The Competition Tribunal conditionally approved the merger involving Shoprite Checkers (Shoprite) and Ellerines Furnishers (Ellerines), (currently under business rescue) subject to a condition relating to employment.
By way of background, before the directors of Ellerines adopted the resolution to enter into business rescue, they decided that in order to restore profitability, a significant restructuring of the business was required. This involved assessing various Ellerines stores and deciding which stores would have to be closed down and which were viable to continue trading. This restructuring process occurred parallel to the sale of certain of Ellerines' assets, brands and divisions. Shoprite made an offer to the business rescue practitioners to acquire various leases of retail premises of Ellerines' business designated for closure.
The Competition Commission found that the proposed acquisition raises no competition concerns. However, as part of a consultation process facilitated by the Commission for Conciliation, Mediation and Arbitration, an agreement was entered into between Ellerines, the South African Commercial, Catering and Allied Workers Union, and non-unionised employees, in terms of which most employees of Ellerines applied for voluntary severance agreements (VSAs). The Commission found that it was necessary to impose an employment condition in relation to employees that did not accept VSAs. The merger was approved subject to the condition that the employees of the stores' whose leases will be transferred to Shoprite, will be transferred to and employed by Shoprite.