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[2015] ZACT 47
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Pick 'n Pay Retailers (Pty) Ltd v Trio Belville (Pty) Ltd (LM242Mar15) [2015] ZACT 47 (3 June 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM242Mar15
DATE:
03 JUNE 2015
In
the matter between:
Pick
'
n Pay Retailers (Pty)
Ltd
.......................................................................
Primary
Acquiring Firm
And
Trio
Belville (Pty)
Ltd
............................................................................................
Primary
Target Firm
Panel
: Andreas Wessels (Presiding Member)
Prof
Fiona Tregenna (Tribunal Member)
Medi
Mokuena (Tribunal Member)
Heard
on
: 27 May 2015
Order
issued on :
27 May 2015
Reasons
issued on : 03 June 2015
Reasons
for Decision
Approval
[1]
On 27 May 2015, the Competition Tribunal
(“Tribunal”) unconditionally approved the large merger
between Pick ‘n
Pay Retailers (Pty) Ltd (“Pick ‘n
Pay Retailers”) and Trio Belville (Pty) Ltd (“Trio
Belville”) in
respect of (i) the Boston Franchise Pick ‘n
Pay Supermarket and the Franchise Pick ‘n Pay Liquor store
(“the
Boston Store”); and (ii) the Weigemoed Franchise
Pick ‘n Pay Supermarket and the Franchise Pick ‘n Pay
Liquor
store (“the Weigemoed store”).
[2]
The reasons for approving the
transaction follow,
Parties
to the transaction
[3]
The primary acquiring firm is Pick ‘n
Pay Retailers. Pick ‘n Pay Retailers is a wholly-owned
subsidiary of Pick ‘n
Pay Stores Limited (“Pick ‘n
Pay”), a public company listed on the Johannesburg Stock
Exchange.
[4]
Pick ‘n Pay is a multi-format,
multi-channel retailer. It operates
inter
alia
supermarkets in various
formats that focus on the supply of fast moving consumer goods.
[5]
The primary target firms are the Boston
Store and the Welgemoed Store, which are both controlled by Trio
Belville pre-merger. Trio
Belville is a private company incorporated
in accordance with the laws of the Republic of South Africa.
[6]
Both the Boston Store and the Welgemoed
Store are Pick ‘n Pay franchise supermarkets with adjacent
liquor stores. The stores
are respectively located in Boston and
Welgemoed in the Western Cape.
Proposed
transaction
[7]
Pick ‘n Pay Retailers intends to
acquire the entire issued share capital of the Boston Store and the
Welgemoed Store (hereinafter
collectively referred to as the “target
stores”) as going concerns from Trio Belville.
Competition
assessment
[8]
The Competition Commission
(“Commission”) considered the activities of the merging
parties and found that there is a
horizontal overlap in the retail
sale of grocery products and liquor products. The Commission also
found that there is a vertical
relationship between the merging
parties since Pick ‘n Pay Retailers supplies goods to the
target stores.
[9]
The Commission identified two relevant
product markets i.e. the retail sale of (i) grocery products; and
(ii) liquor products. In
both instances the Commission in its
competition analyses considered a geographic market of a three
kilometre radius from the target
stores.
[10]
Although
the post-merger market shares of Pick ‘n Pay in the retail sale
of both grocery products and liquor products in a
three kilometre
radius from the Boston Store will be relatively high, the Commission
was comfortable that the merged entity will
continue to face
competition in the retail sale of grocery products from Spar
Welgedagte, Checkers Willowbridge and Food Lovers
Market Willowbridge
and players such as Tops (Spar) Welgedagte, Picardi Rebel, Glen
Liquor and Checkers Willowbridge in the retail
sale of liquor
products.
[11]
The
same applies to the Welgemoed Store, but again the Commission was
comfortable that the merged entity will continue to face competition
in the retail sale of grocery products from players such as Shoprite
Checkers (Parrow and Belville), Checkers Oakdale and Spar
Parrow and
players such as Checkers Parrow, Tops/Spar Parrow and Vinolentia
Liquor in the retail sale of liquor products.
[12]
We
concur with the Commission that the proposed transaction is unlikely
to substantially prevent lessen competition in the identified
relevant product markets given that a sufficient number of
alternatives are still available to consumers in the immediate
geographic
areas surrounding the target stores.
[13]
In
relation to the above-mentioned vertical relationship the Commission
found that the target stores purchase stock from Pick ‘n
Pay
Retailers and the Pick and Pay distribution centres. The Commission
however found that since the majority of products procured
by the
target firms are currently procured in- house, the proposed
transaction will not alter the structure of the market. The
Commission thus concluded that the proposed transaction is unlikely
to result in any post-merger foreclosure concerns. We agree
with the
Commission’s conclusion.
Public
interest
[14]The
merging parties confirmed that the proposed transaction will not have
any adverse effect on employment in South Africa.
[I]
[15]
The
proposed transaction furthermore raises no other public interest
concerns.
CONCLUSION
[16]
We
agree with the Commission’s finding that the proposed
transaction is unlikely to substantially prevent or lessen
competition
in any relevant market. In addition, the proposed
transaction raises no public interest concerns. We therefore approve
the proposed
transaction without conditions.
03
June 2015
DATE
Mr
Andreas Wessels
Prof
Fiona Tregenna and Ms Medi Mokuena concurring
Tribunal
Researcher: Caroline Sserufusa
For
the merging parties: Warwick Radford of Nortons Inc
For
the Commission: Kgashane Kgomo
[I]
See pages 10 and 78 of the merger record.