Tribunal tells Massmart to tweak deals

Tribunal tells Massmart to tweak deals

RETAILER NEWS

Business Day - Dec 19th 2011, 09:33

Competition Tribunal chairman Norman Manoim sent Massmart home yesterday without approving its acquisition of Fruitspot and 16 Rhino stores, and asked the retailer and the Competition Commission to tweak conditions to the sales. 

Mr Manoim will make his decision once the mostly technical revisions have been made.

Makro intends to expand its fresh produce offering by acquiring Fruitspot — a wholesaler, processor and distributor of fresh fruit and vegetables to customers mainly in the hospitality and retail segments of industry.

In its assessment of the deal, the commission found that the acquisition could result in a lessening of competition.

The commission was concerned that after the merger was completed that Makro could reduce fresh produce supplies or increase prices to existing retail customers of Fruitspot that might compete with Makro.

It recommended that the tribunal approve the merger subject to the condition that Fruitspot continue supplying its customers, on the same basis as before the merger, for a period of two years.

The tribunal asked Massmart and the commission to change the name of the binding company to Massmart (initially the company bound by the conditions was Fruitspot) and asked for revisions on certain wording.

The second transaction would see Masscash Retail, a Massmart subsidiary, acquire 16 Rhino stores mostly based in KwaZulu-Natal and the Eastern Cape.

The commission found that certain markets would be affected by the merger, in particular the Nongoma and Matatiele areas.

It recommended the tribunal approve the deal on condition that the merging parties sell off the Rhino stores in Nongoma and in Matatiele to independent third parties with sufficient scale to withstand the competitive pressures in these areas.