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[2015] ZACT 143
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Diageo Africa B.V v Newshelf 1167 t/a United National Breweries SA (021196) [2015] ZACT 143 (28 May 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: 021196
In
the matter between:
Diageo
Africa B.V
Primary Acquiring Firm
And
Newshelf
1167 t/a United National Breweries SA
Primary Target Firms
Panel
: Yasmin Carrim (Presiding Member)
: Mondo Mazwai (Tribunal
Member)
: Anton A Roskam
(Tribunal Member)
Heard
on
: 13
May 2015
Order
Issued on : 13 May 2015
Reasons
Issued on : 28 May 2015
Non
Confidential Reasons for Decision
Approval
[1]
On 13 May 2015, the Competition Tribunal ("Tribunal")
unconditionally approved
the merger between Diageo Africa B.V
("Diageo") and Newshelf 1167 Va United National Breweries
SA ("UNB").
[2]
The reasons for approving the proposed transaction follow.
Parties
to transaction
Primary
acquiring firm
[3]
The primary acquiring firm Diageo is a firm incorporated and
registered in Netherlands.
It is listed on the New York Stock
Exchange and the London Stock Exchange. It is not controlled by a
single shareholder but its
largest shareholder is BlackRock
Investment Management (UK) Limited and Capital Research and
Management Company.
[4]
UNB is incorporated in South Africa and is jointly controlled by
Diageo and Pestello
Investments. UNB solely controls the following
South African private companies, Reldann Investments No. 12
Proprietary Limited
("Reldann") and
Primary
target firm
[5]
The primary target firms in this group, the UNB Group is made up of
UNB, Reldann and
[6]
The UNB group manufactures traditional African sorghum beer
(Umqombothi) and Mageu
in South Africa. These products are
distributed from four breweries and various distribution depots
situated around South Africa
with the exception of the Western Cape.
Proposed
transaction and rationale
[7]
The proposed transaction involves Diageo, who already holds 50% of
UNB acquiring the
remaining 50% from Pestello Investments.
[8]
The target firms submitted that its intention to sell is due to the
fact that this
will be an opportunity to sell to a purchaser who
intends to grow the business.
Impact
on competition
[9]
According to the Competition Commission's ("the Commission")
findings the
proposed transaction is unlikely to alter the existing
competitive structure in the affected markets given Diageo's
pre-existing
shareholding of 50%.
[10]
The Commission further found that the merging entity will be unable
to unilaterally increase prices post-merger and it has
limited
incentives to so considering the presence of other competitors such
as SAB and Distillers that operate in the affected
market.
[11]
The Commission also investigated the possibility of coordinated
effects. The Commission was of
the view that coordination in this
case may be difficult to sustain in a market which comprises of a
large number of firms as it
may be challenging for firms to align
their individual behaviour and agree on common terms. Further, the
products involved are
non- homogenous and the merger, from joint to
sole control, does not assist in facilitating coordination as it does
not alter the
market. Based on these findings the Commission found
that typical conditions to facilitate coordination are not present in
this
case.
[12]
We concur with the Commission's competition assessment, i.e. that the
proposed transaction is
unlikely to substantially prevent or lessen
competition in any relevant market. We further agree that it is
unlikely that the transaction
would result in coordination.
Public
interest
[13]
The merging parties confirmed that the proposed transaction will not
result in an adverse impact
on employment.
[1]
The proposed transaction further raises no other public interest
concerns.
Conclusion
[14]
In light of the above, we conclude that the proposed transaction is
unlikely to substantially
prevent or lessen competition in any
relevant market. In addition, no public interest issues arise from
the proposed transactions.
Accordingly, we approve the proposed
transaction unconditionally.
Yasmin
Carrim
28 May 2015
DATE
Mondo
Mazwai and Anton A Roskam concurring
Tribunal
Researcher:
Aneesa Raval
For the merging
parties:
Antony Norton of
Nortons Inc
For the Commission:
Daniela Bove and
Grashum Mutizwa
[1]
Inter
alia
merger record page 7.