Foodcorp (Pty) Ltd v Sunshine Bakery Holdings (Pty) Ltd (LM089Aug22) [2022] ZACT 92 (5 December 2022)

Foodcorp (Pty) Ltd v Sunshine Bakery Holdings (Pty) Ltd (LM089Aug22) [2022] ZACT 92 (5 December 2022)

The Tribunal found that the proposed merger would not substantially prevent or lessen competition in the relevant markets, as the merged entity would have a relatively low market share in both bread and bread flour supply. The Tribunal accepted the Commission's recommendation to impose procurement conditions for two years, requiring the Target Firm to procure at least 50% of its quarterly bread flour requirements from independent suppliers, subject to reasonable commercial terms. The Tribunal rejected the request to extend the condition to three years but accepted the proposal to stagger procurement quarterly. The transaction was found to have a positive impact on Broad Based Black...

Citation
[2022] ZACT 92
Parties
Applicant: Foodcorp (Pty) Ltd; Respondent: Sunshine Bakery Holdings (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
5 December 2022
Case Number
LM089Aug22
Procedural Posture
Large Merger Review / Reasons for Decision
Outcome
Merger approved subject to procurement conditions for two years.
Judges
Yasmin Carrim, Imraan Valodia, Fiona Tregenna
Legal Topics
Merger Control, Vertical and Horizontal Overlap, Input Foreclosure, Public Interest, B Bbee Ownership
Competition Law Merger Control Vertical and Horizontal Overlap Input Foreclosure Public Interest B Bbee Ownership

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Parties

Foodcorp (Pty) Ltd

Applicant

Sunshine Bakery Holdings (Pty) Ltd

Respondent

Procedural Posture

Large Merger Review / Reasons for Decision

Legal Issues

  1. 1 Whether the proposed merger between Foodcorp and Sunshine Bakery Holdings will substantially prevent or lessen competition in the relevant markets.
  2. 2 Whether the transaction will result in input or customer foreclosure in the bread flour market in KwaZulu-Natal.
  3. 3 Whether the merger raises any public interest concerns under section 12A(3) of the Competition Act.

Ratio Decidendi

The Tribunal found that the proposed merger would not substantially prevent or lessen competition in the relevant markets, as the merged entity would have a relatively low market share in both bread and bread flour supply. The Tribunal accepted the Commission's recommendation to impose procurement conditions for two years, requiring the Target Firm to procure at least 50% of its quarterly bread flour requirements from independent suppliers, subject to reasonable commercial terms. The Tribunal rejected the request to extend the condition to three years but accepted the proposal to stagger procurement quarterly. The transaction was found to have a positive impact on Broad Based Black...

Court Disposition

Merger approved subject to procurement conditions for two years.

Orders

  • The merger between Foodcorp (Pty) Ltd and Sunshine Bakery Holdings (Pty) Ltd is approved subject to the conditions contained in Annexure A.
  • For two years from the Implementation Date, the Target Firm must procure at least 50% of its quarterly bread flour requirements from independent bread flour suppliers, subject to reasonable commercial terms.