How South Africa's 2026 Merger Threshold Changes Affect Distressed M&A and Business Rescue Transactions

Last updated: 30 April 2026

On 27 January 2026, the Minister of Trade, Industry and Competition, acting in consultation with the Competition Commission, published draft amendments to South Africa’s merger notification thresholds and filing fees in the Government Gazette. The 2026 merger thresholds South Africa impact is already reverberating through deal rooms and insolvency practices: higher rand values for the “size-of-parties” and “size-of-transaction” tests will reclassify many transactions that previously required mandatory notification, while substantially increased filing fees will change the cost calculus for every deal that remains notifiable. For insolvency practitioners, business rescue practitioners (BRPs), creditors and M&A advisors working on distressed transactions, where speed, confidentiality and cost discipline are paramount, these draft changes demand immediate attention and careful re-evaluation of deal pipelines.

TL;DR, Six Things Deal Teams Need to Know Right Now

• Draft, not law. The proposed threshold and fee amendments were published for public comment on 27 January 2026. They are not yet in force. Deal teams must monitor the Government Gazette for the final notice.
• Higher thresholds. The draft raises both the combined annual turnover/asset value of the merging parties and the annual turnover/asset value of the target firm, meaning some transactions that are currently notifiable will fall below the new floors.
• Higher filing fees. The draft proposes significant increases in filing fees for intermediate and large mergers, adding direct cost to transactions that remain above the thresholds.
• Fewer mandatory notifications, but more risk. Distressed asset sales and business rescue transactions near the threshold boundary face a compliance grey zone until the final thresholds are gazetted.
• Timing is critical. Transactions signed before the new thresholds take effect are assessed against the current thresholds. Implementation before approval remains unlawful.
• Action now. Screen every live and pipeline distressed deal against both the current and draft thresholds; prepare dual-track notification strategies.

What Changed, The Competition Act Amendment 2026 Draft Thresholds and Fee Increases

South Africa’s merger control regime, established under the Competition Act 89 of 1998, classifies mergers as small, intermediate or large based on two financial tests: the combined annual turnover or asset value of the acquiring and target firms (the “size-of-parties” test) and the annual turnover or asset value of the target firm alone (the “size-of-transaction” test). These thresholds determine whether notification to the Competition Commission is voluntary (small mergers), mandatory with Commission adjudication (intermediate mergers), or mandatory with Tribunal adjudication (large mergers).

The draft amendments published on 27 January 2026 propose raising these thresholds materially. The table below compares the current thresholds (in force as of April 2026) with the proposed draft figures. Note that these proposed figures remain subject to public comment and final ministerial approval.

Source: Competition Commission, Merger Thresholds; Draft Government Gazette notice dated 27 January 2026; Werksmans Attorneys commentary.

Important caveat: The figures above reflect the draft amendments as published for comment. They are proposals, not enacted law. Until a final notice is gazetted, the current thresholds apply to all transactions.

Key Definitions That Matter in Distressed M&A South Africa

Practitioners advising on distressed transactions should pay close attention to three definitional questions that the threshold tests raise:

• Target firm. In a business rescue context, the “target” may be the company in distress, a division being sold under a business rescue plan, or a bundle of assets. The Competition Commission assesses turnover and asset values of the target firm (or the part of the business being acquired where only a portion is transferred).
• Size-of-parties. This test aggregates the turnover or asset values of both the acquiring group and the target group. Where a private equity fund or creditor-led consortium is the acquirer, all entities within the acquiring “firm”, as defined in section 1 of the Competition Act, must be included.
• Size-of-transaction. The annual turnover or asset value of the target firm alone. In a distressed scenario, asset values may have declined sharply. If the target’s assets or turnover have fallen below the draft threshold floor, the transaction may not require notification, but parties must apply the thresholds in force at the date of filing, not at the date of signing.

When Does a Transaction Trigger Merger Notification South Africa?

A merger occurs for Competition Act purposes when one or more firms directly or indirectly acquire or establish direct or indirect control over the whole or part of the business of another firm. Control includes the ability to materially influence policy in a manner comparable to holding more than 50% of equity or voting rights. This broad definition captures share acquisitions, asset purchases, joint ventures, and, critically for distressed M&A, the acquisition of a business or part of a business out of business rescue, liquidation or creditor enforcement.

Intermediate mergers must be notified to, and approved by, the Competition Commission before implementation. Large mergers must be notified to the Commission, which then refers the matter to the Competition Tribunal for adjudication. Small mergers, those falling below the intermediate thresholds, may be notified voluntarily but are not subject to mandatory notification, unless the Commission requires notification within six months of implementation.

Business Rescue and Insolvency-Specific Triggers

The following transaction structures commonly arising in business rescue transactions can all constitute “mergers” triggering notification obligations under the Competition Act:

• Sale of shares or business as a going concern under a business rescue plan adopted under Chapter 6 of the Companies Act 71 of 2008.
• Pre-packaged sales where the BRP negotiates a sale to a preferred bidder before or shortly after the commencement of business rescue proceedings.
• Creditor enforcement of security resulting in a change of control, for example, a secured creditor exercising step-in rights or enforcing a cession of shares.
• Section 155 compromises (schemes of arrangement) that result in a new party acquiring control over the company or its assets.
• Acquisition of assets out of liquidation by a single buyer or consortium, where the assets constitute a “business” capable of being carried on.

Industry observers expect the Competition Commission to maintain its established position that there is no blanket “insolvency exemption”, every transaction that meets the definition of a merger and breaches the applicable thresholds must be notified, regardless of the distressed context.

Immediate Implications of the 2026 Merger Thresholds South Africa Impact on Distressed Deals

The draft amendments, if enacted in their current form, will have three principal effects on distressed M&A and business rescue transactions.

1. Fewer Mandatory Notifications, But a Transitional Grey Zone

Higher thresholds will exempt more small and mid-market distressed transactions from mandatory notification. In business rescue scenarios, where target companies frequently have diminished asset values and contracting turnover, many transactions that currently sit just above the intermediate merger floor will drop below the proposed R1 billion combined threshold or the R190 million target threshold. The likely practical effect will be faster deal execution for these sub-threshold transactions, with no Competition Commission review period to accommodate.

However, until the final notice is gazetted and an effective date confirmed, all transactions must be assessed against the current thresholds. Deal teams face a transitional risk: a transaction signed and filed today under the current thresholds could, in principle, become sub-threshold if the new thresholds commence before approval is granted. Conversely, parties who assume the new thresholds will apply and fail to notify may find themselves in breach if the draft is delayed or amended.

2. Higher Costs for Transactions That Remain Notifiable

The draft proposes significant increases to merger filing fees for both intermediate and large mergers. For distressed transactions that continue to exceed the thresholds, particularly large mergers involving well-capitalised acquirers purchasing distressed targets, the increased fees represent an additional cost that BRPs, creditors and bidders must factor into business rescue plan budgets and deal models. Early indications suggest the fee increases could add materially to the all-in cost of regulatory compliance in large transactions.

3. Strategic Impacts on Bidders, DIP Lenders and Creditors

The interplay between higher thresholds and the time-critical nature of distressed sales creates strategic considerations for all parties:

• Bidders may structure offers to fall below the new thresholds (e.g., acquiring selected assets rather than the whole business) to avoid notification delays. This structuring must be genuine, not artificial, the Commission can look through arrangements designed solely to avoid notification.
• DIP lenders and post-commencement financiers may seek additional protections in facility agreements to address the risk that a sale process is delayed by a Competition Commission review period.
• Creditors voting on business rescue plans must understand whether the proposed transaction requires Competition Commission approval and, if so, how the approval timeline affects distributions and the overall rescue timeline.
• Business rescue practitioners carry personal exposure. A BRP who implements a notifiable transaction without approval risks both regulatory sanction and potential personal liability for breach of the Competition Act.

Who Bears the Risk?

Under the Competition Act, the obligation to notify rests on the parties to the merger, typically the acquiring firm. In practice, however, BRPs, boards of distressed companies, and creditors who drive or facilitate a sale can all face scrutiny if a notifiable merger is implemented without approval. The risk allocation should be addressed expressly in the sale agreement, the business rescue plan, and any creditor or DIP financing documentation.

Competition Commission Notification Checklist, Practical Timeline for Distressed Deals

Speed and certainty are the twin imperatives in distressed M&A. The following step-by-step timeline provides a practical framework for deal teams navigating merger notification in the context of a business rescue or distressed sale.

Day 0: Threshold Screening

1. Gather the most recent audited or management accounts for the target company (or business division being sold) and the acquiring group.
2. Calculate the target’s annual turnover and gross asset value using the Competition Act definitions (refer to the Competition Commission’s guidance on how to apply the turnover and asset tests).
3. Calculate the combined annual turnover or asset value of both parties.
4. Compare both figures against both the current thresholds and the draft thresholds. Record the results and retain working papers.
5. If either test is close to the threshold boundary, obtain a legal opinion on whether notification is required.

Days 1–3: Internal Clearance and Legal Assessment

1. Confirm with legal counsel whether the transaction constitutes a “merger” under section 12 of the Competition Act.
2. Assess whether any exemptions or carve-outs may apply (e.g., intra-group restructuring exemptions).
3. Prepare a preliminary competition assessment: identify horizontal overlaps, vertical relationships and any public interest issues that may arise.
4. If the transaction is clearly sub-threshold under both current and draft thresholds, document the analysis and proceed with the deal, but retain the threshold workings in case the Commission exercises its call-in power for small mergers.

Days 3–7: Pre-Notification Engagement or Filing Preparation

• Pre-notification engagement. The Competition Commission permits, and increasingly encourages, pre-notification discussions with its Mergers & Acquisitions Division. For complex distressed transactions, early engagement can clarify threshold questions, identify potential concerns and streamline the review process.
• Filing preparation. Assemble the required merger notification form (CC4(1) for intermediate mergers or the large merger form), supporting documents, market share data and the prescribed filing fee. Payment of the filing fee must accompany the filing, a filing is not accepted as complete until the fee is received.

Filing to Approval: Indicative Review Windows

• Intermediate mergers: The Competition Commission has 20 business days from acceptance of a complete filing to make a decision (extendable by a further 40 business days in complex cases). In practice, straightforward filings may be cleared more quickly.
• Large mergers: The Commission has 40 business days to investigate and make a recommendation to the Competition Tribunal, which then sets the matter down for hearing. The Tribunal process can add several further weeks.
• Fast-track or expedited review: There is no formal “fast-track” procedure, but the Commission has in practice expedited reviews of distressed transactions where delay would cause irreparable harm. Pre-notification engagement is essential to secure this treatment.

Implementation Hold Period

Parties may not implement a notifiable merger until it has been approved (with or without conditions) by the Commission or Tribunal. In a business rescue context, this means the business rescue plan should include a merger condition precedent, the sale is conditional upon Competition Commission or Tribunal approval. The BRP should structure the plan so that the company can continue to trade and preserve value during the review period.

If You Are Already in a Running Auction

Deal teams managing a live auction process for a distressed target should take immediate steps:

1. Screen all shortlisted bidders against both current and draft thresholds to identify which bids will trigger mandatory notification.
2. Factor estimated notification timelines and fees into the bid evaluation criteria.
3. Consider whether accepting a sub-threshold bid, even at a slightly lower price, delivers better value to creditors when the time cost of a Commission review is accounted for.
4. Include a merger control condition precedent in the preferred bidder’s sale agreement, with a contractual “long-stop date” that accounts for realistic Commission review periods.

Structuring Options and Worked Examples for Distressed M&A South Africa

The interaction between declining asset values in distressed targets and the proposed higher thresholds creates structuring opportunities, and traps. The following worked examples illustrate how the threshold tests apply in practice. These are illustrative examples only. Parties must verify calculations with their legal advisors and with the Competition Commission.

Example A: Asset Sale in Business Rescue

Facts: A manufacturing company is in business rescue. The BRP proposes to sell the company’s operating division (Plant A) to an industrial buyer. Plant A has annual turnover of R160 million and gross assets of R140 million. The acquiring group has combined annual turnover of R800 million.

1. Size-of-transaction test (target): The higher of Plant A’s turnover (R160 million) and assets (R140 million) is R160 million.
2. Size-of-parties test (combined): R800 million (acquirer) + R160 million (target) = R960 million.
3. Current thresholds: Combined = R600 million (exceeded ✓). Target = R100 million (exceeded ✓). Result: intermediate merger, notification required.
4. Draft thresholds: Combined = R1 billion (R960 million, not exceeded ✗). Result: the transaction would fall below the proposed intermediate threshold and notification would not be required.

Practical implication: If the draft thresholds are enacted before this transaction is filed, no mandatory notification is needed. If the current thresholds still apply, the filing must proceed. A dual-track approach, preparing the filing while monitoring the Gazette, is advisable.

Example B: Pre-Pack Sale to Connected Buyer

Facts: A retail chain enters business rescue. The BRP negotiates a pre-pack sale of the entire business to an entity controlled by the existing shareholders’ holding company. The target’s turnover is R250 million; the holding company group’s combined turnover is R3 billion.

1. Size-of-transaction: R250 million (exceeds both the current R100 million and draft R190 million thresholds ✓).
2. Size-of-parties: R3 billion + R250 million = R3.25 billion (exceeds both the current R600 million and draft R1 billion ✓).
3. Result under both regimes: Intermediate merger, mandatory notification required.

Additional consideration: Pre-pack sales to connected parties attract heightened Commission scrutiny on public interest grounds (employment effects, ownership concentration). Deal teams should budget for a longer review period and prepare comprehensive public interest submissions.

Example C: Creditor-Enforced Sale Under Security

Facts: A bank enforces its security over a logistics company by calling up its cession of shares. The bank then sells the shares to a strategic buyer within 30 days. The target’s assets are R80 million; the strategic buyer’s group turnover is R5 billion.

1. Size-of-transaction: R80 million. Under the current threshold (R100 million), not exceeded. Under the draft threshold (R190 million), not exceeded.
2. Result: Small merger under both current and draft thresholds. No mandatory notification, but the Commission may call in the transaction within six months if it considers the merger may substantially prevent or lessen competition.

Risk mitigation: Even where no mandatory notification is required, parties to a creditor-enforced sale should consider a voluntary filing if the transaction raises potential competition concerns, to obtain certainty and reduce the risk of a retrospective call-in.

Recommended Protective Clauses

Deal teams should include the following provisions in sale agreements, business rescue plans and creditor sale documentation:

• Merger control condition precedent: “This transaction is conditional upon all required approvals being obtained under the Competition Act 89 of 1998, including Competition Commission or Competition Tribunal approval where the transaction constitutes a notifiable merger.”
• Threshold adjustment clause: “In the event that the merger notification thresholds are amended between the signature date and the filing date, the parties shall re-assess the notification obligation and adjust the filing strategy accordingly.”
• Long-stop date: Include a realistic long-stop date (typically 6 to 9 months) that accommodates the maximum Competition Commission and Tribunal review periods, with provision for extension by mutual agreement.
• Cost allocation: Specify which party bears the filing fee and the costs of preparing and prosecuting the merger notification, a particularly important provision in cash-constrained business rescue scenarios.

Merger Filing Fees 2026, Budgeting for Distressed Transactions

The draft amendments propose substantial increases to merger filing fees. The increased fees apply to both intermediate and large mergers and must be paid at the time of filing, a filing is not accepted as complete without the prescribed fee. For BRPs and insolvency practitioners managing cash-constrained estates, this has direct implications.

Deal teams should take the following budgeting steps:

• Confirm the applicable fee category (intermediate or large) based on the threshold classification of the transaction.
• Verify the current fee schedule on the Competition Tribunal’s website and monitor the Gazette for the final amended fee schedule.
• In business rescue, ensure that the filing fee is expressly provided for in the business rescue plan budget as a post-commencement expense.
• Where the acquirer is bearing filing costs (as is common), ensure the sale agreement specifies the fee allocation and provides for payment in advance of filing.
• Consider whether escrow arrangements are appropriate to ring-fence the filing fee from the general estate.

Consequences of Non-Notification and Mitigation Steps

Implementing a notifiable merger without Competition Commission or Tribunal approval, commonly known as “gun-jumping”, is a serious contravention of the Competition Act. The consequences include:

• Administrative penalties of up to 10% of the firm’s annual turnover.
• Divestiture orders requiring the parties to reverse the transaction.
• Declaration of the merger as void by the Competition Tribunal.
• Personal liability for directors and, potentially, BRPs who authorised or facilitated the implementation.

Where parties discover that a transaction has been implemented without the required approval, the recommended course of action is to approach the Competition Commission voluntarily, disclose the non-notification, and file a retrospective merger notification. The Commission and Tribunal have shown willingness to regularise transactions where parties engage cooperatively, though penalties may still be imposed.

Action Plan, What to Do in the Next 7, 30 and 90 Days

The 2026 merger thresholds South Africa impact requires immediate and phased action from every deal team working on distressed transactions:

Next 7 Days

• Screen all live and near-term pipeline transactions against both current and draft thresholds.
• Identify any transactions currently in the “grey zone” (notifiable under current thresholds but potentially sub-threshold under the draft).
• Instruct competition counsel to prepare dual-track filing strategies for grey-zone transactions.

Next 30 Days

• Update template sale agreements, business rescue plan precedents and creditor sale documentation to include the recommended protective clauses set out above.
• Engage with the Competition Commission’s Mergers Division on any complex pending transactions to understand how the transition will be managed.
• Revise deal budgets and business rescue plan cost estimates to reflect the proposed filing fee increases.

Next 90 Days

• Monitor the Government Gazette for the final notice bringing the new thresholds and fees into force.
• Once the final thresholds are gazetted, update all internal screening tools, checklists and compliance procedures.
• Conduct training for deal teams, BRPs and insolvency practitioners on the new regime.
• Consider voluntary filings for any sub-threshold transactions that raise potential competition concerns, to mitigate call-in risk.

For tailored guidance on how these changes affect a specific transaction, deal teams can find a qualified commercial transactions lawyer through our directory.

Sources

1. Competition Commission, Merger Thresholds
2. Competition Commission, When Must the Competition Commission Be Notified of a Merger?
3. Competition Tribunal, Merger Notifications and Procedures
4. Cliffe Dekker Hofmeyr, Proposed Changes to Merger Thresholds
5. Werksmans Attorneys, Proposed Amendments to South Africa’s Merger Thresholds
6. DLA Piper Africa, Newsflash on Higher Merger Filing Thresholds and Increased Filing Fees
7. ENSafrica, Pre-Merger Guidelines and Commission Guidance