OUTCOME OF MATTERS CONSIDERED BY THE TRIBUNAL - 4 SEPTEMBER 2020
| Type of matter | Parties involved | Commission’s recommendation to the Tribunal | Tribunal Decision |
| Consent agreement | Commission And Sentra Kem Pharmacy CC | Confirm as an order | Confirmed as an order |
| Large merger | Equites Property Fund Ltd And Retail Logistics Fund (Pty) Ltd | Approve without conditions | Approved without conditions |
| Large merger | Retailability (Pty) Ltd And Parts of the Edgars business conducted by Edcon Limited in SA, as a going concern, consisting of certain assets and liabilities | Approve with conditions | Approved with conditions |
Paarl supplier of pharmaceutical products agrees to donate to Solidarity Fund after Commission accuses it of excessive pricing of face masks
A Paarl-based supplier of pharmaceutical products has agreed to pay R15 785.03 to the Solidarity Fund, after it was accused by the Competition Commission (the Commission) of charging excessive prices for face masks between March and April 2020.
Sentra Kem CC’s undertaking to contribute to the Solidarity Fund forms part of a consent agreement between it and the Commission. The amount it will contribute to the Solidarity Fund is equivalent to the “excess profits” it made on the face masks between March and April 2020.
Sentra Kem, however, is entering into the consent agreement to avoid protracted litigation and does not admit liability.
In addition to paying an amount to the Solidarity Fund, Sentra Kem has agreed to the following, among others, in terms of the consent agreement:
- To stop the pricing conduct as described in the agreement;
- To reduce the gross profit margin on its face masks to an agreed maximum percentage; and
- To develop, implement and monitor a competition law compliance programme.
Background
In April 2020, the Commission received information relating to alleged excessive prices Sentra Kem was charging its customers for face masks between March and April 2020.
Face masks fall under the category of “medical and hygiene” supplies in the Consumer Protection Regulations (the Regulations).
A Commission investigation found the following, among others:
- Sentra Kem previously did not sell face masks. However, due to the sudden demand and panic buying brought on by the state of national disaster, Sentra Kem started selling face masks.
- The Commission found that Sentra Kem’s conduct of overcharging for face masks may constitute a contravention of section 8(1)(a) of the Competition Act (the Act) read together with Regulation 4 of the Regulations i.e. excessive pricing.
Unconditional merger approval: Equites Property Fund Ltd And Retail Logistics Fund (Pty) Ltd
The Competition Tribunal (the Tribunal) has unconditionally approved the merger whereby Equites Property Fund Ltd (Equites) will acquire Retail Logistics Fund (Pty) Ltd (Retail Logistics).
The transaction will include a series of steps which will culminate in Equites acquiring control of Retail Logistics and the acquisition of properties by Retail Logistics.
Equites is a Real Estate Investment Trust (REIT) listed on the JSE. It is not controlled by any single shareholder. Equites owns and develops logistics properties both locally and in the UK for purposes of long-term letting. Within South Africa, Equites owns logistics properties (i.e. distribution centres), non-logistics and commercial properties in Gauteng, the Western Cape and Kwa-Zulu Natal. Its logistics properties in Gauteng and the Western Cape are of relevance for competition assessment in this transaction.
Retail Logistics, a newly incorporated private company wholly owned by Shoprite Checkers (Pty) Ltd (Shoprite), was incorporated for the purpose of establishing a joint venture (JV) between Shoprite and Equites. Currently, Retail Logistics has no business activities. It will own properties (i.e. Brackenfell Property, Cilmor Property and the Centurion Property) comprising of distribution centres and warehouses used by Shoprite.
The business of Retail Logistics will entail the acquisition, development, ownership, operation and leasing of retail logistics facilities (i.e. distribution centres) only to Shoprite/its affiliates, or to third party suppliers of Shoprite/its affiliates, as the tenant, and any ancillary business directly related thereto.
The Commission, in its assessment of the transaction, found that there were no competition or public interest concerns.
Tribunal approves transaction whereby clothing retailer, Retailability, acquires parts of the Edgars business as a going concern, with employment conditions
The Tribunal has approved, with conditions, the transaction whereby clothing apparel retailer, Retailability (Pty) Ltd will acquire parts of the Edgars business conducted by Edcon Limited in South Africa as a going concern, consisting of certain assets and liabilities.
This merger forms part of a voluntary business rescue processes initiated by Edcon – the seller. The business has been struggling for some time, but the global Covid-19 pandemic and the subsequent national lockdown contributed to the decision to enter business rescue.
The Tribunal has approved the transaction on condition that the merger parties shall not retrench any employees on account of the merger for a period of three (3) years from the merger implementation date. In addition, the acquiring firm will give preference to any former Edcon employees should vacancies arise within three (3) years of the merger implementation date.
The Commission, in its assessment, was of the view that the transaction is unlikely to substantially prevent or lessen competition. In addition, it found that the merger will result in 5200 jobs being saved.
Issued by:
Gillian de Gouveia, Communications Officer
On behalf of the Competition Tribunal of South Africa
Tel: +27 (0) 12 394 1383
Cell: +27 (0) 82 410 1195
E-Mail: GillianD@comptrib.co.za
Twitter: @comptrib
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