The Competition Commission and Premier are headed for a showdown over the R6bn merger, with the commission seeking to revoke its approval. Premier, a JSE-listed company with shareholder Christo Wiese, was approved for the deal but later informed the commission of plans to close RFG's fruit-canning facility in Tulbagh, Western Cape, potentially leading to 400 job losses. The commission claims Premier withheld key information during the approval process.
The commission has applied to the Competition Tribunal to revoke its approval for the deal or have it refiled. Premier's share price dropped 6% after the announcement, and the company has rejected the commission's claims, saying it acted lawfully and provided necessary information. The commission's investigation found Premier and RFG failed to disclose information about the planned closure, which was material to the assessment.
The merger, one of the biggest in the food-producing industry this year, will create one of South Africa's largest food producers, with annual revenue of close to R30bn. Premier had expected a 35%-45% jump in revenue following integration. The deal brings Premier close to long-time FMCG market leader Tiger Brands. The commission had recommended approval subject to conditions aimed at protecting jobs and boosting supplier development.
Competition Commission commissioner Doris Tshepe accused Premier of withholding material information, undermining the integrity of the merger-control regime. She said the planned closure of the Tulbagh cannery would remove the only competitor to Langeberg, creating a monopoly in the sector. The public-interest consequences would be significant, including job losses and export decline.
Premier has engaged with the commission since July 2022 and provided information on its decision-making process regarding the closure of Fruit Products Western Cape. The company claims the decision to close the facility was not related to the merger but arose after implementation due to a deterioration in operating environment and commercial realities.
The move is a blow to Premier, which had pencilled in significant revenue growth following the merger. Premier makes well-known staples such as Blue Ribbon bread and Iwisa maize meal, while RFG produces convenience foods like Rhodes Quality juices and Bull Brand canned meats. The companies operate facilities in South Africa and export to major markets.
The Competition Tribunal will now review the commission's application, and Premier is confident it will arrive at the correct position. The integrity of South Africa's merger-control regime depends on parties making full, frank, and honest disclosure of all material information, according to Tshepe. The commission will take action to protect the regulatory process if parties fail to meet this obligation.
Key points
- Premier faces a legal battle with the Competition Commission over its R6bn purchase of RFG.
- The commission seeks to revoke approval for the deal, citing Premier's alleged withholding of key information.
- The merger would create one of South Africa's largest food producers, with annual revenue of close to R30bn.
