Patel to face competition watchdog over SABMiller merger

Minister of Economic Development Ebrahim Patel. Picture: Leon Sadiki
Minister of Economic Development Ebrahim Patel. Picture: Leon Sadiki

Cape Town - The Competition Tribunal expects to hear a submission from Economic Development Minister Ebrahim Patel in the biggest proposed beer deal in history between Anheuser-Busch (AB) InBev [JSE:ANB] and SABMiller [JSE:SAB].

The proposed R1.657trn merger plan was reached in November as a way to gain access to emerging markets and will see AB InBev acquire control of SABMiller.

The three-day hearing starting on Wednesday follows the Competition Commission’s recommendations to the Tribunal that the merger be approved with conditions.

Some of the recommendations include that AB InBev not be permitted to appoint any directors to the board of Distell, a direct competitor, and one in which AB InBev will have holdings; a R1bn fund to be made available over five years for the development of the South African agricultural outputs for barley, hops and maize, as well as promoting the entry of emerging black farmers and an undertaking to continue to source products like glass bottles, cans, bottle crowns and raw materials for beer, from South Africa.

The Commission also found that the proposed merger raised several competition and public interest concerns.

"At the hearing, the Tribunal expects to hear submissions from the Commission, merging parties, the Minister of Economic Development, Heineken, the Black Business Forum, the Tavern Owners Association, as well as Distell, in which SABMiller has a significant holding, and is the largest producer of ciders in South Africa, followed by SAB," said the Competition Tribunal in a statement on Monday.

Also expected to make representation are members of SABMiller’s Zenzele black economic empowerment (BEE) scheme, which is set to mature in 2020.  

"One of the conditions proposed by the Commission is that the merging parties will have to take steps to ensure black participation in the company following the maturing of the scheme, which will reduce BBBEE holding."

The Tribunal said the Food and Allied Workers Union (Fawu), which is the biggest union at SABMiller, will also participate in the hearings.

Fawu has been opposing the merger over the handling of the Zenzele scheme and vowed to take their fight as far as the Constitutional Court.

The merger plan has already won competition approval in more than a dozen jurisdictions, including the European Union.

AB InBev, which is a public listed company on the Euronext Brussels, New York Stock Exchanges and the JSE, produces, markets and distributes beer, near beer and soft drink products.

In South Africa, AB InBev supplies only beer products, including Corona Extra, Stella Artois, Becks Blue and Budweiser and it uses a global distributor.

SABMiller is the largest producer of beer products and has a primary listing on the London Stock Exchange and a secondary listing on the JSE.

The beer giant's main brands include Peroni, Carling Black Label, Castle Larger, Hansa and Castle Light. Through its subsidiaries, SABMiller also manufactures, distributes and sells various alcoholic and non-alcoholic beverages. It also has interests in barley farming, hops production and bottling.

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