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competitiontribunal
SOUTH AFRICA
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case no: LM151Dec21
In the large merger between:
Shoprite Checkers (Pty) Ltd (Primary Acquiring Firm)
And
Main Street 1883 (Pty) (Primary Target Firm)
Heard on:
Order Issued on:
15 March 2022
15 March 2022
REASONS FOR DECISION
1. On 15 March 2022, the Competition Tribunal unconditionally approved the large merger
between Shoprite Checkers (Pty) Ltd ("Shoprite") and Main Street 1883 (Pty) Ltd ("Main
Street").
2. The proposed transaction involves Shoprite's acquisition of - of the issued share
capital in Main Street. Post-merger, Shoprite and the RTT Group (Pty) Ltd ("RTT") will
exercise joint control over Main Street.
3. The primary acquiring firm, Shoprite, is controlled by Shoprite Holdings Limited ("Shoprite
Holdings"}, a public company listed on the Johannesburg Stock Exchange1. Shoprite
controls various firms, including Computicket (Pty) Ltd and Medirite (Pty) Ltd.2
4. The Acquiring Group retails and distributes a wide range of fast-moving consumer goods
("FMCGs"), through its various stores and supermarkets located across South Africa.3 The
Acquiring Group's operating divisions include Shoprite, Checkers, Checkers Hyper,
Shoprite Usave, and OK Power Express, amongst others. Of relevance to the proposed
merger is the Acquiring Group's Checkers division, which offers an e-commerce delivery
platform, Checkers Sixty60 ("Sixty60"}, which is available across South Africa.4
5. The primary target firm, Main Street is wholly owned by RTT, which is a subsidiary of RTT
Holdings (Pty) Ltd ("RTT Holdings").
1 The shares of Shoprite Holdings are widely held and are not controlled by any firm.
2 All firms directly and indirectly controlled by Shoprite Holdings are referred to as the "Acquiring Group."
3 FMCG products include groceries, food, household, health, beauty, lifestyle consumer products, clothing, home
ware, textiles, and cellular telephone products.
ware, textiles, and cellular telephone products.
4 Sixty60 enables customers to order groceries from Checkers stores by downloading the Sixty60 application
onto their smartphone.
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6. Main Street provides on-demand delivery ("ODD") services5 (i.e., last mile logistics
services) to online shopping platforms such as the Acquiring Group's Sixty60 platform and
other merchants. Main Street only renders ODD services but does not constitute an online
shopping platform.
Competition assessment
7. While assessing the merger, the Competition Commission (the "Commission") found that
the proposed merger raises a vertical overlap, as the Acquiring Group operates an online
shopping platform, while Main Street provides ODD services. However, such vertical
overlap is pre-existing as Main Street provides the Acquiring Group with ODD services in
South Africa.
8. The Commission did not take a definite view on the relevant product market. However, it
assessed the effects of the proposed merger in the following markets:
8.1. The upstream market for the national supply of ODD services; and
8.2. The downstream market for the national procurement of ODD services.
9. In assessing input foreclosure, the Commission found~Acquiring
Group procured ODD services from the Target Firm ---- and this
arrangement will continue post-merger. In any event, the Commission's investigation
revealed that the Acquiring Group's retail grocery competitors such as Pick 'n Pay,
Woolworths and Spar all either render ODD services for their online shopping platforms or
outsource same from third parties as there are alternative suppliers of ODD services that
are active in South Africa, such as Quench, OneCart, Orderin, Zulzi, and Carter. The
Commission was of the view that the contemplated post-merger
~ to result in foreclosure given the presence of alternatives. Additionally, the
--proposed post-merger is likely to ensure that the Acquiring Group cannot
access competitively sensitive information of competitors that may also procure ODD
services from the Target Firm.
10. When assessing customer foreclosure, the Commission found that pre-merger, the
10. When assessing customer foreclosure, the Commission found that pre-merger, the
Acquiring Group procures all of its ODD service requirements for its Sixty60 platform from
the Target Firm. Considering the above, the Commission found that the merger is unlikely
to change anything as, post-merger, the Acquiring Group will continue to predominately
procure ODD services from the Target Firm.
11. No third parties raised concerns with the proposed merger.
12. On the basis of the above, the Commission found that the proposed transaction is unlikely
to substantially prevent or lessen competition in any relevant market.
5 ODD services refer to the collection of an order placed by a customer on a retailer I merchant's online shopping
platform (such as the Acquiring Group's Sixty60 platform), and the delivery of the customer's order to the
customer, within a short duration to time.
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Public interest
Employment
13. Regarding employment, the merger parties have provided an unequivocal undertaking that
the proposed transaction will not have a negative effect on employment and, in particular,
that no employees will be retrenched because of the proposed transaction.
Spread of Ownership
14. Regarding the spread of ownership, it is noteworthy that the Acquiring Group has an
historically disadvantaged person ("HOP") shareholding of 13.45% and Main Street has a
HOP shareholding of 13.65%. The proposed merger will not result in the dilution of the
HOP shareholding in Main Street as the Acquiring Group is acquiring joint control, which
will not affect Main Street's current HOP shareholding.
15. The Commission was of the view that section 12A(3)( e) imposes an obligation on the
merging parties to promote a greater spread of ownership, by increasing the levels of
ownership by HDPs and workers.
Conclusion
16. For the above reasons, we conclude that the merger is unlikely to result in a substantial
prevention or lessening of competition or raise public interest concerns.
Signed by:Enver Daniels
Signed at:2022-03-15 11 :40:21 +02:00
Reason:Witnessing Enver Daniels
Mr Enver Daniels
15 March 2022
Date
Professor lmraan Valodia and Professor Liberty Mncube
concurring
Tribunal Case Managers:
For the Merging Parties:
For the Commission:
Leila Raffee and Camilla Mathonsi
Werner Rysbergen of DLA Piper Attorneys on behalf
of Shoprite Checkers; Burton Phillips, Shawn van der
Meulen, Tenisha Burslem-Rotheroe of Webber
Wenzel on behalf of Main Street
Nonhlanhla Msiza and Wiri Gumbie
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