Competition watchdog blocks sale of Burger King SA on BEE grounds
In a "historic" decision which could well be tested in court, the Competition Commission has blocked the sale of Burger King SA by Grand Parade (68% black-owned).
Ironically, the Commission would not allow a sale sought by one of country's oldest empowerment companies because the BEE credentials of the buyer (Emerging Capital Partners) are not good enough.
Bruce Whitfield finds out more about the Commission's decision from its Head of Mergers and Acquisitions, Tamara Paremoer.
Regardless of the assessment on competition, the Act requires that we also determine whether or not a transaction can be justified on public interest grounds.Tamara Paremoer, Head of Mergers and Acquisitions - Competition Commission
Of the five public interest grounds they consider, there is one particularly relevant in the case of Burger King SA - whether or not the merger will promote a greater spread of ownership.
And in particular, whether it increases the level of ownership by historically disadvantaged persons or workers.Tamara Paremoer, Head of Mergers and Acquisitions - Competition Commission delete
We found that this merger does not pass that threshold, so it has a negative effect because it does not promote a greater spread of ownership.Tamara Paremoer, Head of Mergers and Acquisitions - Competition Commission
It is a historic decision I suppose because it is the first time we have prohibited a merger purely on public interest grounds.Tamara Paremoer, Head of Mergers and Acquisitions - Competition Commission
If the deal falls though, Whitfield points out, could it not have other disastrous consequences for a potential sale and in fact be prejudicial to the very shareholders that the public interest consideration is trying to protect?
He gets comment from a BEE advisory perspective from BEE expert Safiyya Patel, a partner at Webber Wentzel.
She notes the decision could well limit the market these broad-based shareholders could now be selling their assets into.
... given that a black shareholder might not be in a position to sell the assets to non-black shareholders because of these public considerations, and that a potential merger might be blocked by the Competition Commission.Safiyya Patel, Partner - Webber Wentzel
Listen to the thought-provoking discussion below:
Source : https://previews.123rf.com/images/jannoon028/jannoon0281507/jannoon028150701318/42966755-bangkok-july-19-2015-burger-king-restaurant-in-don-mueang-international-airport-it-is-the-second-lar.jpg