The predictive power of public interest concerns relative to competition concerns in South African merger control

Date
2024-03
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Stellenbosch : Stellenbosch University
Abstract
ENGLISH SUMMARY: This thesis seeks to ascertain the relative importance of public interest concerns and competition concerns in predicting South African merger adjudication decisions. In particular, the thesis empirically tests the hypothesis that public interest concerns have become more important in driving merger intervention than competition concerns. While earlier research suggests a statistically significant relationship between public interest concerns and the conditional approval of mergers, the relative importance of public interest and competition concerns as drivers of the merger adjudication process in South Africa has not received empirical attention. Such an empirical study is timeous in the light of policy attempts to provide clarity on the role of public interest concerns, including through the publication of guidelines. The thesis also posits two secondary, and related, hypotheses. First, that the South African Competition Commission has become increasingly interventionist since the 2018 amendments to the Competition Act, ceteris paribus. Second, that all public interest concerns are not treated equally, i.e. that public interest concerns vary in their impact on merger intervention. The thesis relies on publicly available merger data released by the South African Competition Commission in 2022. It includes over three thousand unique merger cases, and covers a wide array of variables that influence merger decisions. The methodology in this paper is derived from the machine learning literature. The specific algorithm employed is that of a random forest model, which produces a variable importance plot and allows for partial probability analysis. These measures provide the empirical basis for evaluation the stated hypotheses. The thesis concludes that public interest concerns are more important for predicting merger adjudication decisions than individual competition concerns. It is noteworthy that, on average, small business concerns, BBBEE concerns, and concerns around the ability of national firms to compete in international markets all raise the probability of merger intervention by more than raising three separate competition concerns. It is further shown than the Commission has become increasingly interventionist after the 2018 amendments to the Act, ceteris paribus. Finally, it is concluded that public interest concerns should not be treated as a uniform group when estimating their effects on the adjudication of a merger, as they have distinct effects on the probability of intervention.
AFRIKAANSE OPSOMMING: Hierdie tesis ondersoek die relatiewe gewig van openbare belang oorwegings teenoor mededingingsoorwegings in die konteks van samesmeltingsbeoordelingsbesluite in Suid-Afrika. Die navorsing bied 'n empiriese toets van die hipotese dat openbare-belang-oorwegings 'n toenemend belangriker rol as mededingingsoorwegings speel by beleidsbesluite om in samesmeltings in te gryp. Terwyl vorige studies 'n statisties beduidende verband tussen openbare-belang-oorwegings en die voorwaardelike goedkeuring van samesmeltings toon, het die relatiewe gewig van openbare-belangteenoor mededingingsoorwegings as voorspellers van beoordelingsbesluite omtrent samesmeltings nog nie empiriese ondersoek geniet nie. Die tydsberekening van hierdie studie is pertinent, gegewe die onlangse pogings om groter duidelikheid te bied oor die rol van openbare-belang-oorwegings in Suid- Afrikaanse samesmeltingbeheer, insluitend die publikasie van riglyne. Die tesis stel ook twee sekondere, en verwante, hipoteses voor. Eerstens, dat die Suid-Afrikaanse Mededingingskommissie toenemend intervensionisties geword het sedert die 2018 wysigings aan die Mededingingswet, ceteris paribus. Tweedens, dat nie alle openbare-belang-oorwegings gelyk behandel word nie, m.a.w. dat openbare-belang-oorwegings in hul impak op samesmeltingintervensie. Die tesis maak staat op openbare samesmeltingsdata wat deur die Suid-Afrikaanse Mededingingskommissie in 2022 vrygestel is. Dit sluit meer as drie duisend unieke samesmeltingsgevalle in en dek 'n wye reeks veranderlikes wat samesmeltingsbeoordelingsbesluite beinvloed. Die metodologie in hierdie artikel is ontleen aan die masjienleerliteratuur. Die spesifieke algoritme wat gebruik word, is die van 'n “random forest” model, wat 'n veranderlike belangrikheidsplot produseer en voorsiening maak vir gedeeltelike waarskynlikheidsanalise. Hierdie maatstawwe verskaf die empiriese basis vir die evaluering van die gestelde hipoteses. Die tesis kom tot die gevolgtrekking dat openbare-belang-oorwegings belangriker is vir die voorspelling van samesmeltingbeoordelingsbesluite as individuele mededingingsoorwegings. Dit is opmerklik dat, in die gemiddeld, besorgdhede oor klein ondernemings, BBBEE-besorgdhede en besorgdhede oor die vermoe van nasionale firmas om in internasionale markte mee te ding, almal die waarskynlikheid van samesmeltingintervensie met meer verhoog as wat drie afsonderlike mededingingsoorwegings sou doen. Daar word verder getoon dat die Kommissie toenemend intervensionisties geword het na die 2018 wysigings aan die Wet, ceteris paribus. Die tesis kom ook tot die gevolgtrekking dat openbare-belangoorwegings nie as 'n uniforme groep behandel moet word wanneer hul effekte op die beoordeling van 'n samesmelting geskat word nie, aangesien hulle onderskeie effekte het op die waarskynlikheid van intervensie.
Description
Thesis (MCom)--Stellenbosch University, 2024.
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