Philafrica Foods (Pty) Ltd v Sunshine Bakery Holdings (Pty) Ltd (LM160Aug18) [2018] ZACT 46 (15 November 2018)

Philafrica Foods (Pty) Ltd v Sunshine Bakery Holdings (Pty) Ltd (LM160Aug18) [2018] ZACT 46 (15 November 2018)

The Tribunal found that the proposed merger creates a vertical relationship between the AFGRI Group (upstream flour production) and Sunshine Bakery Holdings (downstream bread and confectionery production). Both parties hold minimal market shares in their respective markets, and the AFGRI Group does not supply flour to Sunshine Bakery's competitors in KwaZulu Natal. The geographic distance and cost factors make it unviable for AFGRI to supply flour to Sunshine Bakery, and the latter sources flour from local mills. The Commission's investigation revealed no ability or incentive for input or customer foreclosure. No competitors or employees raised concerns, and no adverse public interest...

Citation
[2018] ZACT 46
Parties
Applicant: Philafrica Foods (Pty) Ltd; Respondent: Sunshine Bakery Holdings (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
15 November 2018
Case Number
LM160Aug18
Procedural Posture
Merger Approval / Final Decision
Outcome
Merger approved unconditionally.
Judges
Enver Daniels, Medi Mokuena, Fiona Tregenna
Legal Topics
Vertical Merger, Input Foreclosure, Customer Foreclosure, Public Interest, Market Share Analysis
Competition Law Commercial and Corporate Vertical Merger Input Foreclosure Customer Foreclosure Public Interest Market Share Analysis

Case Brief

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Parties

Philafrica Foods (Pty) Ltd

Applicant

Sunshine Bakery Holdings (Pty) Ltd

Respondent

Procedural Posture

Merger Approval / Final Decision

Legal Issues

  1. 1 Whether the proposed merger between Philafrica Foods and Sunshine Bakery Holdings is likely to substantially lessen or prevent competition in any market.
  2. 2 Whether the merger raises concerns of input or customer foreclosure.
  3. 3 Whether the merger will have adverse effects on public interest grounds, including employment.

Ratio Decidendi

The Tribunal found that the proposed merger creates a vertical relationship between the AFGRI Group (upstream flour production) and Sunshine Bakery Holdings (downstream bread and confectionery production). Both parties hold minimal market shares in their respective markets, and the AFGRI Group does not supply flour to Sunshine Bakery's competitors in KwaZulu Natal. The geographic distance and cost factors make it unviable for AFGRI to supply flour to Sunshine Bakery, and the latter sources flour from local mills. The Commission's investigation revealed no ability or incentive for input or customer foreclosure. No competitors or employees raised concerns, and no adverse public interest...

Court Disposition

Merger approved unconditionally.

Orders

  • The large merger between Philafrica Foods (Pty) Ltd and Sunshine Bakery Holdings (Pty) Ltd is approved without conditions.