Oceana Group Ltd and Another v Competition Commission; In Re: Oceana Group Ltd v Foodcorp (Pty) Ltd (018101) [2014] ZACT 35; [2014] 1 CPLR 17 (CT) (11 June 2014)

Oceana Group Ltd and Another v Competition Commission; In Re: Oceana Group Ltd v Foodcorp (Pty) Ltd (018101) [2014] ZACT 35; [2014] 1 CPLR 17 (CT) (11 June 2014)

The Tribunal found that post-merger, the Glenryck brand, if separated from its quota, would be unable to compete effectively in the canned pilchards market due to increased costs and reduced margins. Reliance on third party quota and imports would place Glenryck at a disadvantage compared to the dominant Lucky Star brand, which would gain further access to the cheapest input. The evidence showed that barriers to entry and expansion would increase for smaller players, and the merger would entrench Oceana's dominance. The Bidfish offer was not part of the notified transaction and did not address the competition concerns. Public interest factors such as employment and transformation could be...

Citation
[2014] ZACT 35
Parties
Applicant: Oceana Group Limited; Applicant: Foodcorp (Proprietary) Limited; Respondent: Competition Commission
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
11 June 2014
Case Number
018101
Procedural Posture
Review Application / Conditional Approval of Intermediate Merger After Reconsideration Hearing
Outcome
Merger conditionally approved subject to divestiture of Glenryck brand and Foodcorp's small pelagic fishing rights prior to implementation.
Judges
Yasmin Carrim, Imraan Valodia, Andiswa Ndoni
Legal Topics
Merger Control, Substantial Lessening of Competition, Barriers to Entry, Public Interest, Vertical Integration, Divestiture Conditions
Competition Law Commercial and Corporate Merger Control Substantial Lessening of Competition Barriers to Entry Public Interest Vertical Integration Divestiture Conditions

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Parties

Oceana Group Limited

Applicant

Foodcorp (Proprietary) Limited

Applicant

Competition Commission

Respondent

Procedural Posture

Review Application / Conditional Approval of Intermediate Merger After Reconsideration Hearing

Legal Issues

  1. 1 Whether the merger between Oceana and Foodcorp would result in a substantial lessening of competition in the canned pilchards market.
  2. 2 Whether the Glenryck brand can remain an effective competitor without the support of Foodcorp's small pelagic fishing quota.
  3. 3 Whether public interest considerations, including employment and transformation, justify approval of the merger without divestiture of quota.

Ratio Decidendi

The Tribunal found that post-merger, the Glenryck brand, if separated from its quota, would be unable to compete effectively in the canned pilchards market due to increased costs and reduced margins. Reliance on third party quota and imports would place Glenryck at a disadvantage compared to the dominant Lucky Star brand, which would gain further access to the cheapest input. The evidence showed that barriers to entry and expansion would increase for smaller players, and the merger would entrench Oceana's dominance. The Bidfish offer was not part of the notified transaction and did not address the competition concerns. Public interest factors such as employment and transformation could be...

Court Disposition

Merger conditionally approved subject to divestiture of Glenryck brand and Foodcorp's small pelagic fishing rights prior to implementation.

Orders

  • The merger between Oceana Group Limited and Foodcorp (Pty) Ltd is approved on condition that the Glenryck brand and Foodcorp's small pelagic fishing rights are divested prior to implementation.
  • No implementation of the merger may occur until the divestiture is completed.