Emasa Holdings v Dewfresh (Pty) Ltd (LM031May20) [2020] ZACT 17 (28 July 2020)
- Citation
- [2020] ZACT 17
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- M Mazwai, E Daniels, I Valodia
- Case number
- LM031May20
More details
- Court
- Competition Tribunal
- Panel
- M Mazwai, E Daniels, I Valodia
- Case number
- LM031May20
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that there were no overlaps between the activities of the merging parties and that the transaction would not substantially prevent or lessen competition in any relevant market. The Commission's investigation confirmed that neither customers nor competitors raised concerns, and the Food and Allied Workers Union confirmed that Dewfresh's employees were notified and did not object. The transaction promotes broad-based black economic empowerment and does not negatively affect employment. Accordingly, the Tribunal approved the merger unconditionally.
Court disposition
Merger approved unconditionally.
Orders
- The large merger between Emasa Holdings (Pty) Ltd and Dewfresh (Pty) Ltd is approved without conditions.
02
Material facts
Parties
Emasa Holdings (Pty) Ltd
Applicant Counsel: M van NiekerkDewfresh (Pty) Ltd
Respondent03
Procedural history
Posture
Merger Approval / Final Decision
04
Questions and positions
Legal issues
- 01
Whether the proposed merger between Emasa Holdings and Dewfresh is likely to substantially prevent or lessen competition in any relevant market.
- 02
Whether the transaction raises any public interest concerns, including effects on employment and broad-based black economic empowerment.
Party arguments
- Applicant
- Emasa Holdings argued that the transaction aligns with the Government Employees Pension Fund's mandate to invest in return-seeking and high developmental impact projects, aiming to create and grow sustainable businesses. The merger would promote broad-based black economic empowerment in Dewfresh through partnerships with Emlek and Asante Afrika, both black-owned entities. The parties submitted that there would be no negative effects on employment.
- Respondent
- Dewfresh did not oppose the transaction and confirmed, through the Food and Allied Workers Union, that employees were notified and raised no concerns. The Competition Commission found no overlaps between the activities of Dewfresh and those of the GEPF and PIC, and no customers or competitors expressed objections. The Commission concluded that the transaction would not substantially lessen competition or raise public interest concerns.
05
Court’s reasoning
Legal principles
- 01
Competition Act, 1998
A merger may only be prohibited if it is likely to substantially prevent or lessen competition in any relevant market.
- 02
Competition Act, 1998
Public interest considerations, including effects on employment and promotion of black economic empowerment, must be assessed in merger proceedings.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that there were no overlaps between the activities of the merging parties and that the transaction would not substantially prevent or lessen competition in any relevant market. The Commission's investigation confirmed that neither customers nor competitors raised concerns, and the Food and Allied Workers Union confirmed that Dewfresh's employees were notified and did not object. The transaction promotes broad-based black economic empowerment and does not negatively affect employment. Accordingly, the Tribunal approved the merger unconditionally.
Obiter and limits
- The Tribunal noted that Emasa Holdings was incorporated specifically for the purpose of this transaction and currently has no activities or employees.
- The Tribunal observed that the transaction aligns with the GEPF's mandate to invest in projects with high developmental impact and sustainable business growth.
Court disposition
Merger approved unconditionally.
- The large merger between Emasa Holdings (Pty) Ltd and Dewfresh (Pty) Ltd is approved without conditions.
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
Judgment
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: LM031May20
In the matter between
EMASA HOLDINGS (PTY)
LTD
Primary Acquiring Firm
And
DEWFRESH (PTY)
LTD
Primary Target Firm
Panel: Ms. M Mazwai (Presiding Member)
: Mr. E Daniels (Tribunal Member)
: Prof. I Valodia (Tribunal Member)
Heard on: 24 June 2020
Order Issued on: 24 June 2020
Reasons Issued on: 28 July 2020
REASONS
FOR DECISION
APPROVAL
[1] On 24 June 2020, the Competition Tribunal (“Tribunal”) unconditionally approved a large merger between Emasa Holdings (Pty) Ltd and Dewfresh (Pty) Ltd.
[2] The reasons for the approval of the proposed transaction follow.
PARTIES TO THE PROPOSED
TRANSACTION
Primary acquiring firm
[3] The primary acquiring firm is Emasa Holdings (Pty) Ltd (“Emasa”), a special purpose vehicle ultimately controlled by the Government Employees Pension Fund[1] (“GEPF”) (51%). The GEPF controls various firms. The remaining shares in Emasa are held by Emlek Holdings (Pty) Ltd
(“Emlek”) and Asante Afrika Management Services (“Asante Afrika”).
[4] Emasa was incorporated for purposes of the proposed transaction and does not control any firms. As such, Emasa currently does not have any activities. The GEPF is involved in the administration and management of pensions and other benefits on behalf of its members.[2]
Primary target firm
[5] The primary target firm is Dewfresh (Pty) Ltd (“Dewfresh”), a private company controlled by Mr Frederick Albertus Grobler (45%). Dewfresh controls two firms, namely Grobler Melkerye (Pty) Ltd and Dewfresh Products (Pty) Ltd, which are both wholly owned subsidiaries of Dewfresh.
[6] Dewfresh is involved in the manufacturing and distribution of a wide range of short and long life dairy and fruit juice products. These products are marketed under a variety of brands and supplied to various retailers.
PROPOSED TRANSACTION AND
RATIONALE
[7] Emasa intends to acquire 45% of the issued share capital in Dewfresh. Post- merger, Emasa will exercise joint control over Dewfresh.
[8] The GEPF’s rationale for the proposed transaction is, as per its mandate, the continued investment of capital in return seeking and high developmental impact projects with the aim of creating and growing sustainable businesses. The transaction also promotes the broad-based black economic empowerment (“B-BBEE”) of Dewfresh through Emasa partnering with Emlek and Asante Afrika which are both black-owned businesses.
RELEVANT MARKET AND
IMPACT ON COMPETITION
[9] The Competition Commission (“Commission”) considered the activities of the merging parties and found no overlaps between the activities of Dewfresh and the activities of the various interests held by the GEPF and the PIC.
[10] In addition, the customers and competitors of Dewfresh contacted by the Commission raised no concerns regarding the proposed transaction.
[11] In light of the above, the Commission concluded that the proposed transaction was unlikely to substantially lessen or prevent
competition in any market. We found no reason to disagree.
PUBLIC INTEREST
[12] The merging parties submitted that the proposed transaction would not have any negative effects on employment. The Commission contacted the Food and Allied Workers Union (“FAWU”) which represents Dewfresh’s employees. FAWU confirmed that Dewfresh’s employees were notified of the proposed transaction and that none raised any concerns.
[13] As Emasa is a special purpose vehicle, it does not have any employees. The Commission found that the proposed transaction was
unlikely to raise any other public interests concerns.
CONCLUSION
[14] In light of the above, we concluded that the proposed transaction was unlikely to substantially prevent or lessen competition in any relevant market. In addition, we are of the view that no public interest concerns arise from the proposed transaction.
[15] Accordingly, we approved the transaction without conditions.
28 July 2020
Date
______
Ms. Mondo Mazwai
Mr. E Daniels and Prof. I Valodia concurring
Tribunal Case Manager: P Kumbirai For the Merging Parties: M van Niekerk of Adams & Adams For the Commission: S Moshoma & T Masithulela
[1] The GEPF is a juristic entity regulated by the Government Employees Pension Law, 1996.
[2]
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