South African Competition Tribunal approves acquisition of Eastern Cape Bakeries by Premier Group

On 9 October 2013, the South African Competition Tribunal unconditionally approved the acquisition by the Premier Group of five bakeries in the Eastern Cape province, collectively referred to as the Eastern Cape Bakeries.The Competition Commission assessed the likelihood of both unilateral and coordinated effects in regard to the wholesale supply of bread, but dismissed these concerns in light of evidence presented by the parties demonstrating the lack of any material overlaps between the parties’ activities in the province, and the limited scope for the merger to improve the ability of firms to engage in or sustain tacit coordination.  The Commission also investigated whether the transaction might give rise to adverse effects on employment, a public interest concern, as a result of customer foreclosure in the upstream supply of wheat flour.  However, after a detailed investigation of the ability and incentive of Premier to engage in such foreclosure, the Commission concluded that the concern was unfounded and recommended to the Tribunal that the transaction be approved without conditions.RBB Economics advised the Premier Group during the Competition Commission’s investigation and the hearing before the Competition Tribunal, working alongside attorneys Nortons Inc.