Real Beverage Company (Pty) Ltd v DairyBelle (Pty) Ltd's Yoghurt and Ultra High Temperature Milk Businesses (018879) [2015] ZACT 135; [2016] 1 CPLR 289 (CT) (19 January 2015)

Real Beverage Company (Pty) Ltd v DairyBelle (Pty) Ltd's Yoghurt and Ultra High Temperature Milk Businesses (018879) [2015] ZACT 135; [2016] 1 CPLR 289 (CT) (19 January 2015)

The Tribunal found that the proposed merger would not substantially prevent or lessen competition in the procurement of raw milk or the manufacture and sale of UHT milk, as the merged entity's market shares in relevant regions would remain below thresholds that raise competition concerns. The risk of foreclosure of Danone from secondary distribution services was addressed by imposing a condition requiring Clover to continue supplying Danone until 30 June 2015. The Tribunal identified substantial public interest concerns regarding employment, particularly the risk of retrenchment of at least 59 unskilled workers in Bloemfontein as a direct result of the merger and potential integration of...

Citation
[2015] ZACT 135
Parties
Applicant: The Real Beverage Company (Pty) Ltd; Respondent: DairyBelle (Pty) Ltd's Yoghurt and Ultra High Temperature Milk Businesses; Respondent: Competition Commission
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
19 January 2015
Case Number
018879
Procedural Posture
Merger Review / Reasons for Conditional Approval After Hearing
Outcome
Merger conditionally approved subject to supply and employment conditions.
Judges
Yasmin Carrim, Andreas Wessels, Andiswa Ndoni
Legal Topics
Merger Control, Public Interest Employment, Market Definition, Buyer Power, Horizontal Overlap, Failing Firm Defence
Competition Law Merger Control Public Interest Employment Market Definition Buyer Power Horizontal Overlap Failing Firm Defence

Case Brief

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Parties

The Real Beverage Company (Pty) Ltd

Applicant

DairyBelle (Pty) Ltd's Yoghurt and Ultra High Temperature Milk Businesses

Respondent

Competition Commission

Respondent

Procedural Posture

Merger Review / Reasons for Conditional Approval After Hearing

Legal Issues

  1. 1 Whether the proposed merger would substantially prevent or lessen competition in the procurement of raw milk in relevant geographic markets.
  2. 2 Whether the merger would result in significant competition concerns in the market for the manufacture and sale of UHT milk.
  3. 3 Whether the merger would result in foreclosure of third parties from secondary distribution services.

Ratio Decidendi

The Tribunal found that the proposed merger would not substantially prevent or lessen competition in the procurement of raw milk or the manufacture and sale of UHT milk, as the merged entity's market shares in relevant regions would remain below thresholds that raise competition concerns. The risk of foreclosure of Danone from secondary distribution services was addressed by imposing a condition requiring Clover to continue supplying Danone until 30 June 2015. The Tribunal identified substantial public interest concerns regarding employment, particularly the risk of retrenchment of at least 59 unskilled workers in Bloemfontein as a direct result of the merger and potential integration of...

Court Disposition

Merger conditionally approved subject to supply and employment conditions.

Orders

  • The merger is approved subject to the condition that Clover Industries, Clover SA and its subsidiaries shall continue to supply Danone with secondary distribution services in terms of the Secondary Distribution and Warehousing Agreement (as amended) until 30 June 2015.
  • For a period of three years from the date of approval, the merging parties shall not retrench any of their employees as a result of the merger. Retrenchments do not include voluntary separation arrangements, voluntary early retirement packages, or unreasonable refusals to be redeployed in accordance with the Labour...