Legal experts warn that domestic approval doesn't shield companies from foreign prosecution

South African exporters eyeing relief from the Competition Commission's new block exemptions face a sobering reality: approval at home does not necessarily offer protection from prosecution abroad.

"You cannot export your cartel problem to another place in the world. If it's a cartel domestically that's immunised by domestic laws, it will be enforceable and challengeable under foreign laws if there's an effect in the jurisdiction."

This is the key message when unpacking two exemptions that were hastily introduced following US tariff pressures in August 2025.

It should also be noted that the stakes are high. European Union competition authorities can impose fines of up to 10% of global turnover for cartel conduct.

Fast response, complex implications

The Competition Commission deserves credit for speed. Within 12 days of Donald Trump imposing tariffs on South Africa on 1 August, the draft block exemption for the promotion of exports was published. A second block exemption covering ports, rail and key feeder road corridors is already operational.

Unfortunately, the draft promotion of exports exemption is quite ambiguous, and contains some internal contradictions that could trap unwary businesses.

What the exemptions actually allow

The draft promotion of exports exemption permits coordination on logistics costs, joint infrastructure investment, and "collective marketing of South African goods as a brand in export markets". But what does ‘collective marketing’ mean? Can apple producers jointly approach Tesco's with unified pricing? The exemption does not say.

More troubling: the draft simultaneously permits and prohibits market allocation. It exempts market allocation agreements but excludes "market allocation of goods and services sold to end customers or consumers". Whether "end customer" means a retailer like Sainsbury's or the final consumer also remains unclear.

The ports, rail and key feeder road corridors exemption is more targeted. It allows coordination on port capacity, cargo diversion, joint infrastructure investment, and crucially, fixing purchase prices for inputs - but explicitly prohibits fixing selling prices to customers or collusive tendering.

The process: no carte blanche

Neither of the exemptions operate on self-assessment. Companies must obtain "in scope confirmation" from the Commission, which typically responds within 30 to 60 days.

It should be noted that the approval comes with certain strings in the sense that the Commission imposes strict safeguards, which can include minute-keeping, recording discussions and regular reporting.

The European dimension

However, the European Commission operates differently. Its block exemptions are self-assessed, with market share thresholds typically under 15%. No agency approval is required. EU authorities also offer "comfort letters" for borderline cases which could be regarded as informal guidance that provides high confidence against prosecution. These take one to two months to obtain.

But here's the rub: South African exporters need both.

Consider a consortium of deciduous fruit producers obtaining SA approval for collective marketing to UK supermarkets. If this involves unified pricing that eliminates competition, it could constitute a hardcore cartel violation in Europe - regardless of the SA exemption.

This should be treated as a very narrow South African-only channel and thought needs to be given as to whether any joint conduct could fall foul of international laws.

Documentation dangers

A chilling reality: everything can be used against you. WhatsApp messages, meeting minutes, emails - all are discoverable by competition authorities, both domestic and foreign.

This means that even if the sender does not intend it to mean something, if it is very quick and informal, this can give rise to difficulties.

For example, the UK Competition and Markets Authority recently obtained records held in Germany by Volkswagen for a UK investigation.

Considering the European experience: collaborations that begin legitimately often expand over time until they cross into prohibited territory. It needs to be assessed at the beginning and then consistently throughout the cooperation.

The verdict

These exemptions offer genuine opportunities for South African businesses struggling with logistics bottlenecks and tariff pressures. The Commission's willingness to engage quickly and constructively is encouraging. But this is pioneering territory with significant legal complexity.

Companies must:

• Obtain detailed legal advice in South Africa before approaching the Commission
• Secure separate advice in every export destination market
• Consider whether comfort letters or foreign block exemptions apply
• Maintain rigorous documentation practices
• Keep external counsel involved throughout to prevent "scope creep"

This is not an ‘open sesame’ to go and collude or collaborate on whatever you like. The price of getting it wrong - both reputationally and financially - could dwarf any benefits the exemptions provide.

The draft export promotion exemption remains subject to finalisation. Companies should monitor the Competition Commission's website for the final version.

Written by Nina Greyling, Director at Nortons Inc. & Nicole Kar, Partner at Paul Weiss