OWN CORRESPONDENT, Johannesburg | Tuesday 4.20pm.
RESERVE Bank deputy governor Gill Marcus called for greater clarity on the country’s new competition laws to prevent costly delays on mergers and acquisitions.
Toothless two-decade-old competition legislation was overhauled last September but parts of the new Act have been criticised for leaving gaps and creating confusion. Most recently the courts were asked to provide some guidance.
”You can’t have ambivalence otherwise you will be in court all the time. It creates uncertainty,” Marcus told a competition seminar in Johannesburg. Earlier this year Standard Bank Investment Corporation (Stanbic), as part of its bid to fend off a hostile takeover approach from smaller rival Nedcor, asked the courts to rule on the scope of the competition authorities.
Stanbic, backed by the competition body, argued that the Competition Act should be the law used to make the final decision on whether the bid to create Africa’s biggest bank should be allowed to go ahead. Nedcor, supported by the Reserve Bank, said that the Banks Act should be the deciding legislation. Both the high and appeal courts ruled in favour of Nedcor. This means that the Reserve Bank’s registrar of banks or the finance minister, depending on the size of the merger, would be the final arbiter on banking mergers in terms of the Banks Act. The courts said, however, that advice should be taken from competition authorities.
Marcus, who includes bank supervision among her responsibilities, said the central bank is not seeking exemptions from competition regulation but that this is justified in certain circumstances. She said the controversial section of the Competition Act which excludes from its scope all acts ”subject to public regulation”, such as the Banks Act, is too wide. — Reuters