COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:61/LM/JUL11
In the matter between:
BLUE FALCON 134 TRADING (PTY) LTD Acquiring Firm
And
DENNY MUSHROOMS (PTY) LTD Target Firm
Panel : Norman Manoim (Presiding Member)
Andreas Wessels (Tribunal Member)
Andiswa Ndoni (Tribunal Member)
Heard on : 31 August 2011
Order issued on : 31 August 2011
Reasons issued on : 07 September 2011
Reasons for Decision
Approval
1] On 31 August 2011, the Competition Tribunal (“Tribunal”) approved the large
merger between Blue Falcon 134 Trading (Pty) Ltd and Denny Mushrooms
(Pty) Ltd. We explain below our reasons for this conclusion.
The Parties to the transaction
2] The primary acquiring firm is a shelf company known as Blue Falcon 134
Trading (Pty) Ltd (“Blue Falcon”). Upon completion of the proposed
transaction, Blue Falcon’s majority shares will be owned 49.9% by RMB
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Ventures 6 (Pty) Ltd (“RMBV 6”), the investment banking arm of FirstRand
Limited (“FirstRand”). As the remaining shareholders only have minority
stakes which do not confer any form of control, RMBV6 will have material
influence over Blue Falcon.
3] The primary target firm is Denny Mushrooms (Pty) Ltd (“Denny”), a subsidiary
of AVI Limited (“AVI”).
4] In terms of the transaction, Blue Falcon will acquire Denny’s entire issued
ordinary share capital from AVI and all AVI claims against Denny.
The Rationale
5] According to the merging parties, the transaction is as a result of a decline in
the importance of branding in the “fresh to produce” and in the fresh
mushroom segments, which has resulted in this category no longer being
strategically aligned to AVI’s growth ambition.
The parties’ activities
6] As a shelf company, Blue Falcon has no activities. However, its controlling
company, RMBV6, is involved in the provision of equity funding to a variety of
firms. Its parent company, FirstRand, specialises in providing banking and
insurance products and services to retail, commercials, corporate and public
sectors customers in South Africa and several other African countries.
7] Denny is involved in the business of selling a range of mushrooms and value-
added mushroom products and cook-in sauces.
The relevant market and the impact on competition
8] There is no overlap in the activities of the merging parties as Blue Falcon’s
controlling firms are not active in the market for producing and processing of
fresh and canned mushrooms, the market in which Denny is active. It was
also submitted that neither of Blue Falcon’s controlling shareholders owns nor
controls any interest in Denny’s competitors.
9] Therefore, the Commission found that the transaction will not substantially
prevent or lessen competition in the relevant market.
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CONCLUSION
10] The parties submitted that the proposed transaction will not result in
employments losses. The proposed transaction does not raise any other public
interest issues.
11] We agree with the Commission’s conclusion above and find that the merger is
unlikely to lead to any substantial prevention or lessening of competition in the
relevant market. Accordingly, we approve the above merger unconditionally.
____________________ 07 September 2011
NORMAN MANOIM DATE
Andreas Wessels and Andiswa Ndoni concurring
Tribunal Researcher: Tebogo Hlafane
For the merging parties: Bowman Gilfillan Inc.
For the Commission: Zanele Hadebe
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