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Spar Group Ltd and Sparit Family Supermarkets (Pty) Ltd (76/LM/Aug05) [2005] ZACT 62 (16 September 2005)
.RTF of original document
COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case no.: 76/LM/Aug05
In the large merger between:
Spar Group Ltd
and
Sparit Family Supermarkets (Pty) Ltd
Reasons
_______________________________________________________________
Introduction
1.
On 8 September 2005 the Tribunal approved the merger between Spar Group Ltd and Sparit Family Supermarkets (Pty) Ltd. The reasons
are set out below.
The transaction
2.
The Spar Group will acquire three retail supermarket businesses and two retail liquor outlets businesses, all owned by Sparit Supermarkets.
3.
The Spar Group Ltd (“Spar Group”), which also controls Nelspruit Wholesalers (Pty) Ltd in South Africa, is a public company
listed in the JSE.
4.
Sparit Family Supermarkets (PtY) Ltd (“Sparit Supermarkets”) consists of the following retail businesses:
•
Komati Spar, a retail store in Komatipoort,
•
Hoedspruit Spar, a retail store in Hoedspruit,
•
Greenview Spar, a retail store in Sabie,
•
Mr Cellars Komati, a retail liquor store in Komatipoort, and
•
Mr Cellars Sabie, a retail liquor store in Sabie
Rationale of the transaction
5.
Spar submits that the transaction is a purely defensive strategy in order to keep the stores as Spar retail outlets. Spar Group intends
to sell the stores as soon as possible to owners who will continue to operate them independently as Spar stores. It would appear
that the owners are free to sell their businesses to other retailers and Spar is anxious to prevent these stores falling into the
hands of a rival chain who would re-brand them.
Background
6.
The Spar Group Ltd (“Spar”) is a buying organization, which purchases, warehouses and distributes merchandise to and on
behalf of its Spar Guild members. It owns six distribution centers, in Johannesburg, Olifantsfontein near Pretoria, Durban, Cape
Town, Port Elizabeth and Nelspruit, which service the 773 Spar stores throughout South Africa and neighbouring countries. The members
are expected, but not obliged, to purchase most of their requirements from the Spar distribution centers or through nominated drop
shipment suppliers.
Effect on competition
7.
Spar and its Guild members do not compete with each other but are in a vertical relationship. Spar trades in the wholesale market
for household grocery products and its Guild members in the retail sector.
8.
Whilst the rationale for the merger may be a pre-emptive strike to prevent a rival retailer getting hold of prime retail locations
in the various local markets the merger does no more than preserve the status quo – a Spar retailer was in these sites pre-merger
and will be so post merger. The merger would therefore not lead to a substantial lessening or prevention of competition.
Public interest issues
9.
No significant public interest issues arise from this transaction.
____________
16 September 2005
N. Manoim
Date
Concurring: L. Reyburn and Y. Carrim
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