The Energy Regulation and Markets Review - Stikeman Elliott

South Africa
Coal
There are no regulatory criteria for or prohibiting cross-ownership or vertical and
horizontal integration of firms in the coal sector.
The Mining Charter 25 covers minimum equity ownership by HDSAs. The
Mining Charter was developed following extensive consultation between the mining
industry and the government and is essentially a plan for the phased transformation of
that industry, including a minimum ‘meaningful economic participation’ 26 target of 26
per cent for HDSAs in holders of mining rights, minimum targets for the procurement
of goods and services from enterprises whose share ownership is 25 per cent plus 1
held by HDSAs (40 per cent in the case of capital goods, 50 per cent in the case of
consumer goods and 70 per cent in the case of services) by holders of mining rights, and
a minimum employment target for HDSAs in executive to junior management levels of
40 per cent by holders of mining rights, in each case by 2014.
Oil and gas
There are no regulatory criteria for or prohibiting cross-ownership or vertical and
horizontal integration of firms in the gas sector. Nevertheless, NERSA in its capacity as
the Gas Regulator may impose licence conditions on any licence issued by it in terms
of the Gas Act to the effect that the gas transmission, storage, distribution, trading,
liquefaction and regasification activities of vertically integrated gas firms must be
managed separately with separate accounts and no cross-subsidisation. 27
There are no regulatory criteria for or prohibiting cross-ownership or vertical and
horizontal integration of firms in the petroleum sector, except prohibitions on wholesalers of
certain petroleum products holding retail licences (other than for training purposes) under
the Petroleum Products Act. 28 Further, NERSA in its capacity as the PPRA may impose
licence conditions in any licence issued by it in terms of the Petroleum Pipelines Act to
the effect that the petroleum loading, pipeline and storage activities of vertically integrated
firms must be managed separately with separate accounts and no cross‐subsidisation.
iv Transfers of control and assignments
South Africa has a developed competition regime regulating the transfer of assets and
services, which largely aligns with the models applied in Canada, the European Union
and the United States. The primary legislation regulating anti-competitive practices is
the Competition Act. 29
The Competition Act prescribes prior notification to and approval from the
competition authorities established thereunder for mergers and acquisitions meeting
25 Promulgated in GN 838 in GG 33573 of 20 September 2010.
26 The Mining Charter defines ‘meaningful economic participation’ as including the ownership
of shares carrying voting rights and participation in the cash flows of the licensed activity not
applied to finance the acquisition of such ownership.
27 Section 21(1)(c).of the Gas Act 48 of 2001.
28 Section 2A(5)(a) of the Petroleum Products Act 120 of 1977.
29 Act 89 of 1998.
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