COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case no.: 76/LM/Aug05
In the large merger between:
Spar Group Ltd
and
Sparit Family Supermarkets (Pty) Ltd
Reasons
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Introduction
1. On 8 September 2005 the Tribunal approved the merger between Spar
Group Ltd and Sparit Family Supermarkets (Pty) Ltd. The reasons are set
out below.
The transaction
2. The Spar Group will acquire three retail supermarket businesses and two
retail liquor outlets businesses, all owned by Sparit Supermarkets.
3. The Spar Group Ltd (“Spar Group”), which also controls Nelspruit
Wholesalers (Pty) Ltd in South Africa, is a public company listed in the
JSE.
4. Sparit Family Supermarkets (PtY) Ltd (“Sparit Supermarkets”) consists of
the following retail businesses:
• Komati Spar, a retail store in Komatipoort,
• Hoedspruit Spar, a retail store in Hoedspruit,
• Greenview Spar, a retail store in Sabie,
• Mr Cellars Komati, a retail liquor store in Komatipoort, and
• Mr Cellars Sabie, a retail liquor store in Sabie
Rationale of the transaction
5. Spar submits that the transaction is a purely defensive strategy in order to
keep the stores as Spar retail outlets. Spar Group intends to sell the
stores as soon as possible to owners who will continue to operate them
independently as Spar stores. It would appear that the owners are free to
sell their businesses to other retailers and Spar is anxious to prevent
these stores falling into the hands of a rival chain who would rebrand
them.
Background
6. The Spar Group Ltd (“Spar”) is a buying organization, which purchases,
warehouses and distributes merchandise to and on behalf of its Spar
Guild members. It owns six distribution centers, in Johannesburg,
Olifantsfontein near Pretoria, Durban, Cape Town, Port Elizabeth and
Nelspruit, which service the 773 Spar stores throughout South Africa and
neighbouring countries. The members are expected, but not obliged, to
purchase most of their requirements from the Spar distribution centers or
through nominated drop shipment suppliers.
Effect on competition
7. Spar and its Guild members do not compete with each other but are in a
vertical relationship. Spar trades in the wholesale market for household
grocery products and its Guild members in the retail sector.
8. Whilst the rationale for the merger may be a preemptive strike to prevent
a rival retailer getting hold of prime retail locations in the various local
markets the merger does no more than preserve the status quo – a Spar
retailer was in these sites premerger and will be so post merger. The
merger would therefore not lead to a substantial lessening or prevention
of competition.
Public interest issues
of competition.
Public interest issues
9. No significant public interest issues arise from this transaction.
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____________ 16 September 2005
N. Manoim Date
Concurring: L. Reyburn and Y. Carrim
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