COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case no.: 03/LM/Jan03
In the large merger between:
Friedshelf 243 (Pty) Ltd
and
Gillette South Africa (Pty) Ltd
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Reasons for Decision
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Approval
The Competition Tribunal issued a Merger Clearance Certificate on 20 February 2003
approving the merger without conditions. The reasons are set out below.
The merger
The transaction
Gillette South Africa (Pty) Ltd is selling the manufacturing business of its Eveready
Division to Friedshelf 243 (Pty) Ltd as a going concern.
The parties to the transaction
The acquiring firm is Friedshelf 243 (Pty) Ltd (“Friedshelf”) a special purpose vehicle
that currently does not trade in any products or services. The shareholders of Friedshelf,
The Rooibos Trust, BoE Bank Ltd through BoE Investment Partners and Fenchurch
Investment (Pty) Ltd do not currently have a shareholding in any company involved in a
similar business to the Eveready business, nor do they supply any goods or services to the
Eveready business. Apart from BOE the other shareholders are investment vehicles
owned by current Eveready management.
The target firm is the Eveready division of Gillette South Africa (Pty) Ltd (“Gillette”).
Gillette is a wholly owned subsidiary of The Gillette Company Inc, registered in the
United States of America.
Rationale for the transaction
According to Gillette it decided to shift its strategic global focus to the alkaline batteries
segment with the result that its zinc battery business, the business that Eveready is
involved in, does not fit this strategy anymore. Gillette believes that a management led
company with a primary focus on zinc products is more likely to succeed in developing
and realising the profit potential of the zinc battery business in Southern Africa than
Gillette with its global focus.
Effect on competition
The Eveready division is involved in the manufacture, distribution, marketing and sale of
Zinc Chloride and Zinc Carbon batteries for South and Southern Africa. Since the
acquiring firm is a special purpose vehicle that has never traded there is no product
overlap in either the horizontal or vertical product markets.
The transaction will result in a new player entering the market. Gillette’s market share of
86% in the total battery market will be eroded after the merger, leaving Gillette with the
more expensive Duracell brand. 1 The Eveready brand, which mainly focuses on the
middle to lower end of the market, enjoys a market share of 71% and the Duracell brand
a market share of 15%.
Public interest
The transaction will not result in any retrenchments and does not raise any other public
interest grounds.
27 February 2003
N. Manoim Date
Concurring: D. Lewis and U. Bhoola
1 Duracell is an alkaline battery. Although both alkaline and zinc batteries are functionally similar, price
differences and product features may determine whether they can be considered substitutes in the
competition law sense, but this is not an issue we have to decide.
2