The Competition Tribunal has approved the acquisition of seed and wheat milling companies Progress Milling and Noordfed by holding company K2014202010, a joint venture between Louis Dreyfus Company Africa (LDCA) and DH Brothers Industries Willowton.
The tribunal approved the transactions subject to conditions imposed to prevent information sharing, information flow between potential competitors and to ameliorate potential job losses.
The tribunal has additionally ordered that a skills development fund of at least R1.5-million be set up to assist and uplift any affected employees who may face retrenchment post-merger.
The Competition Commission had recommended the tribunal prohibit the proposed mergers owing to competition concerns.
LDCA is a global trader of commodities, including white maize, wheat, beans, rice, edible oils, oilseeds and sugar, and a processor of agricultural goods.
Willowton is a black owned South African sunflower seed crusher and refinery company. It sells a range of fast-moving consumer goods including edible oils, products derived from edible oils, soaps, candles, beauty products and toiletries.
The commission submitted theories of 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.
It was also concerned about the merger’s impact on the market for sunflower seed crushing, such as the likelihood that the merger may create a platform to enhance or further entrench coordination in the adjacent market of seed crushing where the consortium members are competitors.
However, during the merger hearings, both Progress Milling and Noordfed, indicated that the companies were under strain and would close down, resulting in job losses.
The tribunal approved the acquisition of both companies but stipulated conditions regulating cross directorship between the firms, which was identified by the commission as problematic.