When The Competition Commission Walks In: What South African Directors Must Know After The February 2026 Dawn Raids

In February 2026, the Competition Commission conducted unannounced searches at four scrap metal companies: Scaw South Africa, Cape Gate, Shaurya Steel/Force Steels, and Unica Iron and Steel. Investigators arrived without warning, seized documents, and interviewed employees on the spot. For any director who was not in the boardroom when that happened, the instinctive question is simple: could it happen to us? The more important question is: if it did, would we be ready?

What a dawn raid actually involves

The Competition Commission’s search and seizure powers under section 46 of the Competition Act 89 of 1998 are broad. Authorised investigators may enter premises, inspect and copy documents, question any person found on the premises, and seize material relevant to the investigation. The warrant is issued by a judge or magistrate on application by the Commission. There is no prior notice to the company.

Once investigators are on site, the clock is running. Decisions made in those first hours — about who speaks, what is produced, and what is said — will define the company’s position for the duration of the investigation.

Why this is personal for directors

Most directors understand that a competition law violation carries corporate liability. Fewer appreciate that section 73A of the Competition Act creates direct personal liability for a director who “caused the company to do anything prohibited” or “knowingly acquiesced” in prohibited conduct. The maximum administrative penalty for a prohibited practice is 10% of annual turnover. Section 73A makes that exposure a personal one.

That liability does not sit in isolation. Sections 76 and 77 of the Companies Act 71 of 2008, as amended by the Companies Second Amendment Act 17 of 2024, impose a duty on directors to act with reasonable care, skill and diligence, and in the best interests of the company. A director who ignored repeated warnings about anticompetitive pricing, or who approved a market-sharing arrangement without legal advice, is not simply exposed to competition law sanction. That director may also face a claim under the Companies Act for breach of fiduciary duty.

What goes wrong on the day

Experience shows that the most damaging mistakes happen in the first 30 minutes. They are not strategic errors. They are panic responses.

• Employees speak freely to investigators before legal counsel arrives.
• Documents are produced that fall outside the scope of the warrant.
• Senior managers attempt to contact counterparts at other companies.
• IT systems are locked down without preserving the audit trail.

Each of these responses can convert a difficult investigation into a catastrophic one. Obstruction of a Commission investigation is itself a prohibited act.

Three questions every board should answer before it happens

The February 2026 raids are a prompt, not a warning. Boards that treat them as background noise have missed the point. These are the three questions that matter:

Do we have a dawn raid protocol? Not a compliance manual that lives in a shared drive. A laminated one-page document at reception that tells a receptionist exactly what to do and who to call in the first five minutes.

Does every relevant employee know their rights? An employee has the right to have a lawyer present before answering questions. They also have constitutional rights against self-incrimination. Neither right is automatic in practice. Training matters.

Can a director personally satisfy a section 76 duty of care standard? That means being able to demonstrate, if required, that the board took active steps to prevent competition law breaches, and not merely that a policy existed.

The scrap metal sector is not uniquely exposed. The Commission’s current priorities include construction, agro-processing, and financial services. If your business operates in a concentrated market or involves any contact with competitors on pricing, terms, or territories, the question is not whether a dawn raid is possible. It is whether you are ready for one.

Andersen SA is hosting a webinar on competition law compliance and dawn raid preparedness. Details to follow. If you would like to discuss your organisation’s exposure in the interim, please contact the Competition Law Practice.