Premier Group (Pty) Ltd v Border Star Bakery (Pty) Ltd and Others (017434) [2013] ZACT 111; [2013] 2 CPLR 557 (CT) (4 November 2013)

Premier Group (Pty) Ltd v Border Star Bakery (Pty) Ltd and Others (017434) [2013] ZACT 111; [2013] 2 CPLR 557 (CT) (4 November 2013)

The Tribunal found that the merger would not increase the likelihood of coordinated effects despite the history of collusion in the bread industry. Premier's new management and compliance initiatives mitigate the risk of future collusion. The lease arrangement with Pioneer does not provide Pioneer with undue influence over Premier. Foreclosure concerns are unfounded as Premier cannot economically supply flour to the target firms from its mills outside the Eastern Cape, and local supplier Mr Bread will continue to supply the target firms. Public interest concerns regarding retrenchments are not merger-specific and thus do not affect the approval. The merger is approved without conditions.

Citation
[2013] ZACT 111
Parties
Applicant: Premier Group (Pty) Ltd; Respondent: Border Star Bakery (Pty) Ltd; Respondent: Border Star Bakery (EP) (Pty) Ltd; Respondent: Sikunye Bakery (Pty) Ltd; Respondent: Westpat Properties cc
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
4 November 2013
Case Number
017434
Procedural Posture
Merger Approval / Decision on Approval
Outcome
Merger approved without conditions.
Judges
N Manoim, A Wessels, M Mokuena
Legal Topics
Horizontal Merger, Vertical Merger, Coordinated Effects, Foreclosure, Public Interest, Bread Market
Competition Law Commercial and Corporate Horizontal Merger Vertical Merger Coordinated Effects Foreclosure Public Interest Bread Market

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Parties

Premier Group (Pty) Ltd

Applicant

Border Star Bakery (Pty) Ltd

Respondent

Border Star Bakery (EP) (Pty) Ltd

Respondent

Sikunye Bakery (Pty) Ltd

Respondent

Westpat Properties cc

Respondent

Procedural Posture

Merger Approval / Decision on Approval

Legal Issues

  1. 1 Whether the merger would result in coordinated effects given the history of collusion in the bread industry.
  2. 2 Whether the merger would lead to foreclosure concerns due to Premier's vertical integration and potential self-supply of flour.
  3. 3 Whether the merger would have adverse public interest effects, specifically regarding employee retrenchments.

Ratio Decidendi

The Tribunal found that the merger would not increase the likelihood of coordinated effects despite the history of collusion in the bread industry. Premier's new management and compliance initiatives mitigate the risk of future collusion. The lease arrangement with Pioneer does not provide Pioneer with undue influence over Premier. Foreclosure concerns are unfounded as Premier cannot economically supply flour to the target firms from its mills outside the Eastern Cape, and local supplier Mr Bread will continue to supply the target firms. Public interest concerns regarding retrenchments are not merger-specific and thus do not affect the approval. The merger is approved without conditions.

Court Disposition

Merger approved without conditions.

Orders

  • The merger between Premier Group (Pty) Ltd and the Eastern Cape Bakeries is approved without conditions.