The Competition Tribunal (the “Tribunal”) has granted a variation to conditions imposed on two Coca-Cola mergers, which include two new substantive public interest obligations relating to localisation and procurement commitments which will benefit black sugarcane farmers.
The applicants (Coca-Cola Beverages South Africa (Pty) Ltd (“CCBSA”); Coca-Cola Beverages Africa (Pty) Ltd (“CCBA”); The Coca-Cola Company; and Coca-Cola Fortune (Pty) Ltd) brought a variation application to the Tribunal in relation to the 2016 and 2017 mergers, namely those between:
- CCBA and Various Coca-Cola and Related Bottling Operations; and
- The Coca-Cola Company and CCBA.
Equity Ownership Condition
The relevant portion of the conditions included the requirement that the merger parties had to increase B-BBEE ownership of CCBSA to a specific percentage by 11 May 2021 (the “Equity Ownership Condition”).
The parties indicated that the Equity Ownership Condition could not be achieved within the stipulated time period due to the Covid-19 pandemic and the nationwide lock-down. The Tribunal has agreed to vary the condition i.e., the B-BBEE ownership is now required to be increased to approximately 20% and it will be for the benefit of employees, creating a wider spread of ownership.
In addition, the variation includes two new substantive public interest obligations relating to localisation and procurement, agreed to by the applicants in consultation with the Minister of the Department of Trade, Industry and Competition (the “DTIC”).
In terms of this new commitment, CCBSA will contribute a specified amount to localisation initiatives agreed upon by the DTIC and CCBSA. An appropriate structure, to agree on and monitor this commitment, will be established by CCBSA and the DTIC and will have suitable representation from CCBSA and the DTIC.
CCBSA will collaborate with its sugar suppliers in South Africa to increase the volume of sugar procured by CCBSA from black sugarcane farmers, subject to such arrangements being commercially reasonable and practical.
A public version of the conditions and the Tribunal order will be made available on the Tribunal website at www.comptrib.co.za in due course.