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[2015] ZACT 93
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AECI Ltd v Southern Canned (Pty) Ltd (LM039Jun15) [2015] ZACT 93 (29 July 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM039Jun15
In
the matter between:
AECI
LTD
Primary Acquiring Firm
And
SOUTHERN
CANNED
(PTY)
LTD
Primary Target Firm
Panel
: Y Carrim (Presiding Member)
: N Manoim (Tribunal
Member)
: A Ndoni (Tribunal
Member)
Heard
on
: 8 July 2015
Order
Issued on
: 8 July 2015
Reasons
Issued on
: 29 July
2015
Reasons
for Decision
Approval
[1]
On 8 July 2015, The Competition Tribunal
("Tribunal")
unconditionally approved the acquisition by AECI Limited
("AECI")
of the entire issued share capital in Southern Canned Products
(Ply) Ltd
("SCP").
[2]
The reasons for approving the proposed transaction follow.
Parties
to the transaction
Acquiring
firm
[3]
The
primary
acquiring
firm
is AECI,
a company
not
controlled
by any one
firm.
[1]
AECI
controls
various
firms
nationally
and
internationally.
Relevant
to
the
proposed
transaction
is Lake
Foods (Pty) Ltd
("Lake
Foods"),
a
division of AECI.
[4]
Lake Foods supplies food additives such as ascorbic acid,
preservatives and thickeners to manufacturers and suppliers
of
speciality ingredients and commodities products and services in the
diary, beverage, wine, meat, bakery, health and nutrition
industries.
Lake food does not manufacture nor supply any fruit juice-based
products or olive oil products.
Target
firm
[5]
The target firm is SCP, a company jointly controlled by
Gerber Goldschmidt Group SA (Pty) Ltd, GGI AG and the management
of
SCP. SCP controls Olive Pride (Pty) Ltd
("Olive Pride").
[6]
SCP supplies bulk fruit juice concentrate, purees and pulps. It also
manufactures formulated fruit concentrates and emulsions
to juice
brand owners in the manufacturing industry. SCP also m;;rnufactures
and supplies branded olive and seed
oils to
retailers.
Proposed
Transaction
and
Rationale
[7]
AECI intends to acquire the entire issued share capital of SCP. Post
- merger AECI will have sole control of SCP.
[8]
According to AECI, the proposed transaction presents
growth opportunities within the food additives
market. The proposed transaction will allow SCP's current
shareholders to realise its investment.
Relevant
Market and Impact on Competition
[9]
The Competition Commission
("Commission")
considered the activities of the merging parties to
determine the relevant market. It found there is no horizontal
overlap between the merging parties' activities.
[10]
The Commission found there is a vertical overlap as AECI, through
Lake Foods, supplies additives and colourants to fruit juice
based
product manufacturers and suppliers that compete with SCP. The
Commission considered the upstream market to be the market
for the
supply of additives and colourants and the downstream market to be
the market for the manufacture and supply of fruit-juice
based
products.
[11]
The Commission was of the view that AECI is a small
player in the upstream market, for the supply
of
additives and colourants, where other larger players are also
present, such as Du Pont Nemours SA (Pty) Ltd, Danisco SA (Pty)
Ltd,
Bidfood Solutions (Pty) Ltd, Technologies Division (8.F.T) and CJ
Petrow Company (Pty) Ltd.
[12]
In the downstream market for fruit juice based products, SCP has an
estimated market share between 10 - 20%. There are
thus other
potential customers to supply additives and colourants to. Moreover
the suppliers of additives and· colourants
indicated that they
also supply to other sectors such as, agriculture,
pharmaceuticals, lubricants and
coatings. Therefore the Commission is
of the view that the proposed transaction is unlikely to result in
customer foreclosure
[13]
The transaction is therefore unlikely to raise any foreclosure
concerns.
[14]
The Commission accordingly concluded that the proposed transaction is
unlikely to substantially prevent or lessen competition
in the
relevant market. We agree with this assessment.
Public
Interest
[15]
The transaction does not raise any public interest concerns.
Conclusion
[16]
In light of the above we concluded that the proposed transaction was
unlikely to substantially prevent or lessen competition.
Accordingly
we approved the proposed transaction unconditionally.
29
July 2015
DATE
____________________
Ms
Carrim
Mr
N Manoim and Ms A Ndoni concurring
Tribunal
Researcher:
Moleboheng Moleko
For
the merging parties:
Tanya Haskins, Norton Rose Fulbright
For
the Commission:
Hugh Dlamini, Seema Nunkoo and Xolela Nokele.
[1]
AECl's top shareholders include:
Coronation
Asset
Management
(Ply) Ltd, Public Investment Corporation,
Kagiso
Asset
Management
(P
l
y)
Ltd, Old Mutual Investment Group (Pty) Ltd and Allan Gray Investment
Council.