Dutch multinational brewer Heineken’s takeover of South Africa’s alcohol drinks group Distell will result in the merged company investing R5.5 billion into the local economy, the Competition Tribunal heard yesterday.
The Tribunal yesterday began its hearings from interested parties in the deal. The Competition Commission said in a statement on its testimony to the Tribunal yesterday, that part of the commitments made from the deal included a R3.8bn investment in a new brewery within five years in KwaZulu-Natal, and the setting up of a R1.3bn malt operation in the Western Cape.
Regarding concerns of less access to retail infrastructure for smaller rivals, the commission found that the merged entity was unlikely to have the ability to foreclose small or new brands in the market, as decisions about which products were placed at retail stores were based on demand by consumers.
The new merged company also undertook to support the government’s economic recovery plan by contributing R200 million over five years in a Localisation and Growth Fund, to support further localisation initiatives, focusing on the development of small, medium and micro enterprises.
The new company would also invest R175m over five years to support around 1 000 tavern owners to create sustainable businesses. An innovation, research and development hub for the Africa region based in South Africa would also be established.
On the commission and concerns by other stakeholders about possible retrenchments through the transaction, the commission said the parties had agreed to limit potential retrenchments to 230, or 5% of the total workforce, over a 10-year period, on a worst-case basis.
A new supplier development fund would be established and it would contribute R400m over five years for investment in SMMEs and historically disadvantaged persons which were suppliers to the company.
A new employee share ownership plans would be among the measures that would result in the new company achieving a B-BBEE effective ownership of no less than 15%.