The proposed merger of the SABMiller-Coca-Cola-Gutsche family bottling interests would create the largest soft drinks bottler in Africa, says the writer. Picture: REUTERS/JACKY NAEGELEN

I HAD calls last week from a couple of foreign investors who are following the progress of the proposed SABMiller-Anheuser Busch InBev (AB InBev) deal closely. They were just beginning to wonder whether the deal might run into regulatory troubles, even though the two brewing groups have no overlap here and there should, in theory, be no competition issues at stake.

The investors’ concern was prompted in part by reports on another megadeal in which SABMiller is involved, this time in soft drinks.

The proposed merger of the SABMiller-Coca-Cola-Gutsche family bottling interests would create the largest soft drinks bottler in Africa. It was cleared long ago by competition authorities in all other countries in which it has operations.

SA is the exception. By the time public hearings on the Coca-Cola Bottling Africa merger will finally begin at our Competition Tribunal, probably in May, it will be 18 months since the deal was announced in November 2014. Over that time, there have been extensive negotiations between the merging parties and Economic Development Minister Ebrahim Patel, who believes he is required by legislation to consider the public interest issues in mergers (although competition lawyers dispute this, arguing the law does not actually require him to do so, nor does it give him any special legal standing in merger regulation).

Competition Commission documents indicate that the Coca-Cola bottling folk have offered many goodies to allay any public interest concerns. Nevertheless, the minister has decided to intervene at the tribunal hearings.

The documents he has filed are confidential, according to the tribunal. But a flavour of his demands can be gleaned from the report the commission has filed, an expurgated version of which is a public document (with the confidential bits blacked out).

There are the usual concerns about job losses, which the commission shares, and in response to which the merging parties have committed to avoid retrenchments. The minister also wants the merged firm to buy all its packaging from domestic producers, and to favour small businesses.

Patel seems particularly fond of Appletiser, and is clearly anxious that the merging parties might resort to using alien apples to make it — so he wants conditions about Appletiser being produced here in SA, and from domestic produce.

In addition, according to the commission, "The (department) is concerned that the merged firm could move its head office outside the country in order to avoid paying tax ... (and) is of the view that Coca-Cola Beverages Africa head office should be permanently located, managed and directed from SA and must remain a SA tax resident."

It’s for the tax authorities and the finance minister to worry about a merged entity’s tax status, surely, and one has to wonder why this is in the realm of competition regulation.

It’s all part of what has become a pattern in SA. Authorities globally often look at the public interest when they evaluate mergers, and SA’s competition legislation requires employment, empowerment, international competitiveness and regional and sectoral effects of a merger to be considered. But the list has grown larger and broader in recent years, as has the minister’s habit of intervening, at least in larger, higher-profile mergers. The process of obtaining approval has become more time-consuming, and more cumbersome — and the list of conditions the parties must agree to get the deal done ever longer.

Setting up multimillion-rand funds to develop small businesses or domestic suppliers or even (in the case of a seed merger) to invest in a particular kind of seed production, are one of the trends. That raises the question whether merger regulation is the appropriate platform to pursue industrial policy, or agricultural policy goals.

There’s a question too of consistency. Some mergers sail through; others attract all sorts of demands. And there’s the more profound question of balance: if competition and public interest issues are in conflict, which should prevail? (And who should be the final arbiter of what the public interest is?) If foreign hedge fund managers are phoning around because they are worried about SA’s merger regulation, we already have a problem. It highlights the question of whether the time, the trouble and the tithes required to do high-profile cross-border deals in SA will have (or have had) a chilling effect on foreign investment.

At a time when SA desperately needs more foreign capital inflows, the last thing we need is to become known as a rough place to do deals — where regulatory clearances can take forever, and require so many concessions, to so many stakeholders, it may not be worth doing the deal at all.

AB InBev CE Carlos Brito is known to value speed of execution, and he seems to have got the measure of the South African regulatory environment — which is why he has been spending a lot of time in Pretoria talking to unspecified "stakeholders".

But the "megabrew" deal is a lightning rod for whether SA is indeed open for investment, and whether our regulators and politicians are willing to facilitate deals rather than frustrate them. The world will be watching.

• Joffe is editor at large