The Harmony - Gold Fields take-over battle

South Africa's corporate law severely limits the defensive stratagems that can be implemented by the directors of a target firm to ward off a hostile take-over. Those directors consequently have an incentive to try to achieve the same result by 'playing the competition card'. This stratagem was successfully employed by Gold Fields to ward off the 2004 takeover bid by Harmony. The litigation in the Harmony - Gold Fields take-over battle brought to the fore the interpretation of key provisions of the Competition Act. Of central importance is the identification of the precise juncture, between the conception of a plan to acquire control of a firm and its consummation, at which that plan becomes a 'proposed merger' which cannot be implemented until the approval of the competition authorities has been obtained. It is argued that the judgment of the Competition Appeal Court, in attempting to bring South Africa's competition law into harmony with the European Commission Merger Regulation, has inflicted on our legal system the interpretation that our statutory regulatory regime is powerless to act against the acquisition of control in the context of a notifiable merger, and that regulatory powers are triggered only when that control is subsequently exercised.