Softline (Pty) Ltd and Another v Competition Commission of South Africa, In re: Softline (Pty) Ltd v Netcash (Pty) Ltd (82/AM/Dec10) [2011] ZACT 74 (30 September 2011)

Softline (Pty) Ltd and Another v Competition Commission of South Africa, In re: Softline (Pty) Ltd v Netcash (Pty) Ltd (82/AM/Dec10) [2011] ZACT 74 (30 September 2011)

The Tribunal found that the merger between Softline and Netcash raised legitimate concerns regarding technical foreclosure, specifically the risk that the merged entity could exclude rival transaction processors from serving Softline customers by limiting access to necessary file formats and APIs. However, the Tribunal accepted that the revised set of behavioural conditions, agreed upon by the Commission and the merging parties and amended following Tribunal queries, were appropriate and proportionate remedies. These conditions require Softline to continue providing file formats and APIs to all current and future transaction processors, free of charge for file formats and on reasonable,...

Citation
[2011] ZACT 74
Parties
Applicant: Softline (Pty) Ltd; Applicant: Netcash (Pty) Ltd; Respondent: Competition Commission of South Africa
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
30 September 2011
Case Number
82/AM/Dec10
Procedural Posture
Merger Review / Reasons for Decision Following Conditional Approval
Outcome
Merger conditionally approved subject to behavioural conditions for five years.
Judges
Y Carrim, A Wessels, M Holden
Legal Topics
Small Merger Review, Foreclosure, Bundling, Interoperability, Behavioural Conditions
Competition Law Commercial and Corporate Small Merger Review Foreclosure Bundling Interoperability Behavioural Conditions

Case Brief

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Parties

Softline (Pty) Ltd

Applicant

Netcash (Pty) Ltd

Applicant

Competition Commission of South Africa

Respondent

Procedural Posture

Merger Review / Reasons for Decision Following Conditional Approval

Legal Issues

  1. 1 Whether the merger between Softline and Netcash is likely to substantially prevent or lessen competition in the transaction processing market for SMMEs.
  2. 2 Whether the proposed behavioural conditions adequately address technical foreclosure concerns arising from the merger.
  3. 3 Whether the merged entity will have both the ability and incentive to foreclose rivals through bundling and preferential interoperability.

Ratio Decidendi

The Tribunal found that the merger between Softline and Netcash raised legitimate concerns regarding technical foreclosure, specifically the risk that the merged entity could exclude rival transaction processors from serving Softline customers by limiting access to necessary file formats and APIs. However, the Tribunal accepted that the revised set of behavioural conditions, agreed upon by the Commission and the merging parties and amended following Tribunal queries, were appropriate and proportionate remedies. These conditions require Softline to continue providing file formats and APIs to all current and future transaction processors, free of charge for file formats and on reasonable,...

Court Disposition

Merger conditionally approved subject to behavioural conditions for five years.

Orders

  • Softline shall continue to make all file formats created for its accounting and payroll packages available to current transaction processors, free of charge, in a complete, accurate, and timely manner.
  • Softline shall maintain and make available standard file formats for relevant payment streams to transaction processors not currently using Softline formats, free of charge, in a complete, accurate, and timely manner.