SPAR Group Ltd v SPAR Encore Ltd (LM133Oct22) [2023] ZACT 34 (27 February 2023)

SPAR Group Ltd v SPAR Encore Ltd (LM133Oct22) [2023] ZACT 34 (27 February 2023)

The Tribunal found that the proposed merger creates a vertical overlap, as Spar Encore supplies private label products exclusively to The Spar Group. The evidence showed no risk of input or customer foreclosure, as Spar Encore has historically only supplied The Spar Group and other private label manufacturers continue to supply the group. No employment concerns were identified, and the transaction increases HDP ownership due to Spar Group's shareholding structure. The Tribunal considered DTIC's submissions regarding procurement from HDPs and small and medium businesses and imposed a condition requiring the merged entity to use best endeavours to procure localised goods from such...

Citation
[2023] ZACT 34
Parties
Applicant: The SPAR Group Ltd; Respondent: SPAR Encore Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
27 February 2023
Case Number
LM133Oct22
Procedural Posture
Large Merger Review / Conditional Approval With Reasons
Outcome
The merger is conditionally approved subject to public interest conditions.
Judges
L Mncube, M Mazwai, I Valodia
Legal Topics
Vertical Merger, Input Foreclosure, Customer Foreclosure, Public Interest Conditions, Hdp Ownership, B Bbbee Compliance
Competition Law Commercial and Corporate Vertical Merger Input Foreclosure Customer Foreclosure Public Interest Conditions Hdp Ownership B Bbbee Compliance

Case Brief

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Parties

The SPAR Group Ltd

Applicant

SPAR Encore Ltd

Respondent

Procedural Posture

Large Merger Review / Conditional Approval With Reasons

Legal Issues

  1. 1 Whether the proposed merger between The Spar Group Ltd and Spar Encore Ltd is likely to substantially lessen or prevent competition in any relevant market.
  2. 2 Whether the transaction raises public interest concerns, particularly regarding employment, spread of ownership, and participation of HDPs and small and medium businesses.
  3. 3 Whether the merger conditions adequately address concerns raised by the Department of Trade Industry and Competition regarding procurement from HDPs and small and medium businesses.

Ratio Decidendi

The Tribunal found that the proposed merger creates a vertical overlap, as Spar Encore supplies private label products exclusively to The Spar Group. The evidence showed no risk of input or customer foreclosure, as Spar Encore has historically only supplied The Spar Group and other private label manufacturers continue to supply the group. No employment concerns were identified, and the transaction increases HDP ownership due to Spar Group's shareholding structure. The Tribunal considered DTIC's submissions regarding procurement from HDPs and small and medium businesses and imposed a condition requiring the merged entity to use best endeavours to procure localised goods from such...

Court Disposition

The merger is conditionally approved subject to public interest conditions.

Orders

  • The merger between The Spar Group Ltd and Spar Encore Ltd is approved subject to the conditions set out in Annexure A.
  • The merged entity shall use its best endeavours to procure localised goods from small and medium businesses or firms controlled or owned by Historically Disadvantaged Persons.