Politics Of The Deal: Public Interest Impacting M&A

Merger approval in South Africa was traditionally a predictable step in transaction execution. Parties could assess competition concerns, engage with regulators and forecast the outcome with reasonable confidence. That assumption no longer holds.

Private sector participants have flagged a growing concern that merger review outcomes are shaped as much by political and transformation objectives as by competition economics. This shift is highlighted in the US Department of State’s 2025 Investment Climate Statement on South Africa which notes that international and domestic investors believe the Competition Commission has taken an increasingly social-activist approach. According to the statement the regulator is prioritising public interest criteria over traditional antitrust and monopoly assessments. For boards and dealmakers understanding what this political focus means and planning for it early is now a core part of deal structuring rather than an afterthought.

The legal architecture behind the shift

South Africa's Competition Act was never a pure competition economics statute. Following amendments introduced in 2018 and 2019 the Commission and the Competition Tribunal must weigh a merger's effect on public interest factors alongside its impact on competition. These factors include the effect on specific sectors or regions, employment, small and historically disadvantaged person (HDP) owned businesses and the ability of national industries to compete internationally. Crucially the law also focuses on promoting a greater spread of ownership by HDPs and workers.

This framework operates alongside a national security review mechanism under which a presidentially appointed committee can block a merger involving a foreign acquiring firm on national security grounds. This applies to sectors including energy, mining, banking, insurance and defence.

The Commission's Revised Public Interest Guidelines finalised in March 2024 take the position that virtually every merger carries a positive obligation to promote broader ownership. In the Commission's view this applies to foreign-to-foreign transactions with no South African subsidiary, private equity deals that raise no competition concerns and mergers between parties that are already empowered. Where a transaction does not advance this objective the default response has been to require remedies such as Employee Share Ownership Programme (ESOP) allocations, minority equity sales to HDP purchasers or divestitures, typically in the 5% to 25% range.

Critics warn that South Africa risks allowing public interest considerations to overwhelm merger control entirely rather than sitting alongside a genuine competition assessment. This reflects a real tension between the Tribunal's precedent which treats public interest as one factor to be weighed holistically against others and the Commission's guidelines. While the guidelines do not bind the Tribunal they shape how most transactions are negotiated and cleared in the first instance.

Where the process intersects with politics

The Competition Act requires the Commission and Tribunal to act independently and free from political direction. However the Minister of Trade, Industry and Competition is entitled to appear as a party before both bodies and make representations on public interest grounds. This structural feature where a sitting minister formally weighs in on individual transactions gives the political critique its teeth.

Political actors are not overriding the legal process; rather the legal process has a built-in channel for political input. This occurs at a moment when the Commission's own guidance is pushing public interest analysis into deals that were once considered routine. The wider context matters as well. As the Investment Climate Statement observes negative trends in the business operating environment have created broader concerns about South Africa’s ability to attract foreign and domestic investment.

Greater judicial scrutiny provides a countervailing trend

Dealmakers should not view this shift as entirely one-directional. On 21 January 2025 the Tribunal declined to impose an ownership condition on a foreign-to-foreign merger in the case of CP Spruce Holdings and the Kidney Care Segment of Baxter International Inc. Neither party had South African shareholding by HDPs to begin with and neither had local operations. The Tribunal reasoned that there was no negative effect to remedy. This provides a useful precedent for parties structuring similar cross-border transactions and suggests the Tribunal will not simply rubber-stamp the Commission's expansive guidelines.

The Commission has also taken steps toward greater predictability. Pre-merger filing consultation guidelines allow parties to raise potential public interest concerns with the Commission before formal notification. Additionally revised merger notification thresholds have roughly doubled the target firm threshold for intermediate mergers, reducing the number of deals pulled into the process.

Implications for deal structuring and timelines

• Start the public interest case on day one. 
  Don't treat ownership and employment impact as late stage fixes. They need to be a core workstream from the moment the term sheet is drafted, especially for any deal crossing the new intermediate-merger thresholds.
• Use pre-merger consultations to test the waters.
  Use informal, early chats with the Commission. Catching their public interest concerns early gives you the runway to structure around them, rather than being forced into high-pressure remedy negotiations later.
• Prove the counterfactual, don't just assume it.
  For private equity or foreign-to-foreign deals, you need to explicitly show that the transaction won't dilute South African HDP (historically disadvantaged persons) ownership. Thanks to the CP Spruce precedent, you have a solid legal ground to fight unnecessary ownership remedies, but you have to actively build that case.
• Account for timeline drag, not just remedy risk.
  Even if a deal is ultimately cleared without any conditions, proving your case under the current guidelines takes time. Expect the review process to stretch out, and make sure that buffer is baked into your break fees, financing commitments and longstop dates.
• Keep competition risk and public interest risk separate for boards.
  These are distinct legal hurdles with completely different evidentiary requirements. Mixing them up in your board assessments usually leads to one of two things: paralysing caution or an ugly surprise right before closing.
• Weigh B-BBEE vs. EEIP options early.
  If a multinational client can't meet direct black ownership requirements, look at the DTIC's Equity Equivalent Investment Programme (EEIP) right away. Pitching an EEIP commitment, like skills development or employee stock options, alongside the merger filing can head off public interest objections. Just keep in mind that the application process can be notoriously slow and unpredictable, so factor that into the master timeline.

The bottom line

The debate over whether public interest belongs in South African merger control is over; Parliament has settled it. The challenge now is predictability, especially for cross-border deals where local ownership or employment impact is minimal.

Dealmakers can appreciate that the takeaway is commercial rather than political. Public interest is no longer a closing condition to be managed but a structuring element to be priced in from the start. The teams that build a public interest strategy into the first draft of the transaction rather than treating it as a final hurdle for remedy negotiations will protect both execution certainty and the transaction timeline.