Sunday, July 3, 2022

Competition Authority smells vengeance in Shield liquidation

The proposed Shield Security/G4S merger rejected last month by the Competition Authority and the subsequent imminent closure of Shield Security has pitted the employer against furious employees who are not sure of their future.

There was commotion at the Shield Security premises when workers bayed for the blood of a manager at the company ÔÇô Rockie Mmutle ÔÇô over communication breakdown regarding the closure of the company by the end of this month. Police were called in to diffuse the tension.

Some 1300 employees ÔÇô a figure provided by Shield Security Human Resources Department but contested by Mmutle because of fluctuations owing to the elapse of contracts – will be out of jobs at the end of this month. Mmutle could not provide the exact figure saying probably 600 will be affected.

The employees’ spokesman, Emmanuel Motlhoiwa, said the company failed to inform workers on time.

“We met with management sometime in December last year when we were told the company had been acquired by G4S under the impression that our jobs are secure. We are shocked that Shield Security is closing down at the end of this month. On top of that, we are worried that the government with existing laws can allow this to happen,” he said, addressing scores of workers who had assembled by the company offices and apparently attempted to assault the manager.

A police Sergeant, who could not be identified, implored workers to explore lawful avenues to get management to address their grievances, if there are any, without resorting to violence.

“I called the police to disperse you. If you are aggrieved by any decision taken by the company you have other channels to take them up. I am not alone in this company,” Mmutle protested before angry workers.

The Union for Private Security Workers had misgivings about the swift closure of Shield Security.
‘We met with Mr. Mmutle who told us that he is constantly updating workers about the imminent closure when we registered our concerns regarding the future of workers,” said unionist Robert Mmolai.

“There is nothing illegal about recommending our clients to G4S. We have had a relationship with most of our clients for a long time. We could not just give them month’s notice without giving them an option. This decision was a tough decision. It was not meant to frustrate the Competition Authority. FMG is a legal entity on its own. The Competition Authority has allowed us to sell a group of our companies but cannot allow us to sell an arm of the company,” Mmutle told the Sunday Standard.

There has been a lot of public interest expressed on the rejection of the proposed merger between Shield Security Services and G4S. The interest has been heightened in the wake of the announcement by Shield Security Services management that they are closing down the business.

The Competition Authority has absolved itself from what it has described as “insidious attempt” by some to directly link the events that the decision to shut down Shield Security Services is as a consequence of the Competition Authority’s rejection of the Shield Security takeover by G4S.

“The decision to close shop at Shield Security was a management decision. Shield Security management had options. We are aware that other parties including Batswana shareholders wanted to buy the business unit. There are interested parties, even at this moment, that would want to buy a profitable company such as Shield Security Services,” according to the Director of Communications and Advocacy at the Competition Authority, Gideon Nkala.

Nkala said as the custodian of fair competition in the Botswana market, the Competition Authority is called upon to ensure that high levels of concentration that characterise certain markets, such as the security industry, do not lend themselves to market abuse.

“The current market share of the security industry clearly shows that G4S is a well resourced and dominant firm in the alarm response services market. The proposed transaction of Shield Security takeover would have resulted in increased dominance and possible abuse of dominance of market power by G4S. In view of these competition concerns the merger was rejected,” said Nkala.

“On the flip side, the desire by Shield Security Services management to dispose of the company presented an opportunity to Batswana entrepreneurs or even local shareholders in the company who had expressed an interest to buy the business and enter the security industry,” he added.

“In any merger transaction, maintenance of jobs is one of the key elements of the determination process. If job losses were the likely eventuality, the management of Shield Security Services was under obligation to alert the Authority by raising the failing firm argument. Differently put, Shield Security would have argued that if the Competition Authority does not approve the proposed merger between their company and G4S employees were going to lose jobs because the company is a struggling firm. At that point the complexion of the determination would have changed,” argued Nkala.

Further, the spokesman said in a failing firm scenario “it is almost a necessity that the determination prism becomes skewed towards averting job losses”.

“We must underscore the fact that in the case of Shield Security and G4S transaction the failing firm argument was not canvassed and it is clear why it never arose. Shield Security is not a failing firm. On the contrary, it is a profitable business unit,” he said.

The Competition Authority says the reason why employees at Shield Security have lost their jobs is because the owners wanted to discontinue business, “perhaps out of vengeance” that their proposed merger has not been approved. Shield had running lucrative contracts with government, financial institutions and other corporate clients.

“In case there are some who are of the opinion that the Competition Authority should have allowed Shield security to sell to G4S anyway. Someone may ask, what happened to ‘willing seller willing buyer principle’?

With the advent of the Competition Act, company disposal is a controlled process, not so much to prevent businesses to dispose of businesses but to ensure that competition issues such as concentration, barriers to entry and others are addressed otherwise businesses would maintain dominance by selling to those that they like and prefer,” said Nkala.


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