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Tribunal confirms three consent agreements and approves two large mergers

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Tribunal confirms three consent agreements and approves two large mergers

Tribunal confirms three consent agreements and approves two large mergers

7th August 2020

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Roots Dawn Park, a Boksburg-based butchery retail store in Gauteng, has agreed to donate R12 000 (twelve thousand Rand) to the Solidarity Fund, after a Competition Commission (Commission) investigation found that it had charged excessive prices for eggs during April 2020.
 
The donation forms part of a consent agreement between the retail store and the Commission, which has been confirmed as an order of the Competition Tribunal (the Tribunal).
 
The factors that the Tribunal considers in consent agreement matters include the level of cooperation by the firm in question with the competition authorities as well as how timely it has settled the complaint against it.
 
The Tribunal took these factors into account when considering the consent agreement between the Commission and Roots Dawn Park.
 
Terms of agreement
 
In addition to donating R12 000 to the Solidarity Fund, Roots Dawn Park agrees to, among others:
 

immediately stop the excessive pricing conduct as described in the consent agreement;

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reduce its mark-up on large and medium eggs to an agreed maximum percentage with immediate effect and for the duration of the state of national disaster; and

develop, implement and monitor a competition law compliance programme, incorporating corporate governance, to ensure that its employees, managers, directors and agents do not contravene the Competition Act (the Act) in future.

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Background
 
Roots Dawn Park is a franchisee of the Roots Group wholesale and retail stores which provide a wide range of products such as meat, chicken, groceries and fast foods, among others. It is located in Dawn Park, in Boksburg, Gauteng.
 
On 2 April 2020, the Commission received information relating to alleged inflated prices being charged by Roots Dawn Park for five dozen (60) large and medium eggs.
 
Eggs fall under the category of “essential goods” in the Consumer Protection Regulations.
 
The Commission determined that Roots Dawn Park had market power in the market for the supply of eggs. It concluded, following an investigation, that the retailer’s price increase of large eggs (60) and medium eggs (60) during April 2020 was in contravention of section 8(1)(a) of the Act read together with Regulation 4 of the Consumer Protection Regulations (the Regulations).

PPE distributor admits to excessive pricing of dust face masks, agrees to donate “overcharge amount” to Solidarity Fund 

 
A Gauteng-based distributor of safety and protective clothing, footwear and personal protective equipment (PPE) admits to excessive pricing of FFP2 dust masks during February 2020 and has agreed to donate the “overcharge amount” to the Solidarity Fund.
 
This forms part of a consent agreement between Rand Safety Equipment CC (Rand Safety) and the Commission, which has been confirmed as an order of the Tribunal.
 
Rand Safety admits that its conduct during February 2020 constitutes excessive pricing in contravention of the Act read together with the Regulations -- and agrees to resolve the matter on the following terms, among others:
 

Rand Safety agrees to donate R8 284 to the Solidarity Fund;

It will immediately stop the excessive pricing conduct;

It will immediately reduce its gross profit margin on dust masks to an agreed maximum percentage for the duration of the state of national disaster; and

It will implement a competition law compliance programme which will include a mechanism to monitor and detect any contravention of the Act.

  
Background
 
On 5 June 2020, the Commission received information relating to alleged excessive prices being charged by Rand Safety for FFP2 dust masks during February 2020.
 
Rand Safety explained that it had increased its prices for dust masks in anticipation of, and as a result of, an immediate price increase notification from the manufacturer. However, the Commission found that the manufacturer did not increase its prices in February 2020 but increased its prices the following month.
 
The Commission found that Rand Safety is active in the market for the sale of FFP2 dust masks in Centurion and all parts of Gauteng and that it has market power in the market for the sale of FFP2 dust masks given the current pandemic and state of national disaster.
 
As part of its investigation, the Commission compared the historic gross profit margins earned by Rand Safety (i.e. December 2019 and January 2020 margins) with the gross profit margin it earned in February 2020.
 
The Commission found that the Rand Safety’s gross profit margin in February 2020 was much higher than the historic margins it earned before the spread of Covid-19.
 
The Commission further found that Rand Safety’s increase of its gross profit margin for FFP2 dust masks in February 2020 was excessive.

Firms admit to implementing merger before approval by Commission, agree to pay R742K fine in consent agreement 

 
The Tribunal has confirmed a consent agreement whereby Retail Capital (Pty) Ltd (Retail Capital) and First Asset Finance (Pty) Ltd (FAF) admit that they contravened section 13A(3) of the Act by implementing their merger before approval of the transaction by the Commission.
 
Section 13A(3) of the Act stipulates that parties to an intermediate merger may not implement that merger until it has been approved, with or without conditions, by the Commission in terms of section 14(1)(b) of the Act.
 
Terms of the consent agreement
 
Retail Capital and FAF have agreed that Retail Capital will pay an administrative penalty of R742 500 (seven hundred and forty-two thousand and five hundred Rand) payable in 10 (ten) equal monthly instalments of R74 250 (seventy-four thousand, two hundred and fifty Rand).
 
The firms have also agreed and undertaken to notify the Commission of any future transactions that constitute a notifiable merger. They have also agreed and undertaken to refrain from engaging in prior implementation of notifiable mergers.
 
Retail Capital and FAF will also develop and implement a competition law compliance programme to ensure that employees, management, directors and agents do not engage in future contraventions of Chapter 3 of the Act.
 
Background
 
On 19 July 2020, the Commission received a notification of an intermediate merger transaction, which was filed by Retail Capital and FAF. The primary acquiring firm was Retail Capital and the primary target firm was FAF.
 
Prior to the transaction, Retail Capital did not directly or indirectly hold any shareholding or exercise any control over FAF. The transaction resulted in Retail Capital acquiring sole control of FAF in terms of the Act.
 
In the merger filing, the merging parties indicated that the transaction had been implemented in November 2018. The issue of prior implementation, to which the abovementioned consent agreement relates, has been dealt with separately. The Commission evaluated and approved the merger without any conditions.

Tribunal approves large merger in market for provision of rentable light industrial properties 

 
The Tribunal has approved, without conditions, the large merger whereby EA Waterfall Logistics JV (Pty) Ltd (EA Waterfall) will acquire Truzen 116 Trust (Truzen) in respect of an undivided half share of the property letting enterprise known as Cummins (the target property).
 
Post-merger, EA Waterfall will have sole control of the target property.
 
EA Waterfall is controlled by Equites Property Fund Ltd (Equites), a listed Real Estate Investment Trust. Equites controls numerous firms and is not controlled by any single firm. The acquiring group (EA Waterfall, Equites and all the firms they control) currently holds joint control of the target property with Truzen.
 
Truzen is not controlled by any one trustee/firm and does not control any other firm. The target property is situated in Woodmead, Gauteng and comprises rentable light industrial space.
 
The Commission, which assesses large mergers before referring them to the Tribunal for a decision, found that the proposed transaction did not raise any competition or public interest concerns. It recommended its unconditional approval and the Tribunal approved the merger on that basis.

Tribunal approves merger constituting internal reorganisation of Unilever Group 

 
The Tribunal has unconditionally approved the large merger whereby Unilever PLC will acquire all the assets, liabilities, and legal relationships of Unilever N.V.
 
This transaction constitutes an intra-group reorganisation involving the two ultimate parent companies of the Unilever Group.
 
Following the transaction’s implementation, the shareholders of Unilever N.V. and Unilever PLC will be shareholders of Unilever PLC, which will become the new ultimate controller of the Unilever Group.
 
Merging parties
 
Unilever PLC is incorporated under the laws of the United Kingdom. It is listed on both the London and New York Exchanges and is not controlled by any single firm. Unilever PLC directly controls various firms which, in turn, control other entities.
 
Unilever N.V. is listed on the Euronext Amsterdam Exchange as well as the New York Stock Exchange and is not controlled by any single firm. Unilever N.V directly controls numerous firms which, in turn, control other entities.
 
Unilever PLC and Unilever N.V. jointly control Unilever South Africa Holdings (Pty) Ltd (Unilever SA Holdings) which, in turn, controls Unilever South Africa (Pty) Ltd (Unilever SA). Unilever SA will ultimately be controlled by Unilever PLC.
 
The Unilever Group has a global presence and is involved in manufacturing and supplying a range of products including foods, beverages, cleaning agents and personal care products.

 

Issued by The Competition Tribunal

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