K2020211444 (South Africa) (Pty) Ltd v Barrie Cline Clothing (Pty) Ltd (LM082Aug20.2020.) [2020] ZACT 70 (9 November 2020)

K2020211444 (South Africa) (Pty) Ltd v Barrie Cline Clothing (Pty) Ltd (LM082Aug20.2020.) [2020] ZACT 70 (9 November 2020)

The Tribunal found that the proposed merger would not substantially prevent or lessen competition in the relevant apparel markets. The vertical relationship between the parties, with Barrie Cline exclusively supplying Truworths, would remain unchanged post-merger. Barrie Cline's limited market share and lack of supply to third parties meant no input foreclosure would occur. Truworths Group's market share in downstream retail was less than 10%, and it procured apparel from numerous other design houses, negating customer foreclosure concerns. Public interest considerations were addressed through a one-year moratorium on merger-specific retrenchments and the continued engagement of small and...

Citation
[2020] ZACT 70
Parties
Applicant: K2020211444 (South Africa) (Pty) Ltd; Respondent: Barrie Cline Clothing (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
9 November 2020
Case Number
LM082Aug20.2020.
Procedural Posture
Merger Control / Tribunal Approval With Conditions
Outcome
Merger approved subject to conditions.
Judges
M Mazwai, Y Carrim, Fiona Tregenna
Legal Topics
Merger Control, Vertical Integration, Input Foreclosure, Public Interest, Employment Protection
Competition Law Merger Control Vertical Integration Input Foreclosure Public Interest Employment Protection

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Parties

K2020211444 (South Africa) (Pty) Ltd

Applicant

Barrie Cline Clothing (Pty) Ltd

Respondent

Procedural Posture

Merger Control / Tribunal Approval With Conditions

Legal Issues

  1. 1 Whether the proposed merger would substantially prevent or lessen competition in the relevant apparel markets.
  2. 2 Whether the transaction raises public interest concerns, including employment and the impact on small businesses and historically disadvantaged persons.
  3. 3 Whether the merger would result in input or customer foreclosure in the apparel value chain.

Ratio Decidendi

The Tribunal found that the proposed merger would not substantially prevent or lessen competition in the relevant apparel markets. The vertical relationship between the parties, with Barrie Cline exclusively supplying Truworths, would remain unchanged post-merger. Barrie Cline's limited market share and lack of supply to third parties meant no input foreclosure would occur. Truworths Group's market share in downstream retail was less than 10%, and it procured apparel from numerous other design houses, negating customer foreclosure concerns. Public interest considerations were addressed through a one-year moratorium on merger-specific retrenchments and the continued engagement of small and...

Court Disposition

Merger approved subject to conditions.

Orders

  • The merger is approved subject to a one-year moratorium on merger-specific retrenchments.
  • All employees of Barrie Cline Clothing (Pty) Ltd are to be transferred to Truworths Group in accordance with section 197 of the Labour Relations Act.