Bromor Foods (Pty) Ltd and National Brands Ltd (19/LM/Feb00) [2000] ZACT 13 (14 April 2000)

Bromor Foods (Pty) Ltd and National Brands Ltd (19/LM/Feb00) [2000] ZACT 13 (14 April 2000)

The Tribunal found that the relevant market is the national market for ready-to-drink sports drinks, not the broader non-alcoholic beverage market. The merger resulted in a highly concentrated market, with Bromor controlling 60% post-merger and only one other significant competitor, PowerAde. Barriers to entry are substantial due to the need for significant sunk costs in brand establishment and marketing, despite low capital requirements. The Tribunal concluded that the merger substantially prevents and lessens competition, removes the most likely effective competitor, and increases the likelihood of collusion. Given the merger was already implemented, structural remedies such as...

Citation
[2000] ZACT 13
Parties
Applicant: Bromor Foods (Pty) Ltd; Respondent: National Brands Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
14 April 2000
Case Number
19/LM/Feb00
Procedural Posture
Large Merger / Conditional Approval
Outcome
Merger approved subject to conditions.
Judges
N.M. Manoim, D.H Lewis, S. Zilwa
Legal Topics
Market Definition, Merger Control, Restraint of Trade, Divestiture Remedy, Barriers to Entry
Competition Law Commercial and Corporate Market Definition Merger Control Restraint of Trade Divestiture Remedy Barriers to Entry

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 4 Authorities cited 3 Party arguments 2 Amounts and remedies 7
Sign in to unlock

Parties

Bromor Foods (Pty) Ltd

Applicant

National Brands Ltd

Respondent

Procedural Posture

Large Merger / Conditional Approval

Legal Issues

  1. 1 Does the merger between Bromor Foods and National Brands substantially prevent or lessen competition in the market for ready-to-drink sports drinks?
  2. 2 Is the restraint of trade clause in the sale agreement anti-competitive and unnecessarily restrictive?
  3. 3 What is the appropriate remedy given the merger has already been implemented?

Ratio Decidendi

The Tribunal found that the relevant market is the national market for ready-to-drink sports drinks, not the broader non-alcoholic beverage market. The merger resulted in a highly concentrated market, with Bromor controlling 60% post-merger and only one other significant competitor, PowerAde. Barriers to entry are substantial due to the need for significant sunk costs in brand establishment and marketing, despite low capital requirements. The Tribunal concluded that the merger substantially prevents and lessens competition, removes the most likely effective competitor, and increases the likelihood of collusion. Given the merger was already implemented, structural remedies such as...

Court Disposition

Merger approved subject to conditions.

Orders

  • Clause 12 of the sale agreement dated 31 August 1999 is declared void with effect from the date of this order.
  • Bromor must continue to maintain the Game ready-to-drink brand in the national market at levels not substantially less than current, including advertising and promotion, for at least two years from the date of this order.