Competition Tribunal to hear Shoprite merger

The Competition Tribunal will on Monday weigh up a transaction in which Shoprite Checkers, a wholly owned subsidiary of Shoprite Holdings (SHP), intends to acquire the entire shareholding in Metcash Seven Eleven as well as a part of the Friendly Distribution Division of Metcash Trading Africa.

The Competition Commission assessed the merger and has recommended that the Competition Tribunal approve it on condition that Metcash find alternative employment for the employees who stand to be retrenched after the merger as a result of internal restructuring in Metcash, and to do the same for employees who have applied for voluntary retrenchment unless Metcash accepts their applications.

The Shoprite group of companies mainly comprises various supermarkets and stores including Shoprite, Shoprite Usave, Checkers, Checkers Hyper, OK Power Express, House and Home, Hungry Lion and the OK Franchise Division. These stores retail a wide range of fast moving consumer goods such as food, home ware, clothing, cellular telephone products and a number of value added retail services.

Metcash Seven Eleven is a franchisor of the Seven Eleven and the Friendly Seven Eleven franchise stores. Friendly Distribution—which falls within Metcash Trading Africa—consists of various large distribution centres located throughout South Africa to provide support to the franchise stores within the group.

According to the merging parties the proposed merger is mutually beneficial in that Shoprite, through its OK Franchise Division, will expand its business operations by entering into more franchise arrangements and will benefit from the economies of scale this opportunity presents.
Metcash Trading Africa is selling its interest as part a group restructuring plan.

The Commission assessed the merger and concluded that it was unlikely to significantly lessen competition in the various markets impacted by the merger. However, following employment concerns raised by Saccawu, Metcash undertook to find alternative employment for employees yet to be retrenched and to do the same for employees who have applied for voluntary retrenchment, unless Metcash accepts their applications.

Accordingly the commission has recommended that the tribunal approve the merger with the employment related condition.—I-Net Bridge

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