Tiger Brands Ltd / Ashton Canning Company (Pty) Ltd / Newco and Langeberg Foods International Ashton Canning Company (Pty) Ltd (46/LM/May05) [2005] ZACT 82; [2006] 1 CPLR 370 (CT) (23 November 2005)

Parties

Procedural Posture

Large Merger / Final Approval With Conditions

Legal Issues

1. 1 Does the merger substantially prevent or lessen competition in the national domestic market for canned deciduous fruit and fruit puree?
2. 2 Are the claimed efficiency gains sufficient to offset the anti-competitive effects of the merger?
3. 3 Will the merger have a substantial negative effect on employment and public interest?

Ratio Decidendi

The Tribunal found that the relevant geographic market for canned deciduous fruit and fruit puree is national, not international, due to negligible import penetration and distinct domestic pricing. The merger would result in a highly concentrated market, with the merged entity controlling 68% of canned fruit and 50% of puree, and HHI scores far exceeding thresholds for market power. The removal of Ashton Canning as an effective competitor would further entrench collusive tendencies and reduce rivalry. Countervailing power from retailers and surplus capacity at other canners were found insufficient to discipline the merged entity. The failing firm defence was rejected due to lack of...

Court Disposition

Merger approved subject to conditions.

Orders

• The merged entity may not retrench more than 45 employees from the aggregate number employed prior to the order for three years.
• Average seasonal employment may not be reduced by more than 1000 workers compared to the average over the three preceding high seasons, for three years.