Oils well with merger but Unilever South Africa still liable for cartel charges

By Gill Hyslop contact

- Last updated on GMT

The sale of Unilever South Africa's spreads business to Robertsons is subject to conditions following cartel involvement. Pic: ©GettyImages/Multiart
The sale of Unilever South Africa's spreads business to Robertsons is subject to conditions following cartel involvement. Pic: ©GettyImages/Multiart

Related tags: Cartel, Oil, Unilever, Mergers and acquisitions, Snacks, Competition commission

The South African Competition Commissions has approved the merger – with conditions – in which Robertsons will gain control over Silver 2017 (Pty) Ltd (trading as Newco), following the transfer of the spreads business from Unilever South Africa (ULSA).

Last year, ULSA was found guilty of colluding with margarine maker Sime Darby Hudson Knight to avoid competing with each other.

According to the Commission, the two companies divided markets by allocating specific types of products and customers.

The Commission said its investigation found that, between 2004 and 2013, Sime Darby had agreed not to supply industrial customers with margarine pack sizes that were less than 15kg, nor would it supply the retail sector of the market where Unilever was active.

Sime Darby also agreed not to supply retail customers with its Crispa branded edible oils and only produce 25 litre pack sizes of edible oils for industrial customers.

In return, Unilever agreed not to supply industrial customers with its Flora branded edible oils.

Sime Darby was fined R35m, which it settled with the Commission in 2016.

Unilever to be charged

The Commission is seeking an order from the Competition Tribunal to fine Unilever an administrative penalty equal to 10% of its annual turnover.

“Food and agro-processing is an important focus area for the Competition Commission, and we are determined to root out exploitation of consumers by cartels that are so prevalent in this sector,”​ said Tembinkosi Bonakele, commissioner of the Competition Commission.

The Commission has requested a condition that ULSA remain liable for any penalty that may be imposed by the Tribunal post-merger.

Approved, without conditions

The Commission has approved the acquisition of VKB Flour Mills, a manufacturer and supplier of flour, bread and bakery products, by VKB Agri Processors.

VKB Agri Processors is a wholly owned subsidiary of VKB Bellegings, which has a diverse range of interests in the agricultural sector, ranging from maize milling to research and development of seed technology.

It has also approved the sale of Zutco and Pakworks – contract manufacturers of savory snacks for Simba chips – to investment company Philafrica Foods.

The Commission noted there are no public interest concerns arising out of either transaction.

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