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Canned-fish companies argue merits of Oceana-Foodcorp merger

7 Apr 2014

The Competition Commission has been devising "fall-back" theories to mitigate harm and justify the conditions it set for the approval of listed fishing company Oceana's (OCE's) takeover of Foodcorp's fishing business‚ the merging parties argued on Friday, 4 April 2014.

Canned-fish companies argue merits of Oceana-Foodcorp merger

The parties again threatened to walk away from the transaction should the Competition Tribunal approve conditions imposed by the commission. The main condition would deprive Oceana of Foodcorp's fishing quota‚ as a way of preventing market dominance.

Oceana owns the Lucky Star brand of canned fish‚ and Foodcorp the Glenryck brand. Together they would be dominant in the canned fish market.

Oceana and Foodcorp had taken the conditional approval of their transaction on review before the tribunal. The parties said in their closing arguments before the tribunal that without Foodcorp's fishing quota there would be no transaction.

The commission argued that Oceana was "desperate" to get its hands on Foodcorp's quota‚ and that if the tribunal allowed it‚ Oceana would have the ability to behave anticompetitively in the market.

Last year the commission approved the transaction between Foodcorp and Oceana on condition that Glenryck was sold to a third party‚ with Foodcorp's quota.

Jerome Wilson‚ for the merging parties‚ said on Friday that the commission's initial concern was that the Glenryck brand would not survive without its quota‚ and that when the Bidfish transaction (Bidvest Namibia Fisheries) was brought to the tribunal's attention‚ the commission devised "fall-back" arguments.

Greta Engelbrecht‚ for the commission‚ said the merging parties' argument that Glenryck had a variety of sources from which to get supplies was not sufficient‚ as Oceana's greater control over local supplies gave it market power to offer higher prices for supplies in the open market‚ thereby increasing its access to local supplies.

The tribunal will decide on the review application in due course.

Source: I-Net Bridge

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