Mergers vs retrenchment – How the law is geared towards saving jobs

Reece explains that competition law in South Africa plays a unique role in mergers. Companies must first seek approval from the Competition Authorities to ensure the merger does not negatively impact competition or consumers, such as causing price increases. The authorities are also obligated to consider the effect that a merger may have on public interest factors like employment.

Reece adds that the Competition Commission in considering a merger, actively investigates the employment implications of a proposed transaction and consults with trade unions and employees.

If there are concerns about future retrenchments, the Competition Commission will likely require the parties to agree to a three-year moratorium on merger-related retrenchments as a condition to the approval of the merger. Parties are encouraged to have open conversations with the Competition Commission as they can investigate and nullify the merger if it determines there was any misrepresentation regarding the effects that the transaction may have on employment.