Main Street 1511 (Pty) Ltd v Roossenkal Foods Investment Holdings (Pty) Ltd (LM265Jan18) [2018] ZACT 18 (5 March 2018)
- Citation
- [2018] ZACT 18
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Andreas Wessels, Mondo Mazwai, Andiswa Ndoni
- Case number
- LM265Jan18
More details
- Court
- Competition Tribunal
- Panel
- Andreas Wessels, Mondo Mazwai, Andiswa Ndoni
- Case number
- LM265Jan18
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that there is no horizontal overlap between the activities of the merging parties, as the Abraaj Group does not have interests in any KFC or other fast food retail operations in South Africa. The proposed transaction is therefore unlikely to substantially prevent or lessen competition in any relevant market. Furthermore, the merging parties confirmed that the transaction would not result in any retrenchments or job losses, and no other public interest concerns were identified. The Tribunal agreed with the Competition Commission's assessment and approved the merger unconditionally.
Court disposition
The proposed merger is approved unconditionally.
Orders
- The proposed transaction is approved unconditionally.
02
Material facts
Parties
Main Street 1511 (Pty) Ltd
Applicant Counsel: S Van der MeulenRoossenekal Foods Investment Holdings (Pty) Ltd
Respondent Counsel: M SambaAmounts and remedies
- Number of KFC Stores Owned by Roossenekal Foods: 45
- Number of KFC Stores Owned by Roossenekal Two: 17
03
Procedural history
Posture
Merger Approval / Final Determination
04
Questions and positions
Legal issues
- 01
Whether the proposed merger would substantially prevent or lessen competition in any relevant market.
- 02
Whether the merger raises any public interest concerns, including retrenchments or job losses.
Party arguments
- Applicant
- The applicant argued that Bidco is a newly established entity with no business activities in South Africa and that the Abraaj Group, which controls Bidco, does not have interests in any KFC or other fast food retail operations in South Africa. The merger would not result in any retrenchments or job losses, and no other public interest concerns arise.
- Respondent
- The respondent, Roossenekal Foods Investment Holdings, confirmed that the transaction would not result in any retrenchments or job losses and that there are no other public interest concerns. The respondent did not dispute the absence of horizontal overlap or competition concerns.
05
Court’s reasoning
Legal principles
- 01
Competition Act, No. 89 of 1998
A merger may only be prohibited if it is likely to substantially prevent or lessen competition in any relevant market.
- 02
Competition Act, No. 89 of 1998
Public interest considerations, including employment effects, must be assessed in merger proceedings.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that there is no horizontal overlap between the activities of the merging parties, as the Abraaj Group does not have interests in any KFC or other fast food retail operations in South Africa. The proposed transaction is therefore unlikely to substantially prevent or lessen competition in any relevant market. Furthermore, the merging parties confirmed that the transaction would not result in any retrenchments or job losses, and no other public interest concerns were identified. The Tribunal agreed with the Competition Commission's assessment and approved the merger unconditionally.
Obiter and limits
- The Tribunal noted that the merging parties proactively addressed public interest concerns by confirming the absence of retrenchments or job losses.
- The decision reinforces the importance of assessing both competition and public interest factors in merger proceedings.
Court disposition
The proposed merger is approved unconditionally.
- The proposed transaction is approved unconditionally.
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: LM265Jan18
In the matter between:
Main Street 1511 (Pty) Ltd
Primary Acquiring Firm
And
Roossenekal Foods Investment Holdings (Pty) Ltd
Primary Target Firm
Panel : Andreas Wessels (Presiding Member)
: Mondo Mazwai (Tribunal Member)
: Andiswa Ndoni (Tribunal Member)
Heard on : 21 February 2018
Order Issued on : 21 February 2018
Reasons Issued on : 5 March 2018
REASONS
FOR DECISION
Approval
[1] On 21 February 2018, the Competition Tribunal (''Tribunal") unconditionally approved the proposed transaction involving Main
Street 1511 (Pty) Ltd ("Bidco") and Roossenekal Foods Investment Holdings (Pty) Ltd ("Roossenekal"), hereinafter
collectively referred to as the merging parties.
[2] The reasons for approval of the proposed transaction follow.
Parties to the proposed transaction
Primary Acquiring Firm
[3] Bidco is a newly established entity for purposes of the proposed transaction. It currently conducts no business activities in South
Africa.
[4] Bidco is controlled, through various offshore holding companies, by private equity investment funds that are ultimately controlled by Abraaj Holdings ("Abraaj"), a company incorporated in accordance with the laws of the Cayman Islands. Abraaj and its various subsidiaries and investments funds are hereinafter collectively referred to as the 'Abraaj Group'.
[5] The Abraaj Group directly and indirectly controls a number of entities globally. In South Africa, the Abraaj Group manages private equity funds which control Libstar Holdings (Pty) Ltd ("Libstar'').
[6] Libstar is broadly active in the foods and services sector, namely the manufacture and distribution of food, beverage and other consumer products.
Primary Target Firm
[7] Roossenekal is controlled by the Elaine and Selwyn Schaffer Family Trust ("Schaffer Family Trust").
[8] Roossenekal controls Roossenekal Foods (Pty) Ltd ("Roossenekal Foods") and Roossenekal Two (Pty) Ltd ("Roossenekal Two").
[9] Roossenekal, through its subsidiaries, trades as a KFC franchisee. Roossenekal Foods owns and operates 45 KFC stores and Roossenekal Two owns and operates 17 KFC stores. These KFC franchises are located in Mpumalanga, Gauteng, the North West and Limpopo.
Proposed transaction
[10] In terms of the Sale of Shares and Claims Agreement, Bidco will acquire 100% of the issued capital in Roossenekal and would therefore control Roossenekal post-merger.
Impact on competition
[11] The Competition Commission ("Commission") found no horizontal overlap between the activities of the merging parties since the Abraaj Group does not have interests in any KFC or other fast food retail operations in South Africa. The Commission therefore concluded that proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market. We agree with the Commission's conclusion.
Public interest
[12] The merging parties confirmed that the proposed transaction will not result in any retrenchments or job losses.[1]
[13] The proposed transaction raises no other public interest concerns.
Conclusion
[14] In light of the above, we conclude that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market. In addition, no public interest issues arise from the proposed transaction. Accordingly, we approve the proposed transaction unconditionally.
Mr Andrea Wessels
Ms Mondo Mazwai and Ms Andiswa Ndoni concurring
5 March 2018
Tribunal Researcher: Hlumelo Vazi
For the Merging Parties: S Van der Meulen of Webber Wentzel and M Samba
of ENSafrica
For the Commission: I Mhlongo and Z Hadebe
[1]Merger Record, pages 10 and 206.
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