SA takes measures to preserve packaging industry

- Last updated on GMT

Related tags: International trade, Trade

In South Africa a Competition Tribunal has announced that its
recent approval of the R1,97 billion (€194m) packaging merger
between Nampak and Malbak was in part designed to stop
multinational customers for the packaging products of these firms
leaving the country.

In South Africa a Competition Tribunal has announced that its recent approval of the R1,97 billion (€194m) packaging merger between Nampak and Malbak was in part designed to stop multinational customers for the packaging products of these firms leaving the country.

The tribunal argued in an extensive report that the markets in which multinationals are serviced "are most usefully described as a global market".

"However, it is an unusual global market because by designating it as such we do not suggest that there is or will be a large direct international trade in folded carton and printed foil packaging products.

"The packaging companies that supply these multinationals will continue to serve the national producers of consumer nondurables in their home markets.

"However, the Nestles and Unilevers of this world will increasingly turn away from input suppliers whose capacities do not extend much beyond their ability to service production for their home market.

"If the SA packaging giants cannot measure up to their requirements, then they will turn to alternative global packaging suppliers who will service the multinational's global market, including that share traded in the SA market, and whose home countries will become the preferred location for the multinational's global or regional production facilities."

The tribunal noted that, in contrast to the market in which the multinationals operate, the market for domestic consumers of packaging is a national one.

The merger is expected to go through next month with the only condition which has been imposed by the tribunal being the sale of a bubblewrap machine after Nampak and Malbak shareholder meetings.

Nampak and Malbak have said the merger will give them the critical mass to expand globally.

Related topics: Processing & Packaging

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