AN AGREEMENT reached in private between the state and merging parties — diversified food group Afgri and private investment company AgriGroupe — had been made a condition for the approval of the deal by the Competition Tribunal, the tribunal said on Thursday.
It included the agreement despite a request by the merging parties to avoid placing an obligation on itself and the Competition Commission to monitor agreements that were not competition related, as the authorities had limited resources.
The government raised concerns that AgriGroupe might increase storage costs for grain in KwaZulu-Natal, Mpumalanga and Gauteng as it would then own the majority of silos in these regions.
The commission found there was spare capacity at the silos and that it would not make commercial sense to exclude farmers from using it.
It recommended an unconditional approval of the merger after its analysis into the matter after concerns were raised by various stakeholders, including the economic development, trade and industry, agriculture forestry and fisheries, and rural development departments about the possible anticompetitive effects of the transaction.
The commission agreed with the terms, and would abide by the decision of the tribunal.
However, it found no evidence of public interest concerns following assurances that there would be no merger-related job losses, or evidence of competitive overlaps in the activities of the merging parties.
Competition law expert Greta Engelbrecht said this was a continuation of the slippery slope the tribunal set upon in the controversial Walmart deal, where conditions were imposed that had no direct bearing on the deal’s effects on the competitive landscape.
According to the agreement Afgri would make available R90m over four years for loans to emerging farmers, enrol emerging farmers in the development programme established in 2012, and help poultry farmers. Qualifying farmers would receive a grain storage discount.
Afgri also agreed not to relocate its head office outside South Africa during the agreement or 
thereafter. AgriGroupe offered to acquire for cash all outstanding shares of Afgri. 
Source: BusinessDay Live.   #IFAMAFRICA