AFGRI Operations Limited v Pride Milling Company (Pty) Limited (LM237Feb16) [2016] ZACT 72 (4 August 2016)

AFGRI Operations Limited v Pride Milling Company (Pty) Limited (LM237Feb16) [2016] ZACT 72 (4 August 2016)

The Tribunal found that the proposed merger between AFGRI Operations Limited and Pride Milling Company (Pty) Limited would not substantially prevent or lessen competition in any relevant market. In the horizontal market for hominy chop, the merged entity would have a post-merger market share of 17.2%, which is lower than that of other competitors such as Pioneer Foods and Premier Foods. The market is fragmented, and customers have multiple suppliers, limiting the ability of the merged entity to engage in unilateral conduct. The Tribunal also considered the history of collusion in the market but concluded that the merger would not facilitate coordinated conduct due to the competitive...

Citation
[2016] ZACT 72
Parties
Acquiring Firm: AFGRI Operations Limited; Target Firm: Pride Milling Company (Pty) Limited; Respondent: Competition Commission
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
4 August 2016
Case Number
LM237Feb16
Procedural Posture
Merger Application / Conditional Approval
Outcome
Merger conditionally approved subject to reporting and notification requirements.
Judges
Yasmin Carrim, Andiswa Ndoni, lmraan Valodia
Legal Topics
Merger Control, Horizontal Merger Assessment, Vertical Merger Assessment, Input Foreclosure, Customer Foreclosure, Public Interest
Competition Law Commercial and Corporate Merger Control Horizontal Merger Assessment Vertical Merger Assessment Input Foreclosure Customer Foreclosure Public Interest

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 3 Authorities cited 4 Party arguments 2 Amounts and remedies 9
Sign in to unlock

Parties

AFGRI Operations Limited

Acquiring Firm

Pride Milling Company (Pty) Limited

Target Firm

Competition Commission

Respondent

Procedural Posture

Merger Application / Conditional Approval

Legal Issues

  1. 1 Whether the proposed merger between AFGRI Operations Limited and Pride Milling Company (Pty) Limited is likely to substantially prevent or lessen competition in any relevant market.
  2. 2 Whether the merger raises concerns regarding coordinated conduct or collusion in the hominy chop market.
  3. 3 Whether the merger is likely to result in input or customer foreclosure in identified vertical markets.

Ratio Decidendi

The Tribunal found that the proposed merger between AFGRI Operations Limited and Pride Milling Company (Pty) Limited would not substantially prevent or lessen competition in any relevant market. In the horizontal market for hominy chop, the merged entity would have a post-merger market share of 17.2%, which is lower than that of other competitors such as Pioneer Foods and Premier Foods. The market is fragmented, and customers have multiple suppliers, limiting the ability of the merged entity to engage in unilateral conduct. The Tribunal also considered the history of collusion in the market but concluded that the merger would not facilitate coordinated conduct due to the competitive...

Court Disposition

Merger conditionally approved subject to reporting and notification requirements.

Orders

  • The merging parties must submit a copy of the Final Sale Agreement to the Commission within 10 business days of final signature.
  • The merging parties must advise the Commission of the implementation of the Tranche B Sale if it occurs on or before the Tranche B Effective Date.