The Competition Tribunal has approved, with conditions, Shoprite Supermarkets acquisition of certain supermarket stores, wholesale and retail liquor stores, wholesale stores and the Massfresh business, from Massmart Holdings.
The conditions imposed by the tribunal sought to address competition and public interest concerns and include the divestiture of certain retail stores by Massmart, as well as public interest commitments relating to employment; the spread of ownership; localisation; and retailer, supplier and skills development.
The tribunal’s order followed a three-day merger hearing in which the merging parties; the Department of Trade, Industry and Competition; two intervenors, namely Pick n Pay and Spar; and the South African Commercial Catering and Allied Workers’ Union participated. The hearing included information requests from the tribunal and consideration of numerous responses received to the information requests from participating parties.
The commission identified 10 stores as “Highly Problematic Stores”: Cambridge Botshabelo; Cambridge Thaba Nchu; Cambridge Nkandla; Cambridge Ladybrand; Cambridge Mitchell’s Plain; Rhino Qumbu; Cambridge Nongoma; Cambridge/Savemoor Tembisa; Rhino Ulundi; and Cambridge Evaton.
To address the competition concerns in these stores, the commission recommended franchising four of the 10 stores and a funding package to facilitate competition from one existing, high potential, black-controlled independent retail competitor for the remaining six.
After considering the commission’s recommendation and the submissions of the participating parties, the tribunal approved the proposed merger on the basis that the ten stores must be divested by Massmart to a suitable SMME and or historically disadvantage purchaser/s, unrelated to Shoprite, within a specified period from the tribunal’s approval of the merger.
The tribunal provided for a trustee to be appointed to monitor Massmart’s compliance, including its obligation to maintain the continued financial and economic viability, competitiveness and marketability of the problematic stores.
The tribunal said among the conditions for the transaction, there would be no retrenchments as a result of the transaction since all employees of the stores being disposed of by Massmart to Shoprite would be transferred to the Shoprite Group on no less favourable terms.
BUSINESS REPORT