Sunday, March 7, 2021

Competition Authority approves Payless acquisition despite retrenchments

The Competition Authority has confirmed that it has approved the takeover of Payless Supermarket by businessman, Mohamed Abdul Malique despite the transaction being implemented in contravention to section 55 of the Competition Act.

The Act provides that the deal, which happened last year, should have been notified to the Authority prior to its completion. It however emerged early this year that the two parties only notified the Authority at a later date after the deal was sealed.

Meanwhile fresh information suggests that about 34 employees were shown the door following the takeover by the new management.

The Telegraph has it on good authority that Malique, a minority shareholder in Woodblock (Pty) Ltd indirectly acquired 90 percent issued share capital in Payless Supermarket (Pty) Limited sometimes late last year. The company then went to retrench close to 40 employees, mainly shop assistants.

Despite the fact that the retrenchment is classified as a public interest concern under section 59(2) of the Competition Act, the Authority this week confirmed that it has blessed it. It however notes that the new management “should absorb the retrenched employees during their expansion process, following the commitment made to this effect.”

The Authority claims that the analysis of the facts of the merger assessment has shown that there are no competition concerns that will arise with respect to the acquisition of Payless by Malique in the market for grocery retailing.

Woodblock (Pty) Ltd is a wholesaler incorporated under the Laws of Botswana, which is engaged in the business of Fast Moving Consumer Goods (FMCG) and is incorporated under the Laws of Botswana.

Despite the merger having been implemented without notification, the Authority is empowered to retrospectively assess and make a determination to the concerned parties regarding the transaction.
The Payless transaction is the second major merger that happened without the approval of the Authority.

Late last year, the shareholders of the country’s leading hospitality group, Cresta Marakanelo had to wait for a while before they could celebrate an acquisition by their company of a Jwaneng based hotel, Cezar Hotel.

The two companies, Cresta Marakanelo and United Promotional Enterprises trading as Cezar Hotel, also did not notify the Competition Authority (CA) prior to their merger.

The Authority however unconditionally authorised the acquisition despite some critics’ arguments that it was going to set bad precedence.

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