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E-retail sector holds its breath

Cape Town 14-11-2014 Online retailer Takealot.com’s mission statement is displayed largely in its call centre, meanwhile the company awaits approval of its pending merger with Kalahari.com which they announced last month. Picture Jason Boud reporter Jillian Turner

Cape Town 14-11-2014 Online retailer Takealot.com’s mission statement is displayed largely in its call centre, meanwhile the company awaits approval of its pending merger with Kalahari.com which they announced last month. Picture Jason Boud reporter Jillian Turner

Published Nov 15, 2014

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Cape Town - Since the announcement of the merger between major online retailers Takealot.com and Kalahari.com, little information has been shared about what customers can expect when (and if) the merger is complete.

For now, the decision of go or no-go lies with the Competition Commission, the investigative and enforcement agency tasked with promoting and maintaining competition. Established by the Competition Act, the independent agency regulation authority conducts merger reviews, and is reviewing the potential merger of Takealot and Kalahari.

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Head of the mergers and acquisitions division of the Competition Commission, Hardin Ratshisusu, confirmed the commission has until January 5 to make a final decision on whether the merger of the two sites has the potential to substantially prevent or lessen competition.

“We look at the state of competition in the market by focusing on issues such as barriers to entry, level of market share concentration, and bargaining power of consumers,” Ratshisusu said.

Public interest issues like employment and the ability of the firm to compete globally also weighed heavily on the justification of approving a merger like the one between the two e-retailers.

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The in-depth investigation of the merger was now in full-swing, but a complex merger like this one may take time to sort out. “These are very new markets for us to try to understand,” Ratshisusu said.

As part of the decision-making process for this merger, the commission may carry out customer surveys to gain a better understanding of the potential impact.

In the original statement from the companies about the pending union, Takealot said: “The merger will bring customers the benefit of a wider selection of products and categories, as well as broader delivery services”.

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But when the Weekend Argus asked for more details about what changes customers could expect to see in the coming months, and how they may be affected, chief marketing officer Declan Hollywood said: “We have no comments to make on the pending merger. The merger is subject to the approval of the competition authority, and we have nothing to add at this time.”

Kalahari.com’s marketing director Liz Hollick said the two companies were joining forces in an effort to remain successful in a market where competition continues to grow.

“There is growing competition from international retailers such as Amazon.com, and also traditional brick and mortar retailers here in South Africa. E-commerce is growing rapidly, and both entities are experiencing very strong growth. However, the online retail market only contributes around 1.3 percent of the total market for consumer goods in South Africa,” Hollick said.

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While it may take until after the approval to receive the details about what will come of the Takealot and Kalahari merger, Hollick said she expected a positive reaction from customers.

The new entity will operate under the Takealot.com brand.

Weekend Argus

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