Southern African Clothing and Textile Workers' Union v Competition Commission and Another (IM161Dec14) [2015] ZACT 144 (28 May 2015)
- Citation
- [2015] ZACT 144
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Medi Mokuena, Andiswa Ndoni, Fiona Tregenna
- Case number
- IM161Dec14
More details
- Court
- Competition Tribunal
- Panel
- Medi Mokuena, Andiswa Ndoni, Fiona Tregenna
- Case number
- IM161Dec14
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the applicant's request to extend the no-retrenchment condition from one year to three years was justified, given the prior agreement between the union and the merging parties. Tribunal-imposed conditions are legally enforceable and provide greater protection for employees than private undertakings. The Tribunal held that public interest considerations, particularly employment protection, are paramount in the current economic climate. Accordingly, the Tribunal amended the merger condition to prohibit retrenchments (except for affected employees) for three years following the implementation date.
Court disposition
Application granted; merger condition amended to extend no-retrenchment period to three years.
Orders
- Clause 3.4 of the merger conditions is amended to read: 'Apart from the Affected Employees, there shall be no retrenchment of any other employees as a result of the Merger in the Acquiring Firms as well as the Target Firms for a period of three (3) years after the Implementation Date.'
02
Material facts
Parties
Southern African Clothing and Textile Workers' Union
Applicant Counsel: Michelle le RouxCompetition Commission
Respondent Counsel: Ziyaad MintyNewCo One, Bagshaw Footwear (Pty) Ltd, Bolton Footwear (Pty) Ltd, Kap Manufacturing (Pty) Ltd, United Fram, Wayne Plastics, Mossop Western Leathers, Jordan Shoes (the Merging Parties)
Respondent Counsel: Andile Nikani03
Procedural history
Posture
Review Application / Application for Reconsideration of Merger Conditions
04
Questions and positions
Legal issues
- 01
Whether the Tribunal should amend the merger conditions to extend the period of protection against retrenchments from one year to three years.
- 02
Whether a prior agreement between the union and merging parties regarding retrenchments should be incorporated as a Tribunal condition.
- 03
Whether Tribunal-imposed conditions provide greater enforceability than private undertakings.
Party arguments
- Applicant
- The applicant argued that the merger condition imposed by the Commission, which protected employees from retrenchment for only one year, was insufficient. SACTWU had previously secured a three-year no-retrenchment undertaking from the merging parties, and sought to have this incorporated as a Tribunal condition to ensure enforceability under the Competition Act. The applicant contended that Tribunal conditions carry legal weight and can be enforced through administrative penalties, whereas private undertakings are less secure.
- Respondent
- The respondents did not oppose the application. The merging parties confirmed their willingness to honour the prior agreement with SACTWU, extending the no-retrenchment period to three years. The Commission indicated that it considers such agreements on a case-by-case basis, but did not object to the Tribunal amending the condition as requested.
05
Court’s reasoning
Legal principles
- 01
Competition Act No. 89 of 1998, section 59
Tribunal-imposed conditions on mergers are enforceable under the Competition Act and may attract administrative penalties if breached.
- 02
Competition Act No. 89 of 1998, section 12A
Public interest considerations, including employment protection, must be taken into account in merger proceedings.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the applicant's request to extend the no-retrenchment condition from one year to three years was justified, given the prior agreement between the union and the merging parties. Tribunal-imposed conditions are legally enforceable and provide greater protection for employees than private undertakings. The Tribunal held that public interest considerations, particularly employment protection, are paramount in the current economic climate. Accordingly, the Tribunal amended the merger condition to prohibit retrenchments (except for affected employees) for three years following the implementation date.
Obiter and limits
- The Commission should take cognisance of agreements reached between unions and merging parties when considering public interest issues, so as not to undermine constructive engagement concerning employment.
- Employment protection remains a critical public interest factor in merger proceedings, especially given South Africa's economic challenges.
Court disposition
Application granted; merger condition amended to extend no-retrenchment period to three years.
- Clause 3.4 of the merger conditions is amended to read: 'Apart from the Affected Employees, there shall be no retrenchment of any other employees as a result of the Merger in the Acquiring Firms as well as the Target Firms for a period of three (3) years after the Implementation Date.'
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
Judgment
COMPETITION TRIBUNAL
OF SOUTH AFRICA
Case No: IM161Dec14
In the matter between:
Southern African Clothing and Textile
Workers' Union
Applicant
and
The Competition Commission First Respondent
NEWCO ONE, BAGSHAW FOOTWEAR (PTY) LTD,
BOLTON FOOTWEAR (PTY) LTD,
KAP MANUFACTURING (PTY) LTD, THE DIVISIONS,
UNITED FRAM, WAYNE PLASTICS, MOSSOP WESTERN
LEATHERS, JORDAN SHOES
(together "THE MERGING PARTIES")
Second Respondent
Panel
: Medi Mokuena (Presiding Member)
: Andiswa Ndoni (Tribunal Member)
: Fiona Tregenna (Tribunal Member)
Heard on : 06 May 2015
Order Issued on : 06 May2015
Reasons Issued on : 28 May 2015
Reasons for Decision
Conditional approval
[1] On 11 December 2014, the Southern African Clothing and Textile Workers' Union ("SACTWU") filed an application in terms of section 16(1)(b) of the Competition Act No. 89 of 1998("the Act") requesting the Competition Tribunal ("Tribunal") to reconsider an intermediate merger that was conditionally approved by the Competition Commission ("Commission") on 30 September
2014. The merger entailed NewCo One ("NewCo"), Bagshaw Footwear (Pty) Ltd ("Bagshaw") and Bolton Footwear (Pty) Ltd ("Bolton") acquiring the four divisions of Kap Manufacturing (Pty) Ltd ("Kap") namely: United Fram, Wayne Plastics, Mossop Western Leathers ("Mossop") and Jordan Shoes. For purposes of this application these firms will be referred to as the Merging Parties.
[2] The Commission conditionally approved the transaction by imposing an obligation on the Merging Parties not to retrench employees at United Fram for a period of one (1) year from the Implementation Date of the proposed transaction. The main reason the Applicant filed this application before us was because prior to the notification of the transaction, SACTWU and the Merging Parties had entered into an agreement ("Prior Agreement"), which entailed an undertaking not to retrench workers at several firms for a period of three years.
[3] It is worth noting that the Application before us was unopposed by both the Commission and the Merging Parties. In light of this we will not reconsider the transaction as a whole but only consider the public interest issues that form the basis of this application.
Background
The Applicant
[4]
SACTWU is one of the registered trade unions present at the merging parties operations in South Africa. It filed a Notice of Intention to Participate in relation to the current intermediate merger.[1]
The Merging Parties
[5] NewCo, at the time of the merger was yet to be formed for purposes of the transaction.
5.1 Bolton comprises of three divisions, namely Bagshaw Footwear, Watson Shoes and Barker Footwear, which all manufacture different types of footwear. Bagshaw is a manufacturer of multiple brands of leather safety footwear.
Barker Footwear manufactures men's formal footwear on leather sole. Its target market is young business executives looking for fashionable, yet reasonably priced formal footwear. It is worthy to note that Bolton also has another division called Watson Shoes which has manufacturing facilities in Southern Cape, and houses a number of brands for men, women and children's footwear.
5.3 Kap is an investment company with a portfolio of diverse manufacturing businesses including leather products, footwear, automotive components and food. All Kap's businesses are conducted through United Fram, Wayne Plastics, Jordan Shoes and Mossop. United Fram is a manufacturer and importer of leather safety footwear. Wayne Plastics is a manufacturer of gumboots. Jordan Shoes is a manufacturer and importer of civilian footwear, but also specialises in casual and fashion footwear. Mossop is a manufacturer of bovine tanned leather used in the manufacturing of leather footwear. It produces a range of leathers such as full grain sides, corrected grain slides, Tektan splits, suede splits inter alia.
Proposed transaction
[6] The transaction entails various steps wherein the following would take place:
6.1 The leather safety footwear transaction: Beier and Bagshaw will form NewCo. United Fram will then be acquired by NewCo. This would then result in a horizontal overlap between Beier, Bagshaw, United Fram and Wayne Plastics, as they all manufacture and supply safety footwear.
6.2
The civilian footwear transaction: This involves the merger between Watson Footwear, Barker Footwear and Jordan Shoes. This would result in a horizontal overlap in relation to civilian footwear.
6.3 The Acquisition of Mossop: Mossop will be jointly acquired by Bolton, NewCo and SKN (Rahman Industries). Mossop is a leather tanner and thus a vertical relationship exists between Mossop and Jordan Shoes, Barker Footwear and Watson Shoes.
The Current Application
[7] As already mentioned above, neither of the respondents opposed the current application. The Merging Parties informed us that they had re-assured SACTWU that despite the Commission's one year conditional approval, they would honour their agreement with the union that was concluded prior to the transaction notification.
[8]
SACTWU submitted that the reason for bringing the application related to the enforceability of an undertaking versus that of a Tribunal condition. The former obviously carried less weight than the latter. If one fails to abide by a condition imposed by the Tribunal one would be liable in terms of the Act and the Tribunal can impose an administrative penalty in terms of sections 59 of the Act.[2]
[9] Although the Commission indicated that it would regard such agreements between parties on a case by case basis, the Commission would be well advised when considering public interest issues to take cognisance of those conditions agreed to between unions and merging parties, so that it does not undermine any constructive engagement concerning employment which, in the current economic climate in South Africa, is of utmost importance.
[10] Therefore, having heard the Applicant's submissions, the Competition Tribunal orders that clause 3.4 in the conditions attached to the Merger (and attached hereto as "Annexure A"), be amended as follows:
"a. Apart from the Affected Employees, there shall be no retrenchment of any other employees as a result of the Merger in the Acquiring Firms as well as the Target Firms for a period of three (3) years after the Implementation Date."
Conclusion
[11] In light of the above, the application in SACTWU's notice of motion is hereby granted.
Ms Medi Mokuena
28 May 2015
DATE
Ms Andiswa Ndoni and Prof. Fiona Tregenna concurring.
Tribunal Researcher: Caroline Sserufusa
For the Applicant: Michelle le Roux instructed by Cheadle Thompson &
Hayson
For the merging parties: Andile Nikani of Fluxmans Attorneys
For the Commission: Ziyaad Minty
[1]
SACTWU filed its Notice of Intention to participate in the proceedings on 16 July 2014.
[2] See page 3 of the transcript of the hearing.
Case-aware research
Ask AI about this case
The judgment and available research above are public. New questions open in a separate private conversation grounded in this case.