Windhoek-During the first quarter of the 2017/2018 financial year the Namibia Competition Commission (NaCC) received 24 merger notifications and managed to investigate and determine 17 mergers, all of which were unconditionally approved.
During the second quarter of the current financial year the NaCC received 19 merger notifications whereafter it investigated and determined 32 mergers. Of the 32 mergers determined three mergers were approved with conditions. The number of mergers determined in each quarter comprises of merger cases notified during that particular quarter as well as those carried over from previous quarters.
According to the NaCC spokesperson Dina Gowases, the conditions were all behavioural in nature and were aimed at addressing possible public interest consideration, such as possible loss of employment, that was likely to arise from the implementation of the proposed mergers.
The main function of the NaCC’s Mergers & Acquisitions division is the enforcement of the provisions of Chapter 4 of the Competition Act (2003).
As a part of this function the division investigates and assesses whether or not mergers are likely to raise any competition or public interest concerns, and submits subsequent to the investigation a report containing its recommendation to the Board of Commissioners for a decision.
“The Commission is empowered to prohibit a merger that is likely to substantially prevent or lessen competition or harm the public interest. However, it may approve a merger with conditions when a specific remedy can address the competition or public interest concern(s) raised by a proposed merger,” Gowases stated.
Gowases explained that the remedy may either be behavioural or structural. “Behavioural remedies are normally ongoing remedies aimed at regulating the behaviour or future conduct of the merged undertaking, such as ensuring that the merged undertaking allows access to key inputs or facilities that other undertakings (competitors or customers) need to compete. Structural remedies are generally one-off remedies aimed at addressing the market structure and require some form of structural change on the part of the merged undertakings, such as selling part of their business or assets,” said Gowases.
Mergers Approved With Conditions:
Seawork Processors and Benguella Properties
On August 17, 2017, the NaCC received a notification on the proposed merger constituting a sale of shares in Benguella Properties (Pty) Ltd by Ocean Investments (Pty) Ltd to Seawork Fish Processors (Pty) Ltd. The primary acquiring undertaking was Seawork Fish Processors (Pty) Ltd (“Seawork”); a private company with limited liability duly registered under the laws of Namibia. Seawork is controlled by North Quay Properties (Pty) Ltd (“North Quay”), a private company duly incorporated in terms of the laws of Namibia.
The Commission assessed the proposed merger in terms of Section 47(2) of the Act and found that it raised no competition concerns. However, the merger gave rise to public interest concerns, in particular employment. In order to safeguard the employment of the 119 employees in the employment of the target undertaking, the Commission on September 26, 2017 approved the proposed merger subject to the following conditions:
“There shall be no retrenchment of employees of the merged undertakings below management level as a result of the merger for a period of two years from the date of the approval of the merger. All employees of Benguella Properties (Pty) Ltd and its subsidiaries are to be employed on terms and conditions of employment that are on the whole not less favourable to them than their existing terms and conditions of employment,” stated the NaCC decision.
Cathral Investments Four and Haloli Piggery (cc)
On February 17, 2017, the Commission received a notification on the proposed merger constituting a sale of members interest in a close corporation Haloli Piggery CC by Cathral Investments Four (Pty) Ltd, a wholly owned subsidiary of Mariental Piggery (Pty) Ltd.
The Commission assessed the proposed merger in terms of Section 47(2) of the Act and found that it raised no competition concerns. However, the merger gave rise to public interest concerns, in particular employment and the participation of small and medium enterprises. Given the above and in order to safeguard employment of the 23 employees in the employment of the target undertaking and to encourage participation and growth of small pork producers active in the local SME sector and those willing to join the pork subsector, the Commission on August 25, 2017 approved the acquisition of Haloli Piggery CC by Cathral Investments (Pty) Ltd, with conditions.
“There shall be no retrenchment of employees of the merged undertakings as a result of the merger for a period of two years. Should the Pig Producers Association cease to provide training to assist micro, small and medium enterprises (“MSME”) that want to partake in local pork production within the five-year period following the merger, the merged undertaking must develop a training program and provide training; that for as long as the merged undertakings remain the only commercial piggery in Namibia the merged undertakings shall directly supply all its customers and not through any third party. That for as long as the acquiring group remains the only commercial piggery in the country (and the relevant Meat Board Scheme is still in place), no pork or pork products may be imported by the acquiring group or its associates, except those required for reproduction purposes. The acquiring group must within five years from date of implementation realize the intended investment in the Namibian economy through the expansion of Haloli piggery into a 1600 sow unit subject to a minimum expenditure of N$200 million. All employees transferred from Haloli Piggery Close Corporation be employed by Cathral Investments Four (Proprietary) Limited on terms and conditions of employment that are on the whole not less favourable to them than their existing terms and conditions of employment.”
Clause 15 of the determination states: “Should the merged undertaking not be able to comply with any condition(s) above, the merged undertaking must immediately notify the Commission in a statement outlining with compelling reasons and good cause shown why the condition(s) cannot be met, what steps have been taken to comply with the condition(s) and the reason for their failure, and suggest any alternative approaches or conditions which will have the same or similar effect as intended by the initial condition(s).”
Socotra Island Investment and Komsberg Farming
On May 03, 2017, the Commission received a notification on a proposed merger constituting a sale of four farms and certain movable assets owned by Komsberg Farming (Pty) Ltd to Socotra Island Investment (Pty) Ltd. The primary acquiring undertaking was Socotra Island Investments (Pty) Ltd (“Socotra”) a limited liability company incorporated in accordance with the company laws of Namibia. Socotra is wholly owned and controlled by Al Seer Group LLC, a group of companies incorporated in accordance to the laws of the United Arab Emirates.
“All 47 employees previously employed by Komsberg Farming (Pty) Ltd are to be re-employed (should they wish to do so) by Socotra Island Investments (Pty) Ltd, once the entity commences its grape farming activities. The employees are to be employed on terms and conditions of employment that are on the whole not less favourable to them than their previous terms and conditions of employment. Whenever recruiting or employing any person to conduct work or render any services of any nature to the merged undertaking, preference must be given to Namibian citizens,” the Commission decided.