Johannesburg - The Competition Tribunal is today expected to give the proposed merger between SABMiller, Gutsche Family Investments and The Coca Cola Company the green light after the Food and Allied Workers Union (Fawu) agreed to commitments by the parties at a hearing held in Pretoria yesterday.
The tribunal normally has 10 working days to review the proposal by the merging parties following yesterday’s hearing, which dealt with issues ranging from empowerment to labour. The hearing was initially scheduled over three weeks and was fast tracked after Economic Development Minister Ebrahim Patel’s involvement, which included leading the talks between unions and the merging parties.
Read: SABMiller, Coca-Cola hearing today
SABMiller, Coca-Cola and Gutsche Family Investments last week agreed to invest R800 million to support small business after a deal with the department to secure antitrust approval. This followed commitments made by Anheuser-Busch InBev last month on no retrenchments and localisation in its merger with SABMiller.
The Competition Commission in December conditionally approved the merger, which will see the company combine the bottling operations of its non-alcoholic ready-to-drink beverages business in southern and east Africa. More than half of the 14 000 plus employees across Africa will be based in South Africa.
Local suppliers
The approval included that job cuts be limited to 250 and that the merged entity ensured cans, glass and sugar were bought from local suppliers. The merger will see four Coca-Cola bottling operations merge into one entity to be known as Coca-Cola Beverages South Africa (CCBSA).
It will also involve SABMiller transferring Appletiser, Grapetiser, Fruitiser, Peartiser, and Lecol brands to Coca-Cola. SABMiller is expected to exit from its non-alcoholic beverages segment and may not buy non-alcoholic brands in future. Coca-Cola may also not acquire alcoholic beverages.
In his presentation at the hearing, Mike van der Nest, the senior counsel for Coca-Cola, SABMiller and GFI, reiterated an undertaking by the parties not to shed blue collar jobs.
He said the merged entity would maintain its permanent employment in the country for three years from the date of approval of the merger.
The merged entity had committed harmonisation of standards in wages, working conditions and benefits in order to create one set of standards for all employees across the merged entity. “Within four years of the date of approval we would have harmonisation of wages,” he said.
Retrenchments
Van der Nest said the merged entity would not retrench bargaining unit employees, and retrenchments of employees outside the bargaining units would be limited to 250 employees in senior positions.
Measures to mitigate the consequences of the retrenchments will be implemented, including providing funding to reskill affected employees and counselling on applying for alternative employment.
An empowerment transaction will be implemented within five years of the date of approval, which will see black ownership of CCBSA raised to 20 percent from 11 percent.
Speaking on the sidelines of the hearing, Fawu’s Katishi Masemola said the union was comfortable with the merger. He said: “We are talking about lifting thousands of workers to Amalgamated Beverage Industries standards on wages and working conditions.”
Maya Swart, the Competition Commission lawyer, told the hearing that the merger would not “materially change the competition dynamics of the market other than that Coca-Cola will be the new owner of the Appletiser brand.”
Swart said access to fridge space was identified as a key barrier to entry by emerging business. She said the commission wanted 20 percent of space in shops allocated to competing products to ensure that there was no anticompetitiveness. It settled on 10 percent after the Economic Development Department helped iron out a number of conditions.
The creation of CCBSA will combine six businesses across Africa’s soft drinks industry with annual sales estimated to be $2.9 billion (R43.01bn).
BUSINESS REPORT