and frank disclosure of all material information to the Commission, including contemplated operational changes such as facility closures or restructuring plans.”

The case (2 pages/261 KB PDF) is the first reported instance of the Commission seeking to overturn a tribunal-approved merger on the basis of alleged non-disclosure of material information. The merger was implemented on 30 March, raising the additional question of how an already-consummated transaction could possibly be unwound if the Commission’s application is successful.

The proceedings will test what constitutes a “material fact” for merger control purposes and the extent to which contemplated future operational plans, including restructuring initiatives, facility closures and integration measures, must be disclosed to the competition authorities.

"This case sends a clear signal that the duty of disclosure extends beyond the information expressly requested in the notification forms,” said Caroline Bergmann, a merger control specialist at Pinsent Masons

“Merger parties are expected to volunteer any information that is material to the Commission's assessment of both the competition and public interest implications of a transaction,” she said.

Crane said: “Businesses contemplating reportable transactions should ensure that merger teams, management and advisers align their engagement with the competition authorities with internal strategic planning and integration workstreams, as the matter is likely to influence future merger filing strategy regardless of its outcome.”