Opiconsivia Trading 99 (Pty) Ltd v The Fruitspot Group (55/LM/Jul11) [2011] ZACT 111; [2012] 1 CPLR 165 (CT) (20 December 2011)
- Citation
- [2011] ZACT 111
- Status
- Order
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- N Manoim, Y Carrim, A Wessels
- Case number
- 55/LM/Jul11
More details
- Court
- Competition Tribunal
- Panel
- N Manoim, Y Carrim, A Wessels
- Case number
- 55/LM/Jul11
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the merger between Opiconsivia Trading 99 (Pty) Ltd and The Fruitspot Group did not raise substantial competition concerns, provided that specific conditions were imposed to protect small independent retailers and external customers. The Tribunal approved the merger subject to conditions requiring Massmart to maintain Fruitspot's pre-merger conditions of service for all customers, including small independent retailers and those in the hospitality industry, and to ensure non-discriminatory supply in the event of shortages. The Tribunal further required notification of these conditions to all existing customers and provided for monitoring and enforcement mechanisms. The conditions would remain in force for two years from the approval date, with provision for amendment or lifting upon application to the Tribunal.
Court disposition
Merger approved subject to conditions.
Orders
- The merger between Opiconsivia Trading 99 (Pty) Ltd and The Fruitspot Group is approved in terms of section 16(2)(b) of the Competition Act, subject to the conditions set out in Annexure A.
- A Merger Clearance Certificate is to be issued in terms of Competition Tribunal Rule 35(5)(a).
02
Material facts
Parties
Opiconsivia Trading 99 (Pty) Ltd
ApplicantThe Fruitspot Group
Respondent03
Procedural history
Posture
Merger Application / Final Determination
04
Questions and positions
Legal issues
- 01
Whether the proposed merger between Opiconsivia Trading 99 (Pty) Ltd and The Fruitspot Group should be approved under the Competition Act.
- 02
Whether conditions should be imposed to protect small independent retailers and ensure non-discriminatory treatment post-merger.
Party arguments
- Applicant
- The merging parties submitted that the transaction would not substantially prevent or lessen competition in any relevant market. They argued that the merger would not negatively affect small independent retailers or customers in the hospitality industry, and that Fruitspot's conditions of service would be maintained post-merger. They accepted the imposition of conditions to ensure continued service quality and non-discrimination.
- Respondent
- The Competition Commission recommended approval of the merger subject to conditions. The Commission argued that, to prevent potential adverse effects on small independent retailers and external customers, conditions should be imposed requiring Massmart to maintain Fruitspot's pre-merger service standards and to ensure non-discriminatory supply in the event of shortages.
05
Court’s reasoning
Legal principles
- 01
Competition Act 89 of 1998, section 16(2)(b)
A merger may be approved subject to conditions that prevent anti-competitive effects and protect vulnerable market participants.
- 02
Competition Tribunal Rule 35(5)(a)
The Tribunal may impose conditions to ensure continued service quality and non-discriminatory treatment of customers post-merger.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the merger between Opiconsivia Trading 99 (Pty) Ltd and The Fruitspot Group did not raise substantial competition concerns, provided that specific conditions were imposed to protect small independent retailers and external customers. The Tribunal approved the merger subject to conditions requiring Massmart to maintain Fruitspot's pre-merger conditions of service for all customers, including small independent retailers and those in the hospitality industry, and to ensure non-discriminatory supply in the event of shortages. The Tribunal further required notification of these conditions to all existing customers and provided for monitoring and enforcement mechanisms. The conditions would remain in force for two years from the approval date, with provision for amendment or lifting upon application to the Tribunal.
Obiter and limits
- The Tribunal noted that the conditions imposed are intended to safeguard competition and service quality for small independent retailers, who may be vulnerable to changes in supply terms post-merger.
- The Tribunal observed that the duration of the conditions is limited to two years, but may be revised or lifted on good cause shown.
Court disposition
Merger approved subject to conditions.
- The merger between Opiconsivia Trading 99 (Pty) Ltd and The Fruitspot Group is approved in terms of section 16(2)(b) of the Competition Act, subject to the conditions set out in Annexure A.
- A Merger Clearance Certificate is to be issued in terms of Competition Tribunal Rule 35(5)(a).
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
Order
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No.: 55/LM/Jul11
In the matter between:
Opiconsivia Trading 99 (Pty) Ltd
and
The Fruitspot Group
Panel: N Manoim (Presiding Member),
Y Carrim (Tribunal Member) and
A Wessels (Tribunal Member)
Heard on : 14 December 2011
Decided on : 20 December 2011
ORDER
Further to the recommendation of the Competition Commission in terms of section 14A(1)(b) of the Competition Act, 1998 ("the Act") the Competition Tribunal orders that -
1. the merger between Opiconsivia Trading 99 (Pty) Ltd and the Fruitspot Group be approved in terms of section 16(2)(b) of the Act subject to the conditions set out in Annexure A; and
2. a Merger Clearance Certificate be issued in terms of Competition Tribunal Rule 35(5)(a).
Presiding Member
N. Manoim
Concurring: Y Carrim and A Wessels
OPICONSIVIA TRADING 99 (t/a Makro)/THE
FRUITSPOT GROUP
CC CASE NUMBER: 2011Jul0139
1. Definitions
The following expressions shall bear the meanings assigned to them below and cognate expressions bear corresponding meanings -
1.1 "Approval Date" means the date on which a settlement agreement containing these Conditions between the Commission and. the merging parties is confirmed by the Tribunal]
1.2 "Commission" means the Competition Commission of South Africa;
1.3 "Competition Act" means the Competition Act 89 of 1998, as amended;
1.4 "Fruitspot" means the business of Fruitspot Group which is comprised of: Fruit Spot (Pty) Ltd, The Fruit Shop (Pty) Ltd and Fruit Express (Pty) Ltd, and which business will be transferred to the Massmart Group upon implementation of the merger.
1.5 "Fruitspot conditions of service" means all elements governing the quality of Fruitspot's service to customers and the manner in which that service is delivered to customers, such elements include but are not limited to: the volume of produce ordered (as well as historical volume and future prospects),price, quality of produce, product range, point of delivery, frequency of delivery, turnaround time, continuity of supply, payment terms, customer's credit worthiness, credit and payment history.
1.6 "Market conditions" means forces active in the market which fail out of the control of the Massmart Group or Fruitspot. This includes but is not limited to: availability of produce, seasonality and economic conditions.
1.7 "Massmart Group" means all trading divisions of Massmart, namely Masswarehouse, Massdiscounters, Massbuiid and Masscash.
1.8 "Massmart" means Massmart Holdings Limited, a subsidiary of Wal-Mart Inc.
1.9. "Small independent retailers" means a retail store or chain of retail stores which is not owned by a major retail or wholesale group (specifically, the major retail groups including Metcash Limited, Shoprite Checkers Limited, Pick 'n Pay Stores Limited, Woolworths (Pty) Ltd and Spar Group Limited).Spar franchise stores owned by individuals are not considered as being owned by the Spar Group and are considered as small independent retailers', the same applies to Pick 'n Pay.
1.10. "Tribunal" means the Competition Tribunal of South Africa. 2.
2. Preamble
These conditions ("the Conditions") are intended to ensure that Massmart ensures that Fruitspot continues to provide post-merger the same level and quality of service it currently provides to its customers, in particular to small independent retailers.
3. Condition
3.1. Massmart will .ensure that Fruitspot will, post the merger, continue to trade with all existing small independent retailers, customers in the hospitality industry and any new small independent retailers in a manner that is consistent with Fruitspot's conditions of service applied prior to the merger.
3.2. In addition, Massmart will, apply Fruitspot's conditions of service in trading with external customers in the same manner as it does with customers within the Massmart Group. For the avoidance of doubt, this means that external customers will be entitled to the same transaction terms from Fruitspot as customers within the Massmart Group, provided that Fruitspot's conditions of service are equivalent for each transaction.
3.3. Massmart will ensure that there will be no changes to Fruitspot's conditions of service except those resulting from market conditions and which would have occurred had Fruitspot remained independent of the Massmart Group.
3.4. In the event of a shortage in supply, Massmart will, supply all customers, including other Massmart subsidiaries, on a non-discriminatory basis. Massmart will, ensure that available supply is distributed in a proportionate manner so that the shortfall is not concentrated on small independent retailers and customers in the hospitality industry.
4. Monitoring of compliance with this Condition
4.1. The merging parties will inform all their existing customers of the provisions in this condition within one month of the Approval Date.To this end, the merging parties must provide an affidavit by a senior official attesting to this and a copy of the notice sent to customers within one month of the Approval Date.For the purposes hereof, "existing customers" means active customers that have made purchases within the preceding 3 (three) months.
4.2. In the event that the Commission, receives a complaint from a small independent retailer regarding non-compliance by Fruitspot or the Massmart Group with these Conditions, or otherwise determines that there has been an apparent breach by Fruitspot or the Massmart Group of such Conditions, that shall be dealt with in terms of Rule 39 of the Rules for the Conduct of Proceedings in the Commission.
5. Duration of the Conditions
5.1. The Conditions contained herein shall exist for a period of 2 (two) years from the Approval Date.
5.2. The Tribunal may on good cause shown, lift, revise or amend these Conditions upon being approached by the merging parties.
4
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