Commission welcomes Tribunal’s approval of Heineken and Distell merger

Heineken
13 Mar 2023

The Competition Commission (Commission) welcomes the decision issued by the Competition Tribunal (Tribunal) approving the proposed international merger transaction between European brewer, Heineken, and South African alcohol producer, Distell Group Holdings Limited in South Africa (“Distell”).

The Tribunal’s approval, issued on 9 March 2023, is subject to a range of competition and public interest conditions recommended by the Commission in its referral of the case in September 2022.

In its investigation, the Commission found that the merger would combine Distell’s Savanna and Hunter’s brands with Heineken’s Strongbow to create the largest cider manufacturer in the country. Together, Heineken and Distell would have a market share above 65% in the supply of flavoured alcoholic beverages and an even higher market share in the supply of ciders. The Commission recommended that the Tribunal approve the merger subject to the divestiture of Heineken’s Strongbow brand to encourage competition and promote entry into the highly concentrated alcoholic beverages sector.

The merger parties also agreed to public interest conditions that promote supplier development, maintain local procurement, encourage investment in research and development and increase local manufacturing capacity. The merged entity also committed to promoting worker ownership by establishing an employee share ownership plan and giving workers board representation in the merged entity.

“The conditions ensure that we meet our dual objective of promoting and maintaining competition and ensuring that mergers are regulated in keeping with the public interest. We recommended that the divestiture be done in a way that promotes transformation to ensure that this historically concentrated sector is opened to allow for greater participation by all South Africans,” says Competition Commissioner Doris Tshepe.

Following considerations put forward during the Tribunal hearings by interested parties, conditions were also incorporated to address allegations of human rights abuses including an investigation of working conditions on the affected farms and commitments to human rights standards for workers such as the provision of adequate sanitation facilities in the vineyards for workers. Also, Newco – a special purpose vehicle controlled by the Heineken Group – will have to undertake an audit that will cover fair wages, reasonable working hours, a safe and dignified working environment, and health and safety standards and will include a representative sample of other farms which directly or indirectly supply products to Newco.

A non-confidential version of the conditions is available on the Tribunal’s website at https://www.comptrib.co.za/case-detail/19820.

See also:

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
Share


Competition & Antitrust Law articles on GoLegal