Competition Commission approves AB InBev takeover of SABMiller

SOUTH AFRICA – The Competition Commission has recommended to the Competition Tribunal that a deal for Belgian-based brewer Anheuser-Busch InBev (AB InBev) to acquire SABMiller (SAB) be approved with conditions.

Competition Commissioner Tembinkosi Bonakele said on Tuesday these conditions addressed issues that were raised by various stakeholders since the announcement of the acquisition of SABMiller by AB InBev for $108bn.

The commission has recommended a number of conditions to the Competition Tribunal to address these concerns.

The main one is that AB InBev sell off its Distell shareholding within three years after the closing date of the transaction.

The commission found that SABMiller‚ through SAB‚ held a significant shareholding in Distell‚ the largest producer of ciders in SA‚ followed by SAB.

The commission said this relationship created a platform for the exchange of commercially sensitive information between AB InBev and Distell‚ the commission found.

The commission also said AB InBev had undertaken to ensure that its employees who were involved in bottling operations for Coca-Cola would not also be involved in its bottling operations for Pepsi‚ and there would be no sharing of commercially sensitive information between the two.

This is a result of a finding that AB InBev bottled soft drinks for Pepsi in other jurisdictions and would, after the merger, also bottle soft drinks in SA for Coca-Cola.

The commission expressed concern that these bottling arrangements for the two global leading soft drinks manufacturers could be a platform for coordination.

The commission also expressed concern that the merged entity would continue to be the dominant supplier of tin metal crowns through the ownership of Coleus‚ the sole producer of tin metal crowns in SA.

The commission’s concern was that the merged entity would hamper its competitors by refusing them access to tin metal crowns. To remedy this‚ AB InBev has undertaken that to supply tin metal crowns to third parties for a period of five years after the closing date of the transaction.

The commission also received concerns regarding the potential effect of the proposed merger on employment.

AB InBev has undertaken not to retrench any employee in SA as a result of the merger. This condition will endure in perpetuity.

There are also potential negative employment effects arising from the potential termination of the distribution agreements with DGB‚ AB InBev’s distributor of alcoholic beverages in SA.

AB InBev has undertaken to offer employment to those employees of DGB who may be retrenched in the event that AB InBev terminates the DGB distribution agreement.

The commission has also recommended that AB InBev continue supplying hops and malt that are currently supplied by SAB to small beer producers.

The commission said the merging parties had agreed to submit to government and the commission by no later than two years after closing the merger‚ its black economic empowerment plans setting out how the merged entity intends to maintain black participation in the company‚ including equity.

The commission also said AB InBev had undertaken to comply with the terms and conditions of the current agreements that existed between SAB and owner-drivers.

“We are confident that these comprehensive conditions address the competition and public interest concerns emanating from the merger‚” said Bonakele – TMG Digital

May 31, 2016; http://www.bdlive.co.za/business/retail/2016/05/31/competition-commission-approves-ab-inbev-takeover-of-sabmiller

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