Clover fights conditions for merger

27 Nov 2014

JSE-listed dairy producer Clover has objected to a proposed condition set by the Competition Commission for the approval of the company's takeover of DairyBelle's yoghurt and long life milk businesses.

Clover described as "enormously onerous" the condition that the parties refrain from any merger-related retrenchments for three to five years after the transaction has been approved.

Yesterday, 26 November 2014, the Competition Tribunal heard arguments from the commission and the merging parties on this condition, set by the commission. This was imposed on the possibility that Clover might integrate the two firms' plants.

Clover gave an undertaking that there would be no retrenchments.

However, this was not sufficient for the commission. It said Clover had a history of implementing retrenchments even after giving assurances that there would be none. Clover denied this. The commission said if there were going to be no retrenchments Clover had no reason to fear the onerous condition.

Sesi Baloyi, for the commission, asked that in the event of merger-related retrenchments, Clover had to establish a fund to finance business and reskilling opportunities.

Clover is not active in the yoghurt market, and argued that without the current transaction all the workers at DairyBelle's Free State plant might have been retrenched as the company had been running at a loss.

Jean Meijer, acting on behalf of the merging parties, said the commission had failed to demonstrate that the transaction would have a substantial adverse effect on jobs if the facilities were integrated.

Source: Business Day

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