Tribunal mulls Shoprite/Metcash Seven Eleven deal

Shoprite Checkers intends to acquire the entire shareholding in Metcash Seven Eleven as well as a part of the Friendly Distribution Division of Metcash Trading Africa.

The Competition Commission assessed the merger and has recommended that the Competition Tribunal approve it on condition that Metcash find alternative employment for the employees who stand to be retrenched after the merger, as a result of internal restructuring in Metcash. It must also do the same for employees who have applied for voluntary retrenchment, unless Metcash accepts their applications.

The Shoprite group comprises various supermarkets and stores including Shoprite, Shoprite Usave, Checkers, Checkers Hyper, OK Power Express, House and Home, Hungry Lion and the OK Franchise Division. These stores retail a wide range of fast-moving consumer goods (FMCG) such as food, homeware, clothing, cellular products and a number of value-added retail services.

Metcash Seven Eleven is a franchisor of the Seven Eleven and the Friendly Seven Eleven franchise stores. Friendly Distribution, which falls within Metcash Trading Africa, consists of various large distribution centres located throughout SA to provide support to the franchise stores within the group.

According to the merging parties, the proposed merger is mutually beneficial in that Shoprite, through its OK Franchise Division, will expand its business operations by entering into more franchise arrangements and will benefit from the economies of scale this opportunity presents. Metcash Trading Africa is selling its interest as part a group restructuring plan.

The Competition Commission concluded that it was unlikely to significantly lessen competition in the various markets affected by the merger.

However, following employment concerns raised by the South Africa Commercial, Catering and Allied Workers Union (Saccawu), Metcash undertook to find alternative employment for employees yet to be retrenched and to do the same for employees who had applied for voluntary retrenchment, unless Metcash accepted their applications.

Accordingly, the commission has recommended that the tribunal approve the merger with the employment-related condition.

The tribunal will hear the merger today, after which it must decide whether to approve the merger, approve it with conditions or prohibit the merger.