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Business Reporter

THE Competition and Tariff Commission (CTC) has approved the proposed acquisition of a 99 percent stake in Selby Enterprises, a Zimbabwean horticultural products supplier by Mbizi, a subsidiary of Mauritian investment management firm, SSCG Africa Holdings.

The purchase consideration for the proposed transaction is US$500 000. SSCG is an investment company with interests in agriculture, mining, tourism, retail and wholesale of fast-moving consumer goods (FMCG’s), micro-finance, restaurants and human resources sectors in Africa, including Zimbabwe. Of significance to the proposed vertical merger are the retail operations of SSCG, which will, post-merger, create a vertical link with those of Selby.

SSCG has a 40 percent stake in Spar, a retailer of FMCGs including fresh fruits and vegetables. The target entity, Selby Enterprises, is a wholesaler of fresh fruits and vegetables in Zimbabwe and across borders. The details of the merger are contained in a summary of recent board resolutions on the matter, seen by Business Chronicle.

“Analysis of the transaction focused on the vertical relationship between Spar as a retailer of fruits and vegetables and Selby as a supplier.

“An inference into the market shares and concentration levels revealed that the upstream market was moderately concentrated,” reads part of the CTC board resolutions, dated 10 December 2019.

“The foreclosure test undertaken established that the merger would not result in market foreclosure as Selby lacks both the ability and incentive to foreclose as its market share is not significant to accord it market power.”

As such, the Commission said there was enough countervailing power from buyers of fresh fruits and vegetables who are large supermarkets with bargaining power. According to CTC, before the merger, Spar procured its entire requirements from Fresh Trade with whom it has an exclusive supply arrangement. 

“This arrangement has not affected competing wholesalers of fruits and vegetables hence their submission that the merger would not affect them.

“The merger, therefore, will not result in customer foreclosure,” said the Commission. It further stated that stakeholders consulted supported the merger with one exception raised concerning the supply of pre-packed and custom-made lines. The Commission said it approved the merger subject to three main conditions. That the merged entity, its affiliates or successors in tittle continue to supply retailers of fresh fruits and vegetables on non-discriminatory terms and conditions of supply such as prices, quality and delivery terms. 

Secondly, the merged entity should submit to the Commission, on an annual basis, information about quantities of fresh fruits and vegetables supplied to retailers including prices and delivery terms. The third condition is that the merged entity would seek authorisation in terms of Section 35 of the Competition Act (Chapter 14:28) if for any reason(s), it intends to deviate from the above.