COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 01/LM/Jan12
In the matter between:
Lodestone Brands (Pty) Ltd Acquiring Firm
And
Dynamic Brands (Pty) Ltd Target Firm
Panel : Andreas Wessels (Presiding Member)
Medi Mokuena (Tribunal Member)
Taki Madima (Tribunal Member)
Heard on : 07 March 2012
Reasons issued on : 12 April 2012
Reasons for Decision
Approval
1] On 07 March 2012 the Competition Tribunal (“Tribunal”) approved the
merger between Lodestone Brands (Pty) Ltd and Dynamic Brands
(Pty) Ltd. The reasons for approval follow below.
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Parties to transaction and their activities
2] The primary acquiring firm is Lodestone Brands (Pty) Ltd
(“Lodestone”), a private company incorporated in terms of the laws of
the Republic of South Africa. Lodestone is controlled as to 60% of its
issued share capital by Standard Chartered Private Equity (Mauritius)
III Limited (“SCPE”). SCPE is a wholly owned subsidiary of Standard
Chartered Bank PLC (“SCB”).
3] Lodestone controls Candy Tops (Pty) Ltd, Cyndara 224 (Pty) Ltd
(“Cyndara”) and Mister Sweet (Pty) Ltd. Cyndara controls National
Pride Trading 4 (Pty) Ltd. Lodestone, through these subsidiaries, is
active in South Africa in the manufacturing, marketing and distribution
of a wide range of confectionery products, as well as the
manufacturing, marketing and distribution of baby diapers.
4] The target firm is Dynamic Brands (Pty) Ltd (“Dynamic Brands”), a
private company incorporated in terms of the laws of the Republic of
South Africa. Dynamic Brands is not controlled by any firm. Dynamic
Brands controls Eezipak Manufactures (Pty) Ltd (“Eezipak”).
5] Dynamic Brands manufactures dairy based concentrated beverages
and nectar based concentrated beverages. Dynamic Brands also
packages its own products (this includes the blowing of bottles, the
bottling of products, labelling, coding, packing, palletizing and
warehousing). Eezipak is responsible for manufacturing the bottles in
which the concentrated beverages are packaged.
Proposed transaction and rationale for transaction
6] Pursuant to the proposed transaction, Lodestone will own 51% of the
entire issued share capital of Dynamic Brands.
7] Lodestone submitted that it wishes to establish and grow a diverse
portfolio of businesses within the Fast Moving Consumer Goods
(“FMCG”) sector through the implementation of the proposed
transaction (and other potential acquisitions in the future).
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8] The existing shareholders of Dynamic Brands view the proposed
transaction as an opportunity to realise a return on their investment and
to secure the growth of Dynamic Brands going forward.
Impact on competition
9] There is no overlap between the activities of the merging parties since
Lodestone and the SCB Group do not sell any products or provide any
service in South Africa which can be considered by buyers as
reasonably interchangeable with, or substitutable for, any products or
services provided by Dynamic Brands in South Africa. In addition, none
of the firms in the SCB Group are in a vertical relationship with
Dynamic Brands.
10]We therefore conclude that the proposed transaction is unlikely to
result in a substantial prevention or lessening of competition in any
relevant market.
Public interest
11]The merging parties in their merger filing 1 and at the merger hearing 2
confirmed that the proposed merger will not give rise to any job losses
(including retrenchments, redundancies and the like) in South Africa.
12]According to the Competition Commission’s report, the Food and Allied
Workers Union (FAWU) on 26 January 2012 filed a notice of intention
to participate in the merger proceedings. FAWU raised concerns in
relation to the impact of the merger on current jobs, conditions of
employment and future employment at Dynamic Brands; current
business arrangements between Dynamic Brands and Summerpride
Foods (Pty) Ltd (“Summerpride”); fear of a certain future acquisition by
Lodestone and its impact on workers; and a current Collective
Agreement between FAWU and Dynamic Brands regarding gains
sharing that is currently at the Commission for Conciliation Mediation
and Arbitration (“CCMA”) level.
1 See pages 13 and 68 of merger record.
2 Transcript page 6.
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13]The Commission engaged thoroughly with FAWU and the merging
parties regarding these concerns. The Commission investigated each
of the above-mentioned concerns raised by FAWU and ultimately
found them to be either unsubstantiated and unlikely or unrelated to the
current proposed merger.3 FAWU did not attend the Tribunal hearing.
14]Based on the above, we conclude that the proposed deal raises no
significant public interest concerns.
CONCLUSION
15]We approve the proposed transaction unconditionally.
____________________ 12 April 2012
Andreas Wessels DATE
Medi Mokuena and Taki Madima concurring
Tribunal researcher: Thabo Ngilande
For the merging parties: Edward Nathan Sonnenbergs Inc
For the Commission: Jabulani Ngobeni
3 The full details of this can be found in the Commission’s recommendation, see paragraph
7.1 of the Commission’s report. Also see transcript, pages 1 to 7.
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