COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 11/LM/Jan09
In the matter between:
Clidet No 817 (Pty) Ltd Acquiring Firm
And
Amalgamated Beverage Industries Target Firm
Panel : D Lewis (Presiding Member) N Manoim, (Tribunal Member),
and Y Carrim (Tribunal Member)
Heard on : 4 February 2009
Order Issued : 4 February 2009
Reasons Issued: 27 February 2009
Reasons for Decision
Approval
[1] On 4 February 2009, the Tribunal unconditionally approved the merger
between Clidet No. 817 (Pty) Ltd and Amalgamated Beverages Industries. The
reasons for approving the transaction follow.
The parties
[2] The primary acquiring firm is Clidet No. 817 (Pty) Ltd (“Newco”), a company
incorporated under the company laws of the Republic of South Africa. Newco is
a wholly owned subsidiary of Waveside (Pty) Ltd, which is controlled by Coca
Cola Africa (Pty) Ltd (“Coca-Cola Africa”). Coca-Cola Africa controls Coca-Cola
Canners of Southern Africa (Pty) Ltd (Coca-Cola Canners”).
[3] Coca-Cola Africa is controlled by The Coca-Cola Export Corporation (“The
Coca-Cola Export Corporation”), a company incorporated in the United States
of America. The Coca-Cola Export Corporation is controlled by the Coca-Cola
Company (“The Coca-Cola Company”). The Coca-Cola Company controls
various subsidiaries worldwide.
[4] The primary target firm is the Valpre Manufacturing Plant (“Valpre Plant”) which
is currently owned by Amalgamated Beverages Industries (“ABI”), a division of
the South African Breweries Limited (“SAB”). ABI controls Valaqua and SAB
controls Appletiser (Pty) Ltd.
Description of the transaction
[5] In terms of the proposed transaction, Waveside, through Newco, intends to
acquire the assets comprising the Valpre Plant which is owned by ABI. On
completing the transaction, the Valpre Plant will be controlled by Newco, which
is ultimately controlled by The Coca-Cola Company.
Rationale for the transaction
[6] The parties submitted that this transaction has been concluded pursuant to
Waveside exercising its right of first refusal. In 2003, The Coca-Cola Company
acquired the Valpre and Just Juice trademarks from SABMiller Finance B.V.
(“SABMiller”). The Coca-Cola Company in turn licensed the trademarks to its
subsidiary Waveside. 1 Waveside and Appletiser South Africa (Pty) Ltd
(“Appletiser SA”) entered into a manufacturing agreement in terms of which
Appletiser SA would continue to manufacture, on behalf of Waveside, both the
Valpre and Just Juice trademarks for a period of five years. This agreement
expired in April 2008.
[7] The parties further submitted that in terms of the expired manufacturing
agreement, Waveside has a right of first refusal to purchase the Valpre plant
from ABI in the event that the parties are unable to reach an agreement on the
terms of manufacture. The parties submitted that Waveside’s right of first
refusal has been triggered as the parties failed to agree on the terms of
manufacture. Waveside has opted to purchase the Valpre Plant from ABI
THE PARTIES’ ACTIVITIES
Primary acquiring firm
Newco
[8] Newco is a newly formed company that has not traded before. It is a wholly
owned subsidiary of Waveside.
1 See transcript page 2.
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Waveside
[9] Waveside is the holder of a license to use the Valpre trademark pursuant to an
agreement concluded between it and The Coca-Cola Company.
Coca-Cola Africa
[10] Coca-Cola Africa conducts business as a provider of marketing, promotional,
technical and quality control related services in relation to the manufacture,
sale, distribution and marketing of products identified under trademarks of The
Coca-Cola Company including, Valpre and Just Juice.
Coca-Cola Export Corporation
[11] The Coca-Cola Export Corporation is an investment holding company, which
holds certain of the assets and investments of The Coca-Cola Company
around the world, including shareholding in Coca-Cola Africa.
The Coca-Cola Company
[12] The Coca-Cola Company operates in non-alcoholic beverages and owns the
brands and related intellectual property rights in various non-alcoholic
beverags. It primarily manufactures and sells, either by itself or through
designated suppliers, concentrates, beverage bases and syrups to authorised
bottlers who are licensed to manufacture, sell, distribute and merchandise
finished branded products to their customers.
[13] The Coca-Cola Company’s brands in South Africa include Coca-Cola; Fanta;
Sprite; Coca-Cola Zero; Coca-Cola Light; Tab; Krest; Minute Maid; Bonaqua;
Valpre; Bibo; Power Play; Powerade; Sparletta; Twist; and those brands
licensed to The Coca-Cola Company or owned by The Coca-Cola Company’s
affiliate companies, such as Schweppes.
Primary target firm
Valpre Plant
[14] The Valpre Plant produces and packages Valpre Still and Sparkling water on
behalf of the Coca-Cola Company for exclusive supply to other licensed aand
authorised bottlers of The Coca-Cola Company in South Africa.
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Competition analysis
[15] There is no overlap in the activities of the merging parties as they are in a
supplier-customer relationship since ABI manufactures, packages and sells
Valpre bottled water to the licensed bottlers on instructions for and on behalf of
Waveside. There will, therefore, be no change in market shares or market
concentration as a result of the proposed transaction.
[16] The Commission and the parties submitted that the proposed transaction will
result in vertical integration as ABI’s Valpre Plant currently prepares and
packages Valpre water for Waveside in terms of a manufacturing agreement
entered into between Waveside and Appletiser SA. However, the vertical
integration is unlikely to raise any foreclosure concerns as the Valpre Plant
presently produces and packages exclusively for Waveside. There will
therefore be no change in the competitive landscape.
Public Interest
[17] There are no public interest issues.
Conclusion
[18] The merger is approved unconditionally.
________________ 27 February 2009
Y Carrim DATE
Tribunal Member
D Lewis and N Manoim concurring.
Tribunal Researcher : R Kariga
For the merging parties: Cliffe Dekker Hofmeyr Attorneys
For the Commission : K Mahlakoana (Mergers and Acquisitions)
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