South African Tribunal approves two mergers in seed and wheat milling

06-Dec-2017 - Last updated on 06-Dec-2017 at 11:41 GMT

South Africa Competition Tribunal approves merger. Pic: iStock.

A South African Competition Tribunal has approved two mergers in seed and wheat milling in which holding company K2014202010 intends to purchase Progress Milling and Noordfed.

Progress Milling processes and sells white maize. It operates a maize mill outside of Polokwane with 25 depots throughout the Limpopo province.

Fox brand

It supplies other related products under the Fox brand at its depots and controls 11 silos in Polokwane, which are used for storage of Progress Milling products.

Noordfed operates a maize mill in the North West Province and distributes white maize to the North West and KwaZulu Natal provinces.

“The Tribunal has approved two mergers, that of Progress Milling (in Business Rescue) and Noordfed (which faced liquidation should the merger not be approved) with holding company K2014202010,” a spokesman for the Competition Tribunal said.

K2014202010 is a joint venture between Louis Dreyfus Company Africa (LDCA) and DH Brothers industries, trading as Willowton.

LDCA is a global trader of commodities and a processor of agricultural goods. The key commodities traded by LDCA are white maize, wheat, beans, rice, edible oils, oilseeds (sunflower and soya) and sugar.

Willowton is a black-owned South African sunflower seed crusher and refinery company. It sells edible oils, products derived from edible oils, soaps, candles, beauty products and toiletries.

“The Tribunal has approved both mergers subject to conditions imposed to prevent information sharing, information flow between potential competitors and ameliorate potential job losses,” the spokesman added.

“A moratorium was placed on job losses in both companies with a requirement that reskilling takes place.”

Skills development fund

The Tribunal ordered that a skills development fund, tendered by the merging parties, of an amount not less than R1,5m ($110,555) is set up to assist and uplift any affected employees who may face retrenchment post-merger.

Had the merger not been approved, Progress Milling would have closed, resulting in the loss of 273 jobs and Noordfed would have been liquidated, resulting in the loss of 133 jobs.

Concerns submitted to the the Competition Commission prior to the merger included ‘harm pertaining to coordination in the market for white maize milling and the likelihood of coordinated effects arising in the white maize milling market in Limpopo’.

Also any effect the merger would have on the market for sunflower seed crushing.

The Commission had recommended to the Tribunal the proposed mergers be prohibited because of competition concerns.

The Tribunal, hearing the merger on an urgent basis owing to the November 30 drop dead dates of the transaction, approved the transaction with a number of conditions regulating cross directorship between the firms identified by the Commission as problematic.

Additionally, the Tribunal imposed a moratorium on any retrenchments for a stipulated period and a condition requiring the establishment of a fund aimed at upskilling any employees facing retrenchment after the moratorium period has ended.