2 December 2015 by Competition Matters

Competition Tribunal imposes employment conditions in agri-market

On 8 July 2015, the Competition Tribunal approved the acquisition by Louis Dreyfus Commodities Africa Proprietary Limited (LDCA) and VKB Agriculture Proprietary Limited (VKB) of the business of Best Milling Proprietary Limited, Ixia Trading 177 Proprietary Limited and Moliblox Proprietary Limited (Kromdraai Group) on condition that the merging parties shall not retrench any employees as a result of the merger, save for 61 affected employees.

Following the conclusion of and implementation of the proposed transaction, LDCA and VKB shall
jointly control the Kromdraai Group. The Competition Commission found that the proposed transaction is unlikely to substantially prevent or lessen competition in any market.

On the subject of employment, the merging parties submitted that approximately 80.51% of jobs will be unaffected as a result of the proposed transaction and the remaining 19.48% of jobs were at risk, translating into a loss of 61 jobs. The merging parties argued that if these affected employees were not retrenched, the Kromdraai Group will be forced to close down, in which case, all of the existing employees will lose their jobs. Therefore, the merging parties submitted that 61 semi-skilled and unskilled employees be retrenched post-merger. The Commission accepted that the merging parties applied a rational process in arriving at the number of 61 employees. However, the Commission argued that the affected employee complement comprised unskilled individuals with little or no formal education and in order to address the shortcoming, it recommended that the merger be conditionally approved.

The Tribunal agreed with the Commission’s reasoning and approved the proposed transaction on condition that the merging parties shall not retrench any employees as a result of the merger, save for 61 affected employees. In addition, the Tribunal imposed an internal mechanism into the merger conditions whereby VKB is obliged to give a right of first preference to the affected employees should positions arise at VKB for a period of 12 months after the approval date of the merger.

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