Ayanda Mdluli
The Competition Commission, which launched an application last week to appeal against the approval of the takeover of Pannar Seed by DuPont-owned Pioneer Hi-Bred, could have to pay millions in legal costs for the first time if it fails to win at the Supreme Court of Appeal (SCA).
After the Competition Appeal Court (CAC) approved the takeover with costs, it set a precedent that is cited as one of the main reasons for the appeal by the commission.
The CAC’s ruling allowed US agribusiness conglomerate DuPont to take an 80 percent stake in local firm Pannar Seed and awarded costs to the merging parties for fees incurred during the tribunal and appeal court review of the merger.
Commission advocacy and stakeholder relations manager Trudi Makhaya said one of the grounds of launching an application was that the organisation disagreed with the ruling that it would have to pay for DuPont’s legal fees, which she said were in the millions.
She contended that the commission could not be kept from fulfilling its duties for fear of paying legal costs.
Costs for the case include advocates’ fees totalling about R4.8 million. This excluded expenses for expert opinions and reports. Since 2010 the commission’s case costs have totalled about R25m.
However, Makhaya said these costs could not be compared with the amount of work the commission had put in, as it had collected about R550m in fines and penalties over the same period and saved consumers more than R1 billion after it cracked down on price-fixing and breaking up cartels in several industries.
“We don’t have an agenda beyond the competitive outcome and this is not a case of international versus local. As it stands, the merger lessens competition substantially.
“The arguments presented in favour of the transaction do not counter balance the anti-competitive evidence,” Makhaya said.
DuPont hit back, claiming that it would be detrimental to the interests of South African and other African farmers if the partnership was delayed.
Pioneer Hi-Bred said it would review the documents before deciding future actions.
Vinette Nicholls, the corporate communications manager for DuPont’s sub-Saharan Africa region, said the SCA must first grant the commission leave to appeal.
“Furthermore, the CAC was quite clear about the legal merits of this merger and the benefits it will bring to South African farmers. Support for the transaction has been affirmed by the Department of Agriculture in South Africa as well as the greater majority of Pioneer and Pannar stakeholders,” she said.
It is believed by some agribusinesses and environmental NGOs that the deal will confine the domestic seed market to a duopoly between Monsanto and DuPont.
The African Centre for Biosafety and the National African Farmers Union vehemently opposed the deal, arguing that Pioneer would ultimately control locally adapted germplasm, a collection of genetic resources for an organism.
One of the conditions of the merger is the establishment of a R20m fund to increase the productivity, knowledge and welfare of small-scale and developing farmers.
Pioneer said it had committed R62m over five years to establish a regional research centre in South Africa that would bring advanced research and development in breeding technologies to Africa.