Premier FMCG (Pty) Ltd v Lodestone Brands (Pty) Ltd (LM190Jan21) [2021] ZACT 34 (21 April 2021)

Premier FMCG (Pty) Ltd v Lodestone Brands (Pty) Ltd (LM190Jan21) [2021] ZACT 34 (21 April 2021)

The Tribunal found that the proposed merger between Premier FMCG and Lodestone Brands would not substantially prevent or lessen competition in the market for sugar-based confectionary products. The merged entity's market share, while significant, would not confer market power due to the presence of other strong competitors. Concerns regarding foreclosure of access to glucose were unfounded, as there were no exclusive supply arrangements. The Tribunal also considered public interest concerns, particularly regarding employment. Conditions were imposed to protect non-executive employees from retrenchment for 24 months and to ensure that any vacancies arising from natural attrition would be...

Citation
[2021] ZACT 34
Parties
Applicant: Premier FMCG (Pty) Ltd; Respondent: Lodestone Brands (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
21 April 2021
Case Number
LM190Jan21
Procedural Posture
Large Merger / Conditional Approval
Outcome
Merger conditionally approved subject to employment-related conditions.
Judges
Mondo Mazwai, Enver Daniels, Andiswa Ndoni
Legal Topics
Large Merger Review, Market Share Analysis, Public Interest Conditions, Employment Retrenchments
Competition Law Commercial and Corporate Large Merger Review Market Share Analysis Public Interest Conditions Employment Retrenchments

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Parties

Premier FMCG (Pty) Ltd

Applicant

Lodestone Brands (Pty) Ltd

Respondent

Procedural Posture

Large Merger / Conditional Approval

Legal Issues

  1. 1 Whether the proposed merger would substantially prevent or lessen competition in the market for sugar-based confectionary products.
  2. 2 Whether the merger would result in anti-competitive foreclosure of access to glucose for other manufacturers.
  3. 3 Whether the merger would have a negative impact on employment and other public interests.

Ratio Decidendi

The Tribunal found that the proposed merger between Premier FMCG and Lodestone Brands would not substantially prevent or lessen competition in the market for sugar-based confectionary products. The merged entity's market share, while significant, would not confer market power due to the presence of other strong competitors. Concerns regarding foreclosure of access to glucose were unfounded, as there were no exclusive supply arrangements. The Tribunal also considered public interest concerns, particularly regarding employment. Conditions were imposed to protect non-executive employees from retrenchment for 24 months and to ensure that any vacancies arising from natural attrition would be...

Court Disposition

Merger conditionally approved subject to employment-related conditions.

Orders

  • The merger between Premier FMCG (Pty) Ltd and Lodestone Brands (Pty) Ltd is approved subject to the condition that no non-executive employees (excluding five senior executives) will be retrenched for a period of 24 months post-implementation.
  • Any positions that become available due to resignation or natural attrition during the 24-month moratorium period must be filled by employees who would otherwise be retrenched after the moratorium.