<\/p>\n
In a significant development for South African merger control, the Competition Commission has applied to the Competition Tribunal, in terms of Section 16(3) of the Competition Act, for the tribunal to revoke its conditional approval of the acquisition by Premier Group Limited of RFG Holdings Limited.<\/p>\n
This is the first time the commission has sought the revocation of an approval of a merger based on the alleged failure to disclose material information during the merger review process.<\/p>\n
Read:
CompCom moves to scrap Premier-RFG merger over factory shutdown
Premier forecasts revenue jump from RFG acquisition<\/p>\n
The application stems from Premier\u2019s announcement at the end of July 2026, approximately four months after approval of the transaction by the Tribunal, that it intended to close Fruit Processing Western Cape, a fruit-canning facility in Tulbagh.<\/p>\n
The facility is one of only two fruit-canning operations in South Africa, supports approximately 200 fruit growers, and employs more than 400 permanent and fixed-term employees, as well as seasonal workers, across the agricultural value chain.<\/p>\n
The commission alleges that during the merger review process, the parties stated that they did not contemplate closing, integrating or consolidating any production facilities following implementation of the transaction.<\/p>\n
Investigation<\/p>\n
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However, following the investigation of a complaint that the closure of the cannery would result in retrenchments in contravention of the conditions to approval of the merger, the commission concluded that the parties had considered and discussed the possible closure of the Tulbagh facility before the tribunal approved the merger, but did not disclose this \u2013 despite specific enquiries about their post-merger operational plans.<\/p>\n
The commission contends that the non-disclosure prevented both the commission and the tribunal from properly assessing the competition and public-interest implications of the transaction.<\/p>\n
In particular, the commission has indicated that the closure could have material consequences for competition in the canned fruit sector as farmers would lose a long-standing customer and exports would decline, and could result in substantial employment and broader economic effects.<\/p>\n
Read:
Premier Foods factory closure: Talks break down
SA\u2019s fruit canning industry under threat as Premier Foods plans closure<\/p>\n
While the application follows the commission\u2019s investigation of a complaint that the planned closure would result in retrenchments, the commission\u2019s case extends beyond compliance with employment-related conditions.<\/p>\n
Central to the commission\u2019s case is an allegation that material information relevant to the merger assessment was not disclosed during the regulatory process.<\/p>\n
While the commission can revoke its decision, the affected transaction was a large merger, and therefore the decision-maker was the tribunal.<\/p>\n
In such cases, Section 16(3) of the Competition Act empowers the commission to apply to the tribunal to revoke its own decision to approve or conditionally approve a merger or, in respect of a conditional approval, make any appropriate decision regarding any condition relating to the merger, where the approval was granted on the basis of:<\/p>\n
a) Incorrect information for which a party to the merger was responsible;
\nb) Where the approval was obtained by deceit; or
\nc) Where a party to the merger has breached an obligation attached to the approval.<\/p>\n
Notably, absent an application from the commission, it appears that neither third parties nor the tribunal can vindicate the authority of the tribunal with respect to mergers.<\/p>\n
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A case to watch<\/p>\n
As the first application of its kind, the matter may provide important guidance on the extent of merger parties\u2019 disclosure obligations, whether there is a materiality threshold and how it ought to be determined, and the circumstances in which an approved merger may later be revisited, including whether the effluxion of time is a relevant factor.<\/p>\n
Read:
\u2018There\u2019s a lot of opportunity to drive costs out\u2019 \u2013 Premier CEO
Premier launches share-swap takeover bid for RFG Holdings<\/p>\n
In announcing the application, the commission emphasised that \u201cthe integrity of South Africa\u2019s merger-control regime depends on merger parties making full, frank and honest disclosure of all material information\u201d and that withholding material information \u201cwhether by omission or as a deliberate act, undermines the integrity of the merger-control regime and may result in the revocation of an approved merger\u201d.<\/p>\n
* Nazeera Mia is a lawyer at Bowmans South Africa, Xolani Nyali is a partner, and Tamara Dini is co-head of competition at the firm.\u00a0\u00a0<\/p>\n
#PremierRFG #Tulbagh #transaction #troubles #Moneyweb<\/p>\n","protected":false},"excerpt":{"rendered":"
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