On August 1 2011 the Competition Tribunal conditionally approved the acquisition by Shoprite, a wholly owned subsidiary of Shoprite Holdings, of Metcash Seven Eleven (Pty) Ltd, a franchise unit, and the business of Friendly Distribution division of Metcash Trading Africa (Pty) Ltd. Metcash's franchise unit includes the licence to franchise and distribute to Seven Eleven and Friendly Seven Eleven stores. Friendly Distribution is an entity consisting of significant distribution centres located throughout South Africa which provide product support to the franchise stores within the Metcash Trading Africa (Pty) Ltd group.
According to the merging parties, the proposed merger was mutually beneficial in that Shoprite, through its OK Franchise Division, would expand its business operations by entering into more franchise arrangements and would thereby increase its turnover in the supply of merchandise to its franchisees.
Although the tribunal found that the merger was unlikely to lessen competition within the relevant markets, employment concerns had been raised. The transaction was approved on condition that Metcash find alternative employment for employees who stood to be retrenched after the merger, as well as for employees who had applied for voluntary retrenchment, unless Metcash had accepted their applications.
For further information on this topic please contact Lesley Morphet at Webber Wentzel by telephone (+27 11 530 5000), fax (+27 11 530 5111) or email ([email protected]).