South Africa Antitrust Watchdog Seeks to Undo Premier-RFG Deal

The Competition Commission has asked the Competition Tribunal to withdraw its conditional clearance of the transaction, according to Bloomberg’s Oct. 7 report and a statement from the regulator reported by South African media. The move threatens to reopen a takeover completed earlier this year and raises questions about whether the companies provided regulators with all material information during the merger review. Engineering News

The dispute centers on RFG’s Fruit Processing Western Cape operation in Tulbagh. Premier informed the commission in July that it intended to close the fruit-canning facility, about four months after the merger was completed, according to the commission. The regulator says Premier and RFG had previously indicated they weren’t contemplating closing, consolidating or disposing of manufacturing facilities following the transaction. Engineering News

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The Competition Tribunal approved the merger on March 6 subject to conditions, including employment protections, and the transaction was implemented on March 30. The tribunal’s records confirm that the deal received conditional clearance. SAFLII

The commission said an investigation prompted by a complaint that included the South African Clothing and Textile Workers Union found that the companies had discussed the possibility of closing the Tulbagh operation before regulatory approval was granted. The watchdog argues that information should have been disclosed because it was relevant to its assessment of both competition and public-interest consequences. Inside Politic

The Tulbagh plant is one of two fruit-canning facilities in South Africa and serves about 200 fruit growers in the Western Cape, according to the regulator. Closing it could affect more than 400 permanent and fixed-term employees as well as thousands of seasonal workers linked to the agricultural supply chain. The commission also contends that a shutdown would leave Langeberg as the sole remaining domestic operator in the segment. Engineering News

Competition Commissioner Doris Tshepe said merger reviews depend on companies providing regulators with complete information, warning that withholding material facts can compromise authorities’ ability to assess a transaction’s effect on competition and the public interest. Moneyweb

Premier disputes the regulator’s account. The company said it “strongly disagrees” with the commission’s characterization of its conduct and intends to defend its position before the tribunal. Premier also rejected allegations that it acted unlawfully or withheld material information during the review. BusinessTech

The company has previously said the contemplated closure resulted from deteriorating economics in the global fruit-canning business rather than from its acquisition of RFG. In a recent financial disclosure, Premier said the facility’s difficulties were caused by structural pressures in the industry and that the proposed shutdown was independent of the transaction.

Source: Bloomberg