[co-authors: Mateen Memon*, Carey Bridger**]

Since President Cyril Ramaphosa declared a National State of Disaster on 15 March 2020, various government Ministers have issued regulations to deal with the emergency. The Minister of Trade, Industry and Competition (the "Minister"), Mr Ebrahim Patel, has been no exception. In addition to publishing regulations restricting price hikes and stockpiling of consumer goods, he has granted certain block exemptions. We have previously reported on the exemption in the healthcare sector, and set out below further information regarding three further block exemptions, in the banking, retail property and hospitality sectors. These regulations are intended to assist in stabilizing the economy following the declaration of the COVID-19 pandemic as a national disaster, and come amid the implementation of a national lockdown which came into effect at midnight on Thursday 26 March 2020.

Block exemption for the banking industry

The purpose of the COVID-19 Block Exemption for the Banking Sector (the Banking Regulations) is to exempt a category of agreements or practices in the banking sector which would otherwise contravene the provisions of the Competition Act 89 of 1998 (the Act), with respect to agreements amongst competitors as well as amongst customers and suppliers, as a means to address the national fiscal, economic and social risks posed by the COVID-19 pandemic and its resultant declaration as a national disaster.

Specifically, the purpose of the Regulations is to promote coordinated conduct to mitigate the adverse effects of the disaster; to enable the banking sector to minimize the negative impact on both business and individual customers so that they can manage their finances during this time and be able to continue normal operations thereafter; and to enable the banking sector to manage the banking infrastructure, including payment infrastructure, ATMs and bank branches.

The conduct is only exempted under the Banking Regulations if it is aimed at responding to the COVID-19 pandemic and is undertaken at the request of, and in coordination with, the Minister and the Minister of Finance. In addition, the conduct must be solely intended to ensure that the following continue during the COVID-19 disaster period:

• the operation of essential payment systems - limited to the development of industry monitoring, operational policies and contingency plans aimed at the continued availability of cash and the provision of ATM, branch and corporate banking services as well as electronic payment systems; and

• the management of debtors and extension of credit - limited to the development of industry policies and monitoring aimed at relieving financial stress during this time, for example through payment holidays.

Furthermore, the banks, the Banking Association and the Payments Association are obliged to keep minutes of meetings held, and written records of all agreements or practices falling within the scope of the Banking Regulations.

The Banking Regulations came into effect on 23 March 2020 and will remain in operation for the duration of the classification of the COVID-19 pandemic as a national disaster in terms of the National Disaster Management Act. They are subject to amendments to allow for subsequent (or fewer) areas of collaboration or until withdrawn by the Minister.

It is to be hoped that the Banking Regulations will assist both business and private individuals and maintain financial stability during this unprecedented crisis.

Parties seeking to comment on the Banking Regulations have a period of 14 days from 23 March 2020 to do so.

Block exemption for the retail property sector

The purpose of the COVID-19 Block Exemption for the retail property sector (Retail Property Regulations) is to exempt a category of agreements or practices in the retail property sector from conduct which would otherwise contravene the provisions of the Act with respect to agreements between retail landlords and tenants. This exemption allows concerted conduct between certain landlords and tenants which would otherwise be prohibited, to prevent an escalation, and alleviate the effects, of the COVID-19 disaster, and is aimed at minimizing the economic and social effects of the national disaster on retail tenants, including small independent retailers. The aim of the Retail Property Regulations is therefore to enable retail tenants to manage their finances during the national disaster so that they may be in a position to resume normal operations after the national disaster.

The conduct is only exempted under the Retail Property Regulations if it is aimed at responding to the COVID-19 pandemic and is undertaken at the request of, and in coordination with, the Department of Trade, Industry and Competition (DTIC). The Retail Property Regulations specifically exclude communication and agreements in respect of prices unless authorized by the Minister.

The Retail Property Regulations make provision for agreements or practices between retail property landlords (including real estate investment trust companies, property developers owning or operating retail shopping centers and other intermediaries) and designated retail tenants (Designated Retail Tenants). Designated Retail Tenants are South African retail tenants operating in the following trading lines:

• clothing, footwear and home textile retailers;

• personal care services such as hairdressers;

• health and beauty salons; and

• restaurants.

The Retail Property Regulations allow for "payment holidays" or rental discounts for tenants, limitations on eviction and the suspension of or adjustments to lease agreement clauses that restrict measures which may be taken by Designated Retail Tenants to protect their viability during the national disaster.

The Retail Property Regulations specify that, in order to qualify for an exemption, the abovementioned agreements must extend to all Designated Retail Tenants, including small, independent retailers unless otherwise authorized by the Minister or the Competition Commission. Furthermore, retail property landlords and Designated Retail Tenants are required to keep minutes of meetings held, and written records of applicable agreements and practices.

Block exemption for the hotel industry

The purpose of the COVID-19 block exemption for the hotel industry (Hotel Industry Regulations) is similarly to exempt a category of agreements or practices in the hotel industry from conduct which would otherwise contravene the provisions of the Act. This exemption allows concerted conduct between hotels, the Department of Tourism (DoT) and the Department of Health (DoH), and enables the hotel industry to collectively engage with the DoT and DoH in respect of identifying and providing appropriate facilities for persons placed under quarantine, as determined by the DoH.

The conduct is only exempted under the Hotel Industry if it is aimed at responding to the COVID-19 pandemic and is undertaken at the request of, and in coordination with, the DoH and DoT. The Hotel Industry Regulations specifically exclude communication and agreements in respect of prices unless authorized by the Minister of Health and the Minister of Tourism.

The Hotel Industry Regulations make provision for agreements or practices in the hotel industry with the sole purpose of:

• Identifying and providing appropriate facilities to accommodate persons placed under quarantine as determined by the DoH and DoT; and

• Communicating with one another regarding capacities and utilization of their facilities for accommodating such persons.

The Hotel Industry Regulations also make provision for possible interaction amongst industry participants to agree on cost reductions at such facilities, at the request and under the oversight and guidance of the DoH and DoT.

The Hotel Industry Regulations provide that should the hotel industry identify additional agreements or practices outside of the scope of these regulations, but which are necessary to achieve its purpose then such participants of the hotel industry may request the Minister to expand the scope of the Hotel Industry Regulations.

While these sets of regulations are to be welcomed in this exceptionally difficult time for businesses, as the COVID-19 pandemic will inevitably exert an extreme economic strain on South African businesses and ordinary individuals, a note of caution must be sounded. Industry players in the Banking, Retail Property and Hospitality sectors will have to exercise circumspection to ensure that their conduct remains within the scope of both sets of regulations and therefore remains compliant with the Act.

*Associate Designate, **Candidate Attorney

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