Clover S.A (Pty) Ltd v The Milk Procurement Business of Dairy Farmers of South Africa (Pty) Ltd (LM092Aug22) [2022] ZACT 70; [2023] 1 CPLR 8 (CT) (1 December 2022)

Clover S.A (Pty) Ltd v The Milk Procurement Business of Dairy Farmers of South Africa (Pty) Ltd (LM092Aug22) [2022] ZACT 70; [2023] 1 CPLR 8 (CT) (1 December 2022)

The Tribunal found that the proposed merger would not substantially prevent or lessen competition, as Clover S.A. is already the sole customer of the Milk Procurement Business and the transaction merely transfers ownership without affecting market structure. The Tribunal accepted that pre-merger retrenchments were unrelated to the transaction and that the merging parties agreed to conditions addressing employment concerns, including a five-year retrenchment moratorium and opportunities for previously retrenched employees to apply for vacancies. The Tribunal also considered HDP shareholding dilution and accepted commitments to skills and enterprise development. The merger was approved...

Citation
[2022] ZACT 70
Parties
Applicant: Clover S.A. Proprietary Limited; Respondent: The Milk Procurement Business of Dairy Farmers of South Africa Proprietary Limited
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
1 December 2022
Case Number
LM092Aug22
Procedural Posture
Large Merger Application / Conditional Approval
Outcome
Merger conditionally approved subject to public interest and employment-related conditions.
Judges
Yasmin Carrim, Andiswa Ndoni, Fiona Tregenna
Legal Topics
Merger Control, Public Interest Conditions, Employment Retrenchment, Hdp Shareholding, Milk Procurement Contracts
Competition Law Commercial and Corporate Merger Control Public Interest Conditions Employment Retrenchment Hdp Shareholding Milk Procurement Contracts

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Parties

Clover S.A. Proprietary Limited

Applicant

The Milk Procurement Business of Dairy Farmers of South Africa Proprietary Limited

Respondent

Procedural Posture

Large Merger Application / Conditional Approval

Legal Issues

  1. 1 Whether the proposed merger is likely to substantially prevent or lessen competition in any relevant market.
  2. 2 Whether the merger raises any public interest concerns, including employment and HDP shareholding.
  3. 3 Whether the merger conditions adequately address concerns raised by unions and the DTIC.

Ratio Decidendi

The Tribunal found that the proposed merger would not substantially prevent or lessen competition, as Clover S.A. is already the sole customer of the Milk Procurement Business and the transaction merely transfers ownership without affecting market structure. The Tribunal accepted that pre-merger retrenchments were unrelated to the transaction and that the merging parties agreed to conditions addressing employment concerns, including a five-year retrenchment moratorium and opportunities for previously retrenched employees to apply for vacancies. The Tribunal also considered HDP shareholding dilution and accepted commitments to skills and enterprise development. The merger was approved...

Court Disposition

Merger conditionally approved subject to public interest and employment-related conditions.

Orders

  • The merger is approved subject to the conditions set out in Annexure 'A', including a five-year retrenchment moratorium and opportunities for previously retrenched employees to apply for vacancies.
  • The acquiring firm must maintain existing milk procurement contracts with HDP and SME suppliers for five years from the merger approval date.