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[2021] ZACT 57
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Cape Harvest Food Group (Pty) Ltd v BM Food Group (Pty) Ltd (LM034Jun21) [2021] ZACT 57 (26 August 2021)
COMPETITION
TRIBUNAL
OF
SOUTH
AFRICA
Case
No.:
LM034Jun21
In
the matter between:
Cape
Harvest Food Group (Pty)
Ltd
Primary
Acquiring Firm
And
BM
Food Group (Pty)
Ltd
Primary
Target Firm
Panel: E
Daniels (Presiding Member)
Y
Carrim (Tribunal Member)
H
Cheadle (Tribunal Member)
Heard
on: 26
August 2021
Order
Issued on: 26
August 2021
Reasons
Issued on
:
26
August 2021
ORDER
Further
to the recommendation of the Competition Commission in terms of
section 14A(1)(b) of the Competition Act, 1998 ("the
Act")
the Competition Tribunal orders that-
1.
the merger between the abovementioned parties be approved in terms of
section 16(2)(a) of the Act; and
2.
a Merger Clearance Certificate be issued in terms of Competition
Tribunal Rule 35(5)(a).
26 August 2021
Presiding
Member
Date
Mr
Enver Daniels
Concurring:
Ms Yasmin Carrim and Mr Halton Cheadle
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
no: LM034Jun21
Cape
Harvest Food Group (Pty) Ltd
(Primary
Acquiring Firm)
and
BM
Food Group (Pty) Ltd
(Primary
Target Firm)
REASONS
FOR DECISION
[1]
On 26 August 2021, the Competition
Tribunal unconditionally approved the large merger between Cape
Harvest Food Group (Pty) Ltd ("Cape
Harvest") and BM Food
Group (Pty) Ltd ("BM Food")
.
[2]
The proposed transaction involves Cape
Harvest acquiring 53.7% of the issued share capital and loan claims
in BM Food. Post-merger,
Cape Harvest will have sole control over the
business of BM Food.
[3]
Simultaneous
to the proposed transaction, an internal restructuring will occur in
order to convert BM Food into a holding company
for the BM Food
Group. The internal restructuring involves the current shareholdings
of BM Food Manufacturers (Pty) Ltd transferring
to
BM Food
.
[1]
[4]
Cape Harvest is a wholly owned
subsidiary of Sea Harvest Group Limited ("Sea Harvest"),
which is directly controlled by
Brimstone Investment Corporation
Limited ("Brimstone")
.
Cape
Harvest and its controllers are producers and suppliers of dairy
products, and frozen and non-frozen seafood in South Africa
.
[5]
BM Food is a newly incorporated company.
The BM Food Group is an importer and manufacturer
of specialized
foods in South Africa
.
The BM Food Group supplies cheese to
retail and non-retail channels; and also supplies non-frozen seafood
to the non-retail
channel.
[6]
The Competition Commission identified a
horizontal overlap in the activities of the merging parties. As such,
the impact of the transaction
was assessed on the following markets
in South Africa:
i.
manufacture and supply of cheese to the
retail channel;
ii.
manufacture and supply of cheese to the
non-retail channel; and
iii.
supply of non-frozen seafood to the
non-retail channel.
[7]
In
th
e
market for the manufacture and supply of cheese to the retail
channel, the post merger market share is less than 5%, with an
accretion of less than 0.5%. In the market
for
the manufacture and supply of cheese to the non-retail channel, the
post-merger market share is less than 25%, with an accretion
of less
than 2%. The Commission did
not
provide market shares for the market for the supply of non-frozen
seafood to the non-retail channel. However, the Commission submitted
that post-merger the merged entity will continue to compete with a
number of firms
.
[2]
[8]
No third parties raised concerns
regarding the effects of the proposed transaction on competition.
[9]
We conclude that the proposed
transaction does not substantially prevent or lessen competition in
any relevant market.
[1O]
The merger parties submitted that there shall be no retrenchments as
a result of the proposed transaction.
[11]
Further, we note specifically that the
proposed transaction will have a positive effect on
the level of Broad-Based Black Economic
Empowerment or worker ownership, as the proposed transaction will
introduce a BEE shareholding
in BM Food
.
[12]
In light of the above, we approved the
proposed transaction unconditionally.
26 August 2021
Mr
Enver
Daniels
Date
Ms
Yasmin Carrim and Prof Halton Cheadle concurring
Tribunal
Case Manager:
D Mogapi
For
the Merging Parties
R Wilson of Webber Wentzel
For
the Commission
B Ntshingila and T Mahlangu
[1]
Post
-merger
,
the
shareholding in BM Food will be as follows: Cape Harvest (53.7%),
Costas Vayanos (19
.
80%),
Samos
Trust (1.10%), Ali Buhler (24.31%), and Mykonos Trust (1.10%).
[2]
l&J,
Oceana, Nalitha Fishing, Mantas Foods and Bluewave Fish Traders,
amongst others
.