SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this
document in compliance with the law and SAFLII Policy
competitio-ntribunal
il: o ti t k R f r l a
COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: FTN131Sep15
In the matter between:
The Competition Commission of South Africa
And
Fruit & Veg City Holdings Proprietary Limited
Fruit & Veg City SA Proprietary Limited
Everfresh Wholesale Proprietary Limited
Appl icant
1st Respondent
2nd Respondent
3rd Respondent
And in the matter between
The Competition Commission of South Africa
And
Fruit & Veg City Proprietary Limited
Sandro Gastaldi
Luciano Gastaldi
Applicant
1•1 Respondent
2nd Respondent
3rd Respondent
Panel N Manoim (Presiding Member)
IValodia (Tribunal Member)
M Mokuena (Tribunal Member)
Heard on 07 October 2015
Decided on 07 October 2015
ORDER
The Tribunal hereby confirms the order as agreed to and proposed by the
Comp lion Commission and the respondents annexed hereto marked "A".
07 October
2015 Date
Concurring: Prof. I Valodia and Ms M Mokuena
1
IN THE COMPETITION TRIBUNAL OF SOUTH AFRICA
(HELD AT PRETORIA)
CC CASE NO: 2011 Jun0084
CT CASE NO: CR059JUN15
In the matter between:
THE COMPETITION COMMISSION OF SOUTH AFRICA Applicant
And
FRUIT & VEG HOLDINGS (PROPRIETARY) LIMITED First Respondent
FRUIT & VEG CITY SA (PROPRIETARY) LIMITED Second Respondent
EVERFRESH WHOLESALE. (PROPRIETARY) LIMITED Third Respondent
CT Case No: CR060JUN15
CC Case No: 2012Aug0468
And in the matter between:
THE COMPETITION COMMISSION
Applicant
And
FRUIT & VEG CITY (PROPRIETARY) LIMITED First Respondent
SANDRO GASTALDI Second Respondent
2
'
LUCIANO GASTALDI Third Respondent
FILING SHEET
TAKE NOTICE THAT the Competition Commission hereby files a Settlement
Agreement entered into between the Commission and the abovementioned
Respondents.
'
Signed at PRETORIA on this the ogth day of September 2015. l-
f
;
I
Korkoi Ayayee
;,;:
·- •" - ': _ ,-- - -
( 1iifm
oomf.1otll/1Jntrtb 1nat
.1//ll//J clji/1:ll
Junior Legal Counsel
Competition Commission
The dti Campus, Building C, Mulayo
77 Meintjies Street, Pretoria
2015 ··.
RECEIVED BY:
TIME:_ \ I. IS
Tel: (012) 394 3335
E-mail: korkoia@compcom.co.za
Ref: 2011Jun0084
TO: THE REGISTRAR OF THE COMPETITION TRIBUNAL
Block C DTI Campus
Competition Tribunal
Pretoria
Ref: Lerato Motaung
E-mail: leratom@comtrib.co.za
3
AND TO: ENS
Attorneys for the Respondents
150 West Street
Sandlan
Johannesburg
2196
Email: hsenekal@ensafrica.com
. :•
IN THE COMPETITION TRIBUNAL OF SOUTH AFRICA
(HELD IN PRETORIA)
CT Case No: CR059JUN15
CC Case No: 2011Jun0084
In the matter between
THE COMPETITION COMMISSION
and
FRUIT & VEG CITY HOLDINGS (PROPRIETARY) LIMITED
FRUIT & VEG CITY SA (PROPRIETARY ) LIMITED
EVERFRESH WHOLESALE (PROPRIETARY) LIMITED
Applicant
First Respondent
Second Respondent
Third Respondent
And in the matter between
THE COMPETITION COMMISSION
and
FRUIT & VEG CITY (PROPRIETARY) LIMITED
SANDRO GASTALDI
CT Case No: CR060JUN15
CC Case No: 2012Aug0468
Applicant
First Respondent
Second Respondent
LUCIANO GASTALDI Third Respondent
SETTLEMENT AGREEMENT BETWEEN THE COMPETITION COMMISSION AND
FRUIT & VEG CITY HOLDINGS (PROPRIETARY) LIMITED, FRUIT & VEG CITY SA
(PROPRIETARY) LIMITED, EVERFRESH WHOLESALE (PROPRIETARY) LIMITED,
FRUIT & VEG CITY (PROPRIETARY) LIMITED, SANDRO GASTALDI AND LUCIANO
GASTALDI IN RESPECT OF A CONTRAVENTION OF SECTION 13A(3) OF THE
COMPETITION ACT NO. 89 OF 1998, AS AMENDED.
Preamble
The Competition Commission ("Commission") and Fruit & Veg City Holdings
(Proprietary) Limited, Fruit & Veg City SA (Proprietary) Limited, Everfresh Wholesale
(Proprietary) Limited, Fruit & Veg City (Proprietary) Limited, Sandro Gastaldi and
Luciano Gastaldi (collectively referred to below as the "Respondents") hereby agree
that an application be made to the Competition Tribunal (''Tribunal") for the confirmation
of this Settlement Agreement as an order of the Tribunal in terms of section 490 read
with sections 58(1)(b) and 59(1)(d)(iv) of the Competition Act No. 89 of 1998, as
amended ("the Act"), on the terms set out below.
1. Definitions
For the purposes of this Settlement Agreement the following definitions shall apply:
1.1. "Act" means the Competition Act, 1998 (Act No. 89 of 1998), as amended;
1.2. "Commission" means the Competition Commission of South Africa, a
statutory body establi.shed in terms of section 19 of the Act, with its principal
place of business at Mulayo Building (Block C), the DTI Campus, 77 Meintjies
Street, Sunnyside, Pretoria, Gauteng;
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1.3. "Commissioner" means the Commissioner of the Competition Commission,
appointed in terms of section 22 of the Act;
1.4. "Everfresh" means Everfresh Wholesale (Proprietary) Limited, a private
company duly incorporated in accordance with the company laws of the
Republic of South Africa with its principal place of business at 10 Quality
Street, Mobeni, Durban;
1.5. "Everfresh distribution centre" means the distribution centre of Everfresh
situated at 1O Quality Street, Mobeni Durban;
1.6. "Everfresh merger transaction" means the intermediate merger transaction
filed with the Commission on 9 June 2011 under Commission case number
2011Jun0084;
1.7. "Everfresh Stores" means 10 retail stores namely: Everfresh Market Ballito
CC; Everfresh Market Berea CC; Everfresh Cowey Road CC; Everfresh
Market Hillcrest CC; Bridoon Trade and Investments 141 CC; Everfresh
Market Virginia; Riverbend Trade and Investment 11 CC; Fullsail 89 CC;
Verdana General Trading CC and Fast Pace Trade and Investment 13 (Pty)
Ltd;
1.8. "F&V City" means Fruit and Veg City (Proprietary) Limited, a private company
duly incorporated in accordance with the company laws of the Republic of
South Africa with its principal place of business at 2nd Floor, Thor Gardens,
Corner Odin and Viking Roads, Thornton, 7460, Cape Town. F & V City is a
wholly owned subsidiary of Fruit & Veg Holdings (Proprietary) Limited;
1.9. "F&V City SA" means F & V City SA (Proprietary) Limited, a private company
duly incorporated in accordance with the company laws of the Republic of
South Africa with its principal place of business at 2nd Floor, Thor Gardens,
Corner Odin and Viking Roads, Thornton, 7460, Cape Town. F & V City SA is
a wholly owned subsidiary of Fruit & Veg Holdings (Proprietary) Limited;
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!
1.10. "F&V Holdings" means Fruit and Veg City Holdings (Proprietary) Limited, a
private company duly incorporated in accordance with the company laws of
the Republic of South Africa with its principal place of business at 2nd Floor,
Thor Gardens, Corner Odin and Viking Roads, Thornton, 7460, Cape Town;
1.11. "Gastaldi brothers" means Luciano Gastaldi and Sandro Gastaldi;
1.12. "Gastaldi merger transaction" means the intermediate merger transaction
filed with the Commission on 6 August 2012 under Commission case number
2012Aug0468;
1.13. "Parties" means the Commission the Respondents, namely F&V Holdings,
F&V City SA , Everfresh, F&V City and the Gastaldi Brothers;
1.14. "Respondents" means F&V Holdings, F&V City SA , Everfresh, F&V City and
the Gastaldi Brothers;
1.15. "Settlement Agreement" means this agreement duly signed and concluded
between the Commission and the Respondents; and
1.16. "Tribunal" means the Competition Tribunal of South Africa, a statutory body
established in terms of section 26 of the Act, with its principal place of
business at Mulayo building (Block C), the DTI Campus, 77 Meintjies Street,
Sunnyside, Pretoria, Gauteng.
2. The Commission's investigations and findings
2.1 . On 30 June 2015, the Commission filed two (2) referrals for prior
implementation with the Tribunal with case numbers CR059Jun15 and
CR060Jun15 respectively. The first referral concerned a contravention of
section 13A(3) of the Act by F&V Holdings, F&V City SA and Everfresh. ("the
Everfresh merger transaction"). The second referral concerned a contravention
of section 13A(3) of the Act by F&V City and the Gastaldi Brothers ("the
Gastaldi merger transaction").
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The Everfresh merger transaction
2.2. During September 2010, F&V Holdings and Everfresh entered into a series of
inter-related agreements which resulted in F&V Holdings becoming the
franchisor of all the Everfresh Stores and the Everfresh distribution centre.
Everfresh in turn acquired a 50% shareholding in F&V City SA in terms of
section 12(1) of the Act.
2.3. The aforementioned inter-related agreements were as follows:
2.3.1. Franchise agreements between F&V Holdings and entities owning ten
retail stores that were previously operated under the Everfresh name ("the
Everfresh stores") dated 29 July 201O in terms which F&V Holdings
became the franchisor to all the Everfresh Stores. However unlike in
ordinary franchise agreements, the Everfresh Stores contributed
significant assets to the franchise agreements and the business of F&V
Holdings. Moreover, as part of the franchise agreements, the Everfresh
Stores were required to rebrand to F&V City and operate under the Food
Lovers' Market brand;
2.3.2. An agreement dated 29 July 2010 in terms of which Everfresh sold its
distribution centre in Durban to F&V City SA as a going concern and as
part of the consideration in this agreement, Everfresh acquired a 50%
shareholding in F&V City SA.
2.3.3. A shareholder's agreement dated 29 July 2010 between Everfresh and
F&V Holdings to govern their equal partnership in F&V City SA.
2.4. The net effect of the conclusion of the above inter-related agreement is that
they constituted one single indivisible merger transaction in terms of which:
2.4.1. Everfresh acquired joint control of F&V City SA; and
2.4.2. F&V Holdings acquired control of the Everfresh Stores and Everfresh
distribution centre.
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2.5. The Everfresh merger transaction met the threshold for a notifiable
intermediate merger,
2.6. The Everfresh merger transaction was entered into and implemented during
September 2010 and was not notified to the Commiss'1on as required in terms
of the Act The merger transaction was subsequently notified as an
intermediate merger by the merging parties only in June 2011 and was
approved by the Commission with conditions on 2 September 2011.
2.7, Consequently, F&V Holdings, F&V City SA and Everfresh implemented the
Everfresh merger transaction without the approval of the Commission in
contravention of section 13A(3) of the Act.
The Gastaldi merger transaction
2.8. During March 2010, F&V City and the Gastaldi brothers through a series of
inter-related agreements formed two (2) joint ventures which housed their
retail, distribution and wholesale businesses of grocery products respectively,
thus acquiring joint control of each other's business in terms of section 12(1) of
the Act.
2.9, In terms of the Gastaldi merger transaction, F&V City and the Gastaldi
brothers formed two joint ventures, namely, Fruit & Veg City (Western Cape)
(Proprietary Limited) (trading as "Retail Newco") and Zelpy 2916 (Pty) Ltd
(trading as "DC Newco"), DC Newco was used to house the Wholesaling
activities of F&V City1 and the wholesaling activities of the Gastaldi brothers2.
Retail Newco housed the retail activities of F&V City3 and the retail activities of
the Gastaldi brothers4
1 The warehouse and distribution businesses of F&V City consisted of the warehouse and distribution centre in Johannesburg
2 The warehouse and distribution businesses of the Gastaldi brothers consisted of the warehouse and distribution centre in Pretoria.
3 The retail business of F&V City consisted of; Fruit & Veg City Lenasia, Fruit & Veg City Bruma, Fruit & Veg City Viera and Fruit & Veg City Hlllfox.
4 The retail business of the Gastaldl brothers consisted of; Fruit & Veg City Pretoria, Fruit & Veg City Elarduspark, Fruit & Veg City Gateway, Fruit & Veg City
Montana, Fruit & Veg City Rustenburg, Fruit & Veg City Pretoria North, Fruit & Veg City Bela Bel.a, Fruit & Veg City Gezina and Fruit & Veg City Willows.
Page 7 of 11
2.10. The inter -related agreements between F&V City and the Gastaldi Brothers
were as follows:
2.10.1. An agreement dated 28 March 2012 in terms of which F&V City sold its
four retail stores to Retail Newco;
2.10.2. An agreement dated 28 March 2012 in terms of which the Gastaldi
brothers sold their retail stores to Retail Newco;
2.10.3. An agreement dated 1 August 2012 in terms of which F&V City sold its
warehouse and distribution centre located in Johannesburg to DC
Newco; and
2.10.4. An agreement dated 1 August 2012 in terms of which the Gastaldi
brothers sold. their warehouse and distribution centre located in Pretoria
to DC Newco.
2.11. The net effect of the conclusion of the above inter-related agreement is that
they constituted one single indivisible merger transaction in terms of which
F&V City and the Gastaldi brothers acquired joint control of the retail,
warehousing and distribution of each other's respective businesses in Gauteng
Province through their equal shareholding in Retail Newco and DC Newco.
2.12. The Gastaldi merger transaction met the threshold for a notifiable intermediate
merger.
2.13. The Gastaldi merger transaction was entered into and implemented during
March 2010 and was not notified to the Commission as required in terms of
the Act. The merger transaction was subsequently notified as an intermediate
merger by the merging parties only on 6 August 2012 and was approved by
the Commission without conditions on 25 September 2012.
2.14. Consequently, the F&V City and the Gastaldi brothers implemented the
Gastaldi merger transaction without the approval of the Commission in
contravention of section 13A(3) of the Act.
3. Admissions
3.1. In respect of the Everfresh merger transaction, F&V Holdings, F&V City SA and
Everfresh admit that the Everfresh merger transaction constituted a notifiable
intermediate merger as defined in section 11(S)(b) of the Act and was
implemented without the prior approval of the Commission in contravention of
section 13 A(3) of the Act.
3.2. In respect of the Gastaldi merger transaction, F & V City and the Gastaldi Brothers
admit that the Gastaldi merger transaction constituted a notifiable intermediate
merger as defined in section 11(5)(b) of the Act and was implemented without the
prior approval of the Commission in contravention of section 13 A(3) of the Act.
4. Agreement concerning the Respondent's future conduct
4.1. The Respondents agree and undertake to notify the Commission of any future
transactions that constitute a notifiable merger as defined in section 12(1) of the
Act read together with section 11(5) of the Act. The Respondents furthermore
agree and undertake to refrain from engaging in prior implementation of notifiable
mergers in contravention of section 13A(3) of the Act.
4.2. The Respondents also agree and undertake to develop and implement a
competition law compliance programme as part of its corporate governance policy,
. .J
which is designed to ensure that its employees, management, directors and
agents do not engage in future contraventions of the Act. In particular, such
compliance programme will include mechanisms for the identification, prevention,
detection and monitoring of any contravention of the Act.
4.3. The Respondents furthermore agree and undertake to submit a copy of such
compliance programme to the Commission within 60 days of the date of
confirmation of this Settlement Agreement as an order by the Tribunal.
5. Administrative Penalty
5.1. Having regard to the provisions of sections 59(1)(d), 59(2) and 59(3) of the Act, the
Respondents agree and undertake to pay an administrative penalty for the
contravention of section 13A(3) of the Act.
5.2. The Respondents agree that they are jointly and severally liable to pay an
administrative penalty of R750 000.00 (seven hundred and fifty thousand Rand,
only), one paying in full, the others to be absolved.
5.3. The administrative penalty imposed on the Respondents is less than 10% of the
total turnover of the Respondents for the relevant years as stipulated in section
59(2) of the Act
5.4. The Respondents will pay the amount set out in paragraph 5.2 above to the
Commission in 12 (twelve) equal monthly instalments in the sum of R62 500.00
(sixty two thousand five hundred rand), The first instalment must be paid within 5
business days from the date of the confirmation of this Settlement Agreement as
an order of the Tribunal and subsequent instalments must be paid on the first day
of each calendar month until the total amount of the penalty is paid in full.
5.5. The penalty must be paid into the Commission's bank account which is as follows:
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'
Name:
Bank:
The Competition Commission Fee Account
Absa Bank, Pretoria
Account Number: [………..]
Branch Code:
Reference:
323 345
F&V / 2011Jun0084 / 2012Aug0468
5.6. The penalty will be paid over by the Commission to the National Revenue Fund in
accordance with the provisions of section 59(4) of the Act.
6. Full and Final Settlement
This agreement, upon confirmation as an order by the Tribunal, is entered into in full
and final settlement and concludes all proceedings between the Commission and the
Respondents relating to the contraventions of section 13A(3) of the Act by the
Respondents that were the subject of the Commission's investigation referred to the
Tribunal under CT Case Nos; CR059JUN15 and CR060JUN15.
Dated and signed at CAPE TOWN on the DECEMBER day of 2015
For the Respondents
Nigel Meintjes (duly authori sed)
Legal Director
Dated and signed at PRETORIA on the 9th day of Sept 2015
For the Competition Commission
'
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