The Competition Commission has recommended that the merger be blocked, although the Competition Tribunal will still make the final decision.
Massmart is the third-largest distributor of consumer goods in Africa and has a presence in 14 countries in sub-Saharan Africa through four divisions comprising 254 stores with brand names such as Game, Makro, Jumbo and Builders Warehouse.
Head of strategy and stakeholder relations at the Competition Commission Nandi Mokoena said the commission was concerned that the deal would remove Finro as a competitor in the Port Elizabeth region, which would have a spill-on effect through the rest of the food chain. There were no efficiency or public interest gains that would outweigh the potential anticompetitive effects of the proposed merger, said the commission.
Masscash and Finro compete in the market for the wholesaling of grocery products in the Port Elizabeth region and surrounding areas. Grocery products include food, health and beauty products. Masscash and Finro sell their products to independent traders and smaller retailers who then on-sell to, mostly poor, consumers.
Commissioner Shan Ramburuth said “as part of our investigation, we surveyed nearly 400 retailers who buy from these wholesalers to have a clear understanding of the region.
“We saw this merger removing an effective competitor in the food sector, a priority sector for the commission.”
Previously, Massmart has been blocked from taking over only one other company. Its bids for Top Spot Supermarket, Cambridge Food, Sherewa Investments, Nabuild, Servistar and Thabiletrade were successful. In 2006, the Competition Tribunal prohibited a merger between Moresport and Massmart.
Source: Business Day
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