The deal would see Oceana obtain the fishing business of Foodcorp‚ excluding the Glenryck canned pilchards brand.
Saldanha Fisheries' managing director Alan Silverman told the Competition Tribunal the merger might allow Oceana to reduce the price it negotiated with third-party quota-holders‚ with whom it is already contracted to obtain raw fish.
"Some of the smaller fish quota-holders have told us‚ when it comes time to renegotiate the prices on an annual basis‚ there had been positions where they had to reduce the prices they had expected from Oceana," Silverman said.
He was called by the Competition Commission as a witness in a review hearing before the tribunal in Pretoria after the merging parties took issue with the conditional approval of their transaction.
The commission last year approved the transaction on condition that the Foodcorp pilchard brand‚ Glenryck‚ together with its fishing quota‚ allocated to it by the Department of Agriculture‚ Fisheries and Forestry‚ be sold to a third party.
The commission expressed concern that the transaction‚ with the Glenryck brand going to Oceana‚ would remove an efficient competitor to Oceana's Lucky Star brand from the market.
The merging parties proposed the divestiture of the Glenryck brand‚ but insisted on keeping the fishing rights‚ which had been transferred to Oceana‚ subject to approval of the transaction by the competition authorities.
In the review application the merging parties argued that they had a firm offer on the table for the purchase of the Glenryck brand without its quota from Bidvest's fishing division in Namibia.
Bidvest said it had sufficient quota in Namibia to support the brand.
Silverman said he would not buy the brand without the fishing rights‚ because he did not have enough fish to support it.
If the Namibians had asked his advice‚ he said he would have told them not to buy the brand without the rights currently allocated to Foodcorp.
He told the tribunal that quotas fluctuated all the time. There was a time when all the fish for Lucky Star came from Namibia because South Africa had had no fish‚ but things had changed and now Namibia's quotas had decreased.
"The history of pilchard fishing around the world is littered with traumatic stories where the pilchards are there and then they disappear. I would not buy the brand without the quota‚" Silverman said.
He added that the merged entity would hold more than 60% of the total allowable catch in South Africa of 90 000 tons a year. About 70 000 tons are available for canning as 20 000 tons are used for bait and other purposes.
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