Capitau Investments Management Ltd v New Foodcorp Holdings Pty Ltd (112/LM/Dec12) [2013] ZACT 33 (8 May 2013)

Capitau Investments Management Ltd v New Foodcorp Holdings Pty Ltd (112/LM/Dec12) [2013] ZACT 33 (8 May 2013)

The Tribunal found that the proposed merger does not raise significant competition concerns in either vertical or horizontal markets, as alternative competitors remain and the overlaps are minor. However, due to the history of collusion in the relevant markets, the Tribunal determined that a public merger condition is necessary to prevent anti-competitive information exchange between Remgro and Unilever, regardless of the shareholders agreement. The Tribunal held that private arrangements cannot replace public enforcement, and thus elevated the obligations in the shareholders agreement to a formal merger condition. The merger was approved subject to this condition, with no public interest...

Citation
[2013] ZACT 33
Parties
Applicant: Capitau Investments Management Limited; Respondent: New Foodcorp Holdings Pty Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
8 May 2013
Case Number
112/LM/Dec12
Procedural Posture
Merger Application / Decision on Approval
Outcome
Merger conditionally approved subject to a formal condition preventing anti-competitive information exchange.
Judges
Norman Manoim, Yasmin Carrim, Merle Holden
Legal Topics
Merger Control, Vertical Integration, Information Exchange, Shareholder Agreements
Competition Law Commercial and Corporate Merger Control Vertical Integration Information Exchange Shareholder Agreements

Case Brief

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Parties

Capitau Investments Management Limited

Applicant

New Foodcorp Holdings Pty Ltd

Respondent

Procedural Posture

Merger Application / Decision on Approval

Legal Issues

  1. 1 Whether the proposed merger between Capitau Investments Management Limited and New Foodcorp Holdings Pty Ltd raises competition concerns in relevant markets.
  2. 2 Whether vertical or horizontal overlaps resulting from the merger would lead to foreclosure or anti-competitive effects.
  3. 3 Whether the existing shareholders agreement sufficiently prevents information exchange between competitors.

Ratio Decidendi

The Tribunal found that the proposed merger does not raise significant competition concerns in either vertical or horizontal markets, as alternative competitors remain and the overlaps are minor. However, due to the history of collusion in the relevant markets, the Tribunal determined that a public merger condition is necessary to prevent anti-competitive information exchange between Remgro and Unilever, regardless of the shareholders agreement. The Tribunal held that private arrangements cannot replace public enforcement, and thus elevated the obligations in the shareholders agreement to a formal merger condition. The merger was approved subject to this condition, with no public interest...

Court Disposition

Merger conditionally approved subject to a formal condition preventing anti-competitive information exchange.

Orders

  • The merger between Capitau Investments Management Limited and New Foodcorp Holdings Pty Ltd is approved subject to the condition set out in the Annexure to the reasons for decision.
  • The merging parties must adhere to the obligations preventing information exchange for as long as they have a direct or indirect interest in Unilever South Africa, regardless of amendments to the shareholders agreement.