The Commission reserves the right to amend conditions under small and intermediate mergers

In December 2015, Amec FW advised the Commission that it intended to approach the Tribunal to have the employment condition varied on the basis that there was a change in economic circumstances following the conditional approval and that the business was experiencing a reduction in revenue and profitability that threatened its ability to remain sustainable in the market. Amec FW also relied on clause 4.9 of the merger conditions, which provide that the merged entity may approach the Commission to have the conditions revised on the basis that changes in the market, economic and regulatory conditions justify such a revision. In response, the Commission advised the merged entity to file an application in terms of Tribunal Rule 42 for a variation of the employment condition. In doing so, the Commission’s obligation to investigate the basis for the variation was therefore triggered. Accordingly, the merged entity filed an application with the Tribunal in March 2016.

After conducting a thorough investigation, the Commission was satisfied that the amendment was justified in the circumstances. In May 2016, the Commission filed a notice with the Tribunal indicating that it did not intend to oppose the variation of the employment condition for two reasons: first, the competitors of the merged entity advised the Commission that the engineering, procurement, construction and project management services industry was under pressure due to a decline in mining projects coupled with the low prices for oil and gas and secondly, the merged entity demonstrated that the envisaged retrenchments were in fact merger- specific.

At the hearing in June 2016, the merged entity was questioned as to why the matter was before the Tribunal and not the Commission, in light of the express wording in clause 4.9 of the merger conditions. Amec FW conceded that the power to amend the merger conditions did in fact lie with the Commission and only filed the current application before the Tribunal on the Commission’s behest. The Tribunal disagreed with the Commission’s advice to Amec FW and clarified that the Act is quite clear in that it gives the Commission the power to approve, prohibit or conditionally approve intermediate and small mergers, but did acknowledge that the Act was silent on whether the Commission would also have the power to amend merger conditions it had imposed. The Tribunal argued that it was common cause that if the Commission had the power to impose a condition on the merged entity, it would also have the power to amend that condition, absent any statutory provision to the contrary. Moreover, the Commission also reserved its rights to amend the conditions under clause 4.9 of the merger conditions. Therefore, the Commission was directed to issue amended conditions to the merged entity.    

On a last note, the Tribunal considered it useful to set out the following key points on the question of its jurisdiction:

• in circumstances, where an application is filed by way of consideration under s16 read with Tribunal Rule 32 to amend the conditions under the intermediate or reverse a prohibition decision by the Commission, as the case may be, the Tribunal will naturally enjoy jurisdiction over the matter;
• in circumstances, where the Commission imposes conditions in an intermediate merger, in which it reserves the right to amend its own conditions, and where no consideration application is filed, then the Tribunal will not have the required jurisdiction over the matter; and
• where a dispute arises between the Commission and the merging parties relating to an amendment to the merger conditions, the Tribunal will naturally enjoy jurisdiction in terms of the general powers set out in Tribunal Rule 42 to amend the conditions.

This case provides certainty to parties to small and intermediate mergers wishing to amend the conditions especially in those instances where the Commission reserves a right to amend the conditions and is welcomed.