SAFLII Note: Certain personal/private details of parties or witnesses have been
redacted from this document in compliance with the law and SAFLII Policy
COMPETITION TRIBUNAL REPUBLIC OF SOUTH AFRICA
Case No: FTN154Nov20
In the matter between:
The Competition Commission Applicant
And
Shashe Trading (Pty) Ltd First Respondent
Devenco 44 (Pty) Ltd Second Respondent
Panel : AW Wessels (Presiding Member), E Daniels (Tribunal Member), A
Ndoni (Tribunal Member)
Heard on : 02 June 2021
Decided on : 03 June 2021
SETTLEMENT AGREEMENT
The Tribunal hereby confirms the settlement agreement concluded between the
Competition Commission, Shashe Trading (Pty) Ltd and Devenco 44 (Pty) Ltd,
annexed hereto.
Presiding Member Mr Andreas Wessels
Concurring: Mr Enver Daniels and Ms Andiswa Ndoni
DATE: 03 June 2021
IN THE COMPETITION TRIBUNAL OF SOUTH AFRICA
(HELD AT PRETORIA)
CT CASE NO: FTN154Nov20 CC
CASE NO: 2019DEC0001
In the matter between:
THE COMPETITION COMMISSION Applicant
and
SHASHE TRADING (PTY) LTD First Respondent
DEVENCO 44 (PTY) LTD Second Respondent
SETTLEMENT AGREEMENT IN RESPECT OF AN ALLEGED CONTRAVENTION
OF SECTION 13A OF THE COMPETITION ACT, 1998 (ACT NO. 89 OF 1998), AS
AMENDED
The Competition Commission and Shashe Trading (Pty) Ltd and Devenco 44 (Pty)
Ltd hereby agree that an application be made to the Competition Tribunal for the
confirmation of this Settlement Agreement as an order of the Competition Tribunal in
terms of section 27(1)(d) read with section 59(1)(d) of the Competition Act, 1998 (Act
No. 89 of 1998), as amended, 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. "Acquiring Group" means Shashe Trading (Pty) Ltd, the Cannan Development
Trust and the OC Zaayman Development Trust;
1.3. "CAC" means the Competition Appeal Court, a court established in terms of
section 36 of the Act;
1.4. "Commission" means the Competition Commission of South Africa, a statutory
body established in terms of section 19 of the Act, with its principal place of business
at 1st Floor, Mulayo Building (Block C), the DTI Campus, 77 Meintjies Street,
Sunnyside, Pretoria, Gauteng;
1.5. "Commissioner" means the Commissioner of the Competition Commission,
appointed in terms of section 22 of the Act;
1.6. "Devenco" means Devenco 44 (Pty) Ltd which used to trade as Mopani
SuperSpar;
1.7. "Parties" means the Commission and the Respondents;
1.8. "Respondents" means Shashe Trading (Pty) Ltd and Devenco 44 (Pty) Ltd;
1.9. "Settlement Agreement' means this agreement duly signed and concluded
between the Commission and the Respondents;
1.10. "Shashe" means Shashe Trading (Pty) Ltd;
1.11. "Spar Group" means the Spar Group (Pty) Ltd; and
1.12. "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
3rd Floor, Mulayo building (Block C), the DTI Campus, 77 Meintjies Street,
Sunnyside, Pretoria, Gauteng.
2. BACKGROUND
2.1. On 29 November 2019, the Commission received a notice of an intermediate
merger between Shashe and Devenco in respect of Mopani SuperSpar supermarket
business. In the merger notification documents, Shashe indicated that the merger
had already been implemented, i.e., Shashe already took control of Devenco's
Mopani SuperSpar on 6 June 2019.
2.2. Shashe is controlled by two business trusts in equal shares, namely, the
Connan Development Trust and the OC Zaayman Development Trust ("the Trusts").
Shashe was incorporated by the Trusts for the purpose of acquiring Devenco's
supermarket business, i.e., Mopani SuperSpar, and as such does not control any
other firm. Shashe and the Trusts form the Acquiring Group.
2.3. The Acquiring Group is active in the retail market, where it sells general
household merchandise such as fruit and vegetables, household cleaning, frozen
foods, pet care under Spar branded franchise supermarkets. The Acquiring Group
controls 10 Spar supermarkets located in the Northern region of the Limpopo
province.
2.4. Devenco is wholly owned by the MAS Family Trust. Devenco does not control
any other firm. Prior to the merger, Devenco was also involved in the retail market
where it carried on a supermarket business under the name and style of Mopani
SuperSpar. Mopani SuperSpar sells a wide variety of fresh and processed foodstuff
and other household products to the general public.
2.5. The circumstances which led to the purchase by Shashe of Devenco's Mopani
SuperSpar were explained as follows in the merger notification documents.
2.6. Devenco used to purchase its trading stock for the running of Mopani
SuperSpar from the Spar Group. As security for its indebtedness to the Spar Group,
Devenco had executed written deeds of suretyship, i.e., various General Notarial
Bonds (bonds) which were registered in the Spar Group's favour over the assets of
Devenco, which included Mopani SuperSpar.
2.7. The bonds conferred on the Spar Group the following rights:
2.7.1 Take possession of all the corporeal and incorporeal movable property and
to retain such possession for so long as the Spar Group may deem fit, and/or sell
and dispose thereof in such manner and on terms that the Spar Group may
decide and to convey valid title to the purchaser and to collect in all monies
due/owed to Devenco in respect of the property.
2.7.2 At its sole discretion, and should it elect, to carry on the business of Mopani
SuperSpar relating to the movable property in the name of and at the expense of
Devenco and for that purpose to purchase goods and to do whatever else the
Spar Group deemed necessary.
2.7.3 Sign and complete all forms, declarations, agreements and the like as
might be necessary or desirable to record the sale, disposal and/or transfer of the
movable property.
2.7.4 Take possession of and to realise by public auction or by private treaty or
otherwise all or any of the movable property.
2.8 Devenco's debt to the Spar Group for the purchase of its trading stock, which
Devenco could no longer service, ultimately ended up being approximately R 20
million. As a result of Devenco's inability to service its debt, the Spar Group filed an
urgent application with the Pietersburg (Polokwane) High Court, for the perfection of
the various General Notarial Bonds registered in the Spar Group's favour over the
assets of Devenco. The Spar Group was granted the Perfection Application on 4
June 2019 ("the perfection order").
2.9 Once the perfection order was granted by the High Court on 4 June 2019, the
MAS Family Trust (which at that time controlled Devenco) was allowed by the Spar
Group to continue managing Mopani SuperSpar until the Spar Group secured a
purchaser for the business. The Spar Group, using the authority granted to it by the
perfection order, subsequently sold Mopani SuperSpar to Shashe on 6 June 2019.
Shashe and the Spar Group concluded a sale of business agreement in respect of
the sale of Mopani SuperSpar on 27 June 2019.
3 THE COMMISSION'S FINDINGS
3.1 Shashe purchased Devenco's Mopani SuperSpar from the Spar Group and
started operating the business on 6 June 2019. This purchase by Shashe constituted
a merger in terms of section 12(1)(a), read with section 12(2) of the Act. Shashe,
however, only notified the Commission of the acquisition on 29 November 2019,
namely 5 months after Shashe took control of Mopani SuperSpar.
3.2 In the merger notification documents, Shashe was identified as the primary
acquiring firm, whilst Devenco in respect of Mopani SuperSpar was identifie9 as the
primary target firm. It was therefore Shashe's responsibility as the primary acquiring
firm, as well as Devenco's responsibility as the primary target firm in respect of
Mopani SuperSpar, to notify the Commission of Mopani SuperSpar acquisition by
Shashe.
3.3 Accordingly, Shashe and Devenco failed to notify the transaction to the
Shashe.
3.3 Accordingly, Shashe and Devenco failed to notify the transaction to the
Commission at the time when Shashe acquired Mopani SuperSpar business, in
contravention of section 13A(1) of the Act. They also implemented the merger
transaction without the approval of the Commission in contravention of section
13A(3) of the Act.
3.4 In its assessment of the transaction, the Commission found that the merger
was unlikely to substantially prevent or lessen competition in the market for the retail
of grocery and general merchandise in Giyani, Limpopo province. In relation to public
interest, the Commission found that the merger was likely to have a positive impact
on employment as absent the merger, the employees of Mopani SuperSpar would
have been negatively affected. The transaction was accordingly approved by the
Commission without conditions on 26 February 2020.
4 ADMISSION
4.1 Shashe and Devenco admit that they entered into a merger transaction
without notifying the Commission and implemented the merger without the approval
of the Commission in terms of section 14(1)(b), or the Tribunal in terms of section
16(2) or the CAC in terms of section 17, as required by section 13A of the Act, and
as such are in contravention of the Act.
5 AGREEMENT CONCERNING RESPONDENT'S FUTURE CONDUCT
5.1 The Respondents agree to:
5.1.1 Not undertake in any contravention of the Act;
5.1.2 Develop, implement and monitor a competition law compliance programme
incorporating• corporate governance designed to ensure that its employees,
management, directors and agents do not engage in future contraventions of the Act;
and
5.1.3 Submit a copy of such compliance programme to the Commission within 60
days of the date of confirmation of the Settlement Agreement as an order by the
Tribunal.
6 ADMINISTRATIVE PENALTY
6.1 Having regard to the provisions of sections 27(1)(d) as read with sections
59(1)(d), 59(2) and 59(3) of the Act, the Respondents accept that they are jointly and
severally liable to pay an administrative penalty, the one paying, the others to be
absolved.
6.2 The parties have agreed that the Respondents will pay an administrative
penalty in the amount of R 350 000 (three hundred and fifty thousand rands).
6.3 This amount does not exceed 10% of the Respondents' total annual turnover
in the Republic and its exports from the Republic for its 2019/2020 financial year.
6.4 The Respondents will pay the amount set out in paragraph 6.2 above to the
Commission within 30 days from the date of confirmation of this Settlement
Agreement by the Tribunal.
6.7 The penalty must be paid into the Commission's bank account which is as
follows:
NAME: THE COMPETITION COMMISSION FEE ACCOUNT
BANK: ABSA BANK, PRETORIA
ACCOUNT NUMBER: [….]
BRANCH CODE: 323 345
REF: 2019DEC0001
6.8 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.
7 FULL AND FINAL SETTLEMENT
7.1 This Settlement 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 any alleged contravention of the Act by
the Respondents, that is the subject of the Commission's investigation referred to the
Tribunal under CT Case No. FTN154Nov20.