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[2025] ZACT 19
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Pick n Pay Retailers (Pty) Ltd v Plumstead Family Store (Pty) Ltd (LM147Jan25) [2025] ZACT 19 (26 March 2025)
COMPETITION TRIBUNAL
OF SOUTH AFRICA
Case no: LM147Jan25
In
the large merger between:
Pick
n Pay Retailers (Pty) Ltd
Primary
Acquiring Firm
And
Plumstead
Family Store (Pty) Ltd
Primary
Target Firm
Panel:
I Valodia (Presiding Member)
A
Ndoni (Tribunal Member)
G
Budlender (Tribunal Member)
Heard
on:
14 March 2025
Order issued
on:
14 March 2025
Reasons Issued on:
26 March 2025
REASONS FOR DECISION
Introduction
[1]
On 14 March 2025, the Competition Tribunal
(“Tribunal”) conditionally approved the large merger
whereby Pick n Pay Retailers
(Pty) Ltd (“Pick n Pay Retailers”)
intends to acquire 100% of the grocery retail business owned and
operated by Plumstead
Family Store (Pty) Ltd (“Target
Business”).
[2]
Upon implementation of the proposed merger,
Pick n Pay Retailers will exercise sole control over the Target
Business.
Parties to the
transaction and their activities
Primary acquiring firm
[3]
The primary acquiring firm is Pick n Pay
Retailers, ultimately controlled by Pick n Pay Stores Limited (“Pick
n Pay”),
a public company listed on the Johannesburg Stock
Exchange (“JSE”).
[4]
Pick n Pay Retailers controls Score
Supermarkets Trading (Pty) Ltd and Boxer Superstores (Pty) Ltd
relevant to the proposed merger.
[5]
Pick n Pay Retailers is a multi-format and
multi-channel retailer. It operates stores as corporate-owned or
franchise stores. Pick
n Pay’s operations are focused on the
supply of fast-moving consumer goods (“FMCG”) which
includes an array of
goods such as food, groceries, clothing, health
and beauty, general merchandise and liquor.
[6]
Pick n Pay Retailers, Pick n Pay and all
its subsidiaries and the firms controlling it are collectively
referred to as the “Acquiring
Group”.
Primary target firm
[7]
The Target Business is owned by Plumstead
Family Stores (Pty) Ltd (“PFS”). The shareholders of PFS
own a number of firms
not relevant to the proposed merger.
[8]
The Target Business does not directly or
indirectly control any firms.
[9]
The Target Business is branded as a Pick n
Pay Supermarket and operates as a Pick n Pay franchise in line with
their multi-formatting
offering. The Target Business provides many
goods and services of Pick n Pay, including clothing (through Pick n
Pay Clothing)
and as well as liquor (through Pick n Pay Liquor). The
Target Business also offers money market services of Pick n Pay.
Description of the
transaction and rationale
[10]
In terms of the proposed merger, Pick n Pay
Retailers intends to acquire 100% of the grocery retail business of
the Target Business.
Post implementation, Pick n Pay Retailers will
exercise sole control over the Target Business.
[11]
[…]
From
the
Target
Business’s
perspective,
the
proposed merger presents an opportunity to
realise the investment in the Target Business.
Competition
assessment
Horizontal assessment
[12]
The Commission found that the proposed
merger results in a horizontal overlap in (i) the market for the
retail of grocery products
and (ii) the market for the retail of
liquor products within a 3 km radius of the Target Business in the
Plumstead area.
[13]
The Commission found that the proposed
merger is unlikely to raise any competition concerns for the
following reasons.
13.1.
In the market for the retail of grocery
products, the Commission found that although the merged entity will
have a combined market
share of approximately […] (based on
store count), the merged entity will continue to face competition
from approximately
[…] stores in the market.
13.2.
In the market for the retail of liquor
products, the Commission found that although the merged entity will
have a combined market
share of […], the merged entity will
continue to face competition from approximately […] stores in
the market.
[14]
The Commission further noted that the
proposed merger enables Pick n Pay Retailers to retain the Target
Business within the Acquiring
Group’s portfolio and continue to
be branded as a Pick n Pay Supermarket and will not result in any
change in the market
structure.
Vertical assessment
[15]
The Commission further considered the
vertical overlap present in the proposed merger as the Target
Business has majority of its
trading stock (including groceries,
liquor and clothing products) supplied by the Acquiring Group.
[16]
The Commission found that the Target
Business procured […]
of
its trading stock from the Acquiring Group (total purchased from the
Acquiring Group amounted to […] of the Target Business’
total cost of foods amounting to […]).
[17]
The Acquiring Group intends to acquire the
Target Business as a going concern and the post-merger the Target
Business will continue
to operate in the same manner as it does
currently. Based on the above, the Commission found that the proposed
merger is unlikely
to result in vertical foreclosure concerns.
Creeping mergers
assessment
[18]
The Commission found that Pick n Pay
Retailers has acquired a number of franchise stores which were
non-notifiable mergers from
2020 to 2025. In this regard, the
Commission found that the small merger acquisitions did not take
place in and around the same
area to raise potential significant
creeping merger concerns. The Commission nevertheless indicated that
it would continue to monitor
the effect of these acquisitions on
creeping effects.
Public
interest
Employment
[19]
The merging parties submitted that the
proposed merger will have no negative effect on employment.
[20]
The Commission engaged with the South
African Commercial, Catering and Allied Workers Union (“SACCAWU”)
and the Joint
Affirmative Management Forum (“JAMAFO”)
representing the employees of Pick Pay. SACCAWU and JAMAFO raised
concerns
that they were not consulted about the proposed merger
and
further
raised
concerns
related
to
the
downward
variation
of
the employment conditions. The merging
parties notified SACCAWU and JAMAFO of the proposed merger and
further submitted that the
employees of Pick n Pay Retailers would be
unaffected by the proposed merger and there will be no change to
their employment contracts
or their day-to-day operations.
[21]
The Commission additionally engaged the
trade union, the Independent Commercial Hospitality and Allied
Workers Union (“ICHAWU”),
representing the employees of
the Target Business who raised concerns about the conditions of
employment of the temporary employee
services (“TES”)
employees.
[22]
The merging parties indicated that Pick n
Pay Retailers is willing to commit to compensating the target
Business’ employees
at the higher rate of either (i) their
current rate of pay or (ii) the rate that other comparable Pick n Pay
employees are compensated
at. The merging parties further committed
to employing the Target Business’ employees on the same terms
and conditions as
well as a moratorium on merger specific
retrenchments for a period of 2 years.
[23]
We are of the view that the proposed merger
is unlikely to have a negative impact on employment.
Promotion of a greater
spread of ownership
[24]
The Commission found that Pick n Pay
Retailers has a shareholding by historically disadvantaged person
(“HDPs”) of 12.12%
and the Target Business has a
shareholding by HDPs of […].
[25]
We are of the view that the proposed merger
raises no substantial issues regarding the promotion of a greater
spread of ownership.
Conclusion
[26]
For the reasons set out above, we are
satisfied that the proposed merger is unlikely to substantially
prevent or lessen competition
in any relevant market and the proposed
merger does not raise public interest concerns.
[27]
In
the
circumstances,
we
conditionally
approve
the
proposed
merger
on
the
basis
of the conditions
in Annexure A of our order dated 14 March 2025.
Signed by:Imraan Valodia
Signed
at:2025-03-26
15:54:49
+02:00
Reason:Witnessing
Imraan
Valodia
26 March 2025
Prof.
Imraan
Valodia
Date
Ms Andiswa Ndoni and
Adv. Geoff Budlender
Tribunal
Case Manager:
Tarryn
Sampson
For
the Merging Parties:
Veronica
Cadam of Fasken
For
the Commission:
Tshehla
Mathe and Grashum Mutizwa