Cape Harvest Food Group (Pty) Ltd v BM Food Group (Pty) Ltd (LM034Jun21) [2021] ZACT 57 (26 August 2021)
- Citation
- [2021] ZACT 57
- Status
- Order
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- E Daniels, Y Carrim, H Cheadle
- Case number
- LM034Jun21
More details
- Court
- Competition Tribunal
- Panel
- E Daniels, Y Carrim, H Cheadle
- Case number
- LM034Jun21
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed merger between Cape Harvest Food Group and BM Food Group would not substantially prevent or lessen competition in any relevant market. The post-merger market shares in the affected markets were low, and the merged entity would continue to face competition from several other firms. No third parties raised concerns about the transaction. The Tribunal also noted that there would be no retrenchments as a result of the merger and that the transaction would introduce a BEE shareholding in BM Food, thereby positively affecting Broad-Based Black Economic Empowerment. Accordingly, the Tribunal approved the merger unconditionally.
Court disposition
Merger unconditionally approved.
Orders
- The merger between Cape Harvest Food Group (Pty) Ltd and BM Food Group (Pty) Ltd is approved in terms of section 16(2)(a) of the Competition Act, 1998.
- A Merger Clearance Certificate is to be issued in terms of Competition Tribunal Rule 35(5)(a).
02
Material facts
Parties
Cape Harvest Food Group (Pty) Ltd
Applicant Counsel: R WilsonBM Food Group (Pty) Ltd
RespondentAmounts and remedies
- Percentage of BM Food Acquired by Cape Harvest: 53.7
- Post Merger Market Share (cheese to Retail Channel): 5
- Market Share Accretion (cheese to Retail Channel): 0.5
- Post Merger Market Share (cheese to Non Retail Channel): 25
- Market Share Accretion (cheese to Non Retail Channel): 2
03
Procedural history
Posture
Merger Approval / Final Determination
04
Questions and positions
Legal issues
- 01
Does the proposed merger substantially prevent or lessen competition in any relevant market?
- 02
Will the transaction result in any retrenchments or negative employment effects?
- 03
Does the merger promote Broad-Based Black Economic Empowerment or worker ownership?
Party arguments
- Applicant
- The applicant argued that the merger would not result in any retrenchments and would have a positive effect on Broad-Based Black Economic Empowerment, as it would introduce a BEE shareholding in BM Food. The applicant also submitted that the transaction would not substantially prevent or lessen competition in any relevant market, given the low post-merger market shares and continued competition from other firms.
- Respondent
- The respondent, BM Food Group, did not raise any opposition to the merger and concurred with the applicant's submissions. No third parties raised concerns regarding the effects of the proposed transaction on competition.
05
Court’s reasoning
Legal principles
- 01
Competition Act, 1998, section 16(2)(a)
A merger may only be prohibited if it substantially prevents or lessens competition in any relevant market, unless justified on public interest grounds.
- 02
Competition Act, 1998
The assessment of market shares and competitive dynamics is essential to determine the impact of a merger.
- 03
Competition Act, 1998
Consideration of public interest factors, including Broad-Based Black Economic Empowerment and employment effects, is required in merger proceedings.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed merger between Cape Harvest Food Group and BM Food Group would not substantially prevent or lessen competition in any relevant market. The post-merger market shares in the affected markets were low, and the merged entity would continue to face competition from several other firms. No third parties raised concerns about the transaction. The Tribunal also noted that there would be no retrenchments as a result of the merger and that the transaction would introduce a BEE shareholding in BM Food, thereby positively affecting Broad-Based Black Economic Empowerment. Accordingly, the Tribunal approved the merger unconditionally.
Obiter and limits
- The Tribunal specifically noted the positive effect of the transaction on Broad-Based Black Economic Empowerment and worker ownership.
- The absence of third-party objections was considered indicative of the transaction's limited impact on competition.
Court disposition
Merger unconditionally approved.
- The merger between Cape Harvest Food Group (Pty) Ltd and BM Food Group (Pty) Ltd is approved in terms of section 16(2)(a) of the Competition Act, 1998.
- A Merger Clearance Certificate is to be issued in terms of Competition Tribunal Rule 35(5)(a).
Source and reliance status
Competition Tribunal
This page organises the available record for research. Confirm quotations, current status, and subsequent treatment against the official source before relying on the case.
Judgment reading view
Judgment text
The complete available source text.
Competition Tribunal
Order
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
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 the 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.
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.
Case-aware research
Ask AI about this case
The judgment and available research above are public. New questions open in a separate private conversation grounded in this case.