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[2014] ZACT 3
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Shoprite Checkers Proprietary Limited v Gaterite Hypermarket, The Businesss of NAFAWA Trading CC (018226) [2014] ZACT 3; [2014] 1 CPLR 135 (CT) (8 April 2014)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: 018226
In the matter
between;
SHOPRITE
CHECKERS PROPRIETARY
LIMITED
...........................................
Primary
Acquiring Firm
And
GATERITE
HYPERMARKET, THE BUSINESS OF
NAFAWA TRADING
CC
.................................................................................................
Primary
Target Firm
Panel: Mondo Mazwai
(Presiding Member)
: Medi Mokuena
(Tribunal Member)
: Andiswa Ndoni
(Tribunal Member)
Heard on: 12 March
2014
Order Issued on: 12
March 2014
Reasons Issued on: 8
April 2014
Reasons for
Decision
Approval
[1] On 19 March 2014
the Competition Tribunal (“the Tribunal”) unconditionally
approved an acquisition by Shoprite Checkers
Proprietary Limited of
Gaterite Hypermarket, the supermarket business of Nafawa Trading CC.
[2] The reasons for
unconditionally approving the proposed transaction follow.
Parties to the
Transaction
Primary acquiring
firm
[3] The primary
acquiring firm is Shoprite Checkers Proprietary Limited (“Shoprite”),
a company incorporated in terms
of the laws of South Africa. Shoprite
is involved in the retail and distribution of Fast Moving Consumer
Goods.
[4] Shoprite is
wholly controlled by Shoprite Holdings Limited (“Shoprite
Holdings”). Shoprite Holdings operates 1482
corporate and 381
franchise outlets in 17 countries across Africa, including South
Africa.
Primary target
firm
[5] The primary
target firm is the supermarket business of Nafawa Trading CC
(“Nafawa”) known as Gaterite Hypermarket
(“Gaterite”).
Nafawa is a single member close corporation trading in accordance
with the laws of the Republic of South
Africa. Nafawa operates two
businesses, Gaterite and a wholesale business known as Gaterite
Powertrade. Both businesses are situated
in Verulam, Kwa-Zulu Natal.
Proposed
Transaction
[6] The proposed
transaction involves an acquisition by Shoprite of the supermarket
business of Nafawa as a going concern; and the
lease of the premises
currently occupied by the target firm.
Rationale
[7] Shoprite
believes that it is underrepresented in the Verulam area and thus
wishes to expand its presence in the area. Furthermore,
Shoprite has
recently established a distribution centre near Verulam and considers
acquiring the target firm to be sensible in
light thereof.
[8] Gaterite is
managed by the sole member of Nafawa who finds the management thereof
to be too onerous.
Relevant Market
and Impact on Competition
[9]
Shoprite is involved in the retail sale of Fast Moving Consumer
Goods
1
(“FMCG”) while Gaterite is an owner managed halaal
supermarket business. The Commission found the relevant market to
be
that for the retail of groceries and general merchandising.
[10]
The merging parties and the Commission agree that the geographic
market for a supermarket is generally local. Accordingly,
the
geographic market was defined narrowly as that falling within a 2km
radius of the target firm.
2
[11] Pre-merger,
Shoprite holds a market share of between 5% and 15% while Gaterite
holds about 30%. The proposed transaction will
result in Shoprite
holding a market share between 35% and 45%, post-merger. According to
the Commission, the merged entity is unlikely
to have market power
post-merger as it will remain constrained by large players in the
Verulam area such as Pick ‘n Pay,
Spar and Checkout
Supermarket, and numerous smaller competitors.
Public Interest
[12] No public
interest concerns were identified by the Commission or by the merging
parties.
Conclusion
[13] In light of the
above we conclude that the proposed transaction is unlikely to
substantially prevent or lessen competition
in the relevant market.
Accordingly, we approve the transaction unconditionally.
8 April 2014
DATE
MONDO MAZWAI
Medi Mokuena and
Andiswa Ndoni concurring
Tribunal Researcher:
Shannon Quinn
For the merging
parties: Petra Krusche - DLA Gliffe Dekker Hofmeyr
For the Commission:
Thelani Luthuli and Grashum Mutizwa
1
Fast
Moving Consumer Goods include groceries, food, household, health,
beauty, lifestyle consumer products, clothing, home ware,
textiles
and cellular phone products.
2
This
narrow geographic market was identified in light of the feet that
customers in the Verulam area rely fairly heavily on public
transport
and are deemed unlikely to shop outside of this 2km radius. It is to
be noted however that the narrow market may cause
market shares to be
inflated.