Sun Valley Estate (Pty) Ltd v Ascendis Vet (Pty) Ltd and Others (LM067Aug21) [2021] ZACT 112 (9 November 2021)

COMPETITION TRIBUNAL OF SOUTH AFRICA

Case No.: LM067Aug21

In the matter between:

Sun Valley Estate (Pty) Ltd Primary Acquiring Firm

And

Ascendis Vet (Pty) Ltd, Ascendis Animal Health (Pty) Ltd,

Kyron Laboratories (Pty) Ltd, and

Kyron Prescriptions (Pty) Ltd Primary Target Firm

Panel: Y Carrim (Presiding Member)

E Daniels (Tribunal Member)

F Tregenna (Tribunal Member)

Heard on: 09 November 2021

Order Issued on: 09 November 2021

ORDER

Further to the recommendation of the Competition Commission in terms of section 14A(1)(b) of the Competition Act, 1998 (“the Act”) the Competition Tribunal orders that–

1. the merger between the abovementioned parties be approved in terms of section 16(2)(b) of the Act; and

2. a Merger Clearance Certificate be issued in terms of Competition Tribunal Rule 35(5)(a).

Presiding Member Ms Yasmin Carrim

Concurring: Mr Enver Daniels and Prof. Fiona Tregenna

Date: 09 November 2021

Merger Clearance Certificate

Date : 09 November 2021

To : ENSafrica

Case Number: LM067Aug21

Sun Valley Estate (Pty) Ltd

Kyron Laboratories (Pty) Ltd, Kyron Prescriptions (Pty) Ltd

You applied to the Competition Commission on 23 August 2021 for merger approval in accordance with Chapter 3 of the Competition Act.

After reviewing all relevant information, and the recommendation or decision of the Competition Commission, the Competition Tribunal

approves the merger in terms of section 16(2) of the Act, for the reasons set out in the Reasons for Decision.

This approval is subject to: no conditions the conditions listed on the attached sheet.

The Competition Tribunal has the authority in terms of section 16(3) of the Competition Act to revoke this approval if

a) it was granted on the basis of incorrect information for which a party to the merger was responsible.

b) the approval was obtained by deceit.

c) a firm concerned has breached an obligation attached to this approval.

The Registrar, Competition Tribunal

This form is prescribed by the Minister of Trade and Industry in terms of section 27 (2) of the Competition Act 1998 (Act No. 89 of 1998).

Case no: LM067Aug21

Sun Valley Estates Proprietary Limited (Primary Acquiring Firm)

‘Ascendis Vet Proprietary Limited, Ascendis Animal Health Proprietary Limited,

Kyron Laboratories Proprietary Limited, and

Kyron Prescriptions Proprietary Limited (Primary Target Firm)

Heard on: 09

November 2021

Order Issued on: 09 November 2021

Reasons Issued on: 09 November 2021

REASONS FOR DECISION

ANNEXURE A

In the large merger between:

Sun Valley Estates Proprietary Limited

and

Ascendis Vet Proprietary Limited, Ascendis Animal Health Proprietary Limited, Kyron Laboratories Proprietary Limited, and Kyron Prescriptions Proprietary Limited

CONDITIONS

1. DEFINITIONS

The following expressions shall bear the meanings assigned to them below and cognate expressions bear corresponding meanings –

1.1 “AAF” means Acorn Agri and Food Limited;

1.2 “Act” means the Competition Act 89 of 1998, as amended;

1.3 “Acquiring Firm” means Sun Valley;

1.4 “Acquiring Group” means AAF and all firms directly or indirectly controlled by AAF (including Sun Valley);

1.5 “Approval Date” means the date the Tribunal issues a Clearance Certificate (Notice CT10) in terms of the Competition Act;

1.14 “Conditions” means these conditions contained in this Annexure A, agreed to by the Acquiring Firm and the Commission;

1.15 “Days” means business days, being any day other than a Saturday, Sunday or official public holiday in the Republic of South Africa;

1.16 “HDPs” means historically disadvantaged persons, as defined in section 3(2) of the Act;

1.17 “Implementation Date” means the date, occurring after the Approval Date, on which the Merger is implemented by the Merging Parties, and all conditions precedent to the implementation of the Merger are fulfilled;

1.18 “Kyron Laboratories” means Kyron Laboratories Proprietary Limited;

1.19 “Kyron Prescriptions” means Kyron Prescriptions Proprietary Limited;

1.20 “Merged Entity” means the entity that will exist after the implementation of the Merger;

1.21 “Merger” means the acquisition of the Primary Target Firms by Sun Valley;

1.22 “Merging Parties” means Sun Valley and the Primary Target Firms;

1.23 “Primary Target Firms” means Ascendis Animal, Ascendis Vet, Kyron Laboratories, and Kyron Prescriptions;

1.24 “Sun Valley” means Sun Valley Estates Proprietary Limited;

1.25 “Transformation Initiative” means the Acquiring Group’s commitment to enter into a B- BBEE transaction after the implementation of the Merger, which will result in the Primary Target Firms qualifying as at leas [….] black-owned in terms of the B-BBEE Act;

1.26 “Tribunal” means the Competition Tribunal of South Africa; and

1.27 “Tribunal Rules” mean the Rules for the Conduct of Proceedings in the Tribunal

2. CONDITIONS TO THE APPROVAL OF THE MERGER

2.1 Transformation Initiative

2.1.1 The Acquiring Group shall, within 12 (twelve) months of the Implementation Date implement the Transformation Initiative.

2.1.2 Prior to the implementation of the Transformation Initiative, the Acquiring Group will provide the Commission with details, in writing, of the Transformation Initiative. These details shall include at least the following information:

2.1.2.1 the proposed transaction structure and its mechanics;

2.1.2.2 the identities of the parties involved in the Transformation Initiative and their proposed roles and shareholdings;

2.1.2.3 a report prepared by a suitably qualified independent B-BBEE certification firm confirming that the Primary Target Firms qualify as at leas [….] black-owned in terms of the B-BBEE Act;

2.1.2.4 the number of appointments to the board of the Primary Target Firms’ holding company that HDPs participating in the Transformation Initiative will be entitled to;

2.1.2.5 confirmation of whether the Transformation Initiative constitutes a merger for the purposes of the Act; and

2.1.2.6 submissions as to why the Transformation Initiative is unlikely to give rise to competition concerns (including, for instance, information exchange through common members, directors and/or shareholders).

2.1.3 Within 30 (thirty) Days of receipt by the Commission of all details required in terms of paragraph 2.1.2 above, the Commission shall consider whether the implementation of the Transformation Initiative results in the Primary Target Firms qualifying as at least [….] black- owned in terms of the B-BBEE Act and/or gives rise to competition concerns, and indicate in writing whether:

2.1.3.1 the Transformation Initiative meets the requirements of the Conditions and can therefore be implemented; or

2.1.3.2 the Transformation Initiative does not meet the requirements of the Conditions, and if so, providing reasons therefore so that the Acquiring Group can formulate a revised Transformation Initiative that will meet the requirements of the Conditions.

2.1.4 For the avoidance of doubt, the Transformation Initiative may not be implemented without the Commission’s written approval as per paragraph 2.1.3 above, which approval will not be unreasonably withheld.

2.1.5 To the extent that the Transformation Initiative approved by the Commission in writing also constitutes a merger (whether or not the thresholds for mandatory notification are met), the Transformation Initiative can then only be implemented once it has been notified to the Commission as a merger and approved with or without conditions.

3. MONITORING OF COMPLIANCE WITH THE CONDITIONS

3.1 The Acquiring Group shall inform the Commission of the Implementation Date within 5 (five) Days of its occurrence.

3.2 The Acquiring Group shall, upon implementation of the Transformation Initiative contemplated in clause 2.1, submit an affidavit confirming compliance with the Conditions.

3.3 An apparent breach by the Merging Parties of any of the Conditions shall be dealt with in terms of Rule 39 of the Rules for the Conduct of Proceedings in the Commission read together with Rule 37 of the Rules for the Conduct of Proceedings in the Tribunal.

3.4 The affidavits and or documents referred to in the Conditions shall be and all correspondence in relation these Conditions must be submitted to the following email addresses: mergerconditions@compcom.co.za and ministry@thedtic.gov.za.

4. VARIATION

4.1 The Merging Parties and/or the Commission may at any time, on good cause shown, apply to the Tribunal for the Conditions to be waived, relaxed, modified and/or substituted.