The Competition Commission of South Africa has taken a significant step by filing an application with the Competition Tribunal to revoke the conditional approval of the R6.5 billion merger between Premier Foods and Rhodes Foods Group. This move comes after the commission discovered that Premier Group had not disclosed plans to close the Rhodes canning facility in Tulbagh, which could potentially cost the company billions. The merger was initially approved on March 6, 2026.
The root of the issue lies in the fact that Premier and RFG assured regulators they had no plans to close any factories before the merger was approved. However, an investigation triggered by a union complaint found that the companies had discussed closing the Fruit Processing Western Cape fruit-canning plant in Tulbagh before getting approval. This plant is one of only two fruit-canning plants in South Africa, and its closure would effectively create a monopoly in the country, with competitor Langeberg Foods being the only remaining cannery.
The Competition Tribunal had set explicit rules to protect jobs when the merger was approved. Clause 2.1 prohibits any merger-related retrenchments for a three-year moratorium period, and Clause 2.3 states that any retrenchments during these three years are automatically presumed to be caused by the merger unless Premier can prove otherwise. Premier argues that it did not break any rules, stating that the decision to close the plant was made months after the merger, driven by a collapse in global demand for canned fruit.
Premier completed its R6.5 billion acquisition of RFG Holdings on March 30, 2026, using a share swap, which brought significant financial scale to its business. With RFG fully consolidated for the upcoming 2027 financial year, Premier expects its overall revenue to jump by between 35% and 45%. The combined company now owns 52 consumer brands, operates 44 manufacturing plants, and employs about 15,500 people. RFG's business has been turned into Premier's new Culinary division, which is expected to contribute about one-third of the group's total Ebitda.
The Competition Commission's application to revoke the merger approval could have significant consequences for Premier Group. If the tribunal finds Premier in breach of merger conditions or competition regulations, the highest fine is 10% of Premier's annual South African turnover and export turnover. Based on Premier's FY2026 group revenue of R21.2 billion, that penalty could reach just over R2.1 billion. Should the tribunal grant the commission's application, the approval would be revoked, forcing Premier into an unwinding or divestment of the R6.5 billion RFG transaction.
Premier argues that the commercial necessity to close the factory would have occurred regardless of whether the merger took place. The company says it remains committed to consulting in good faith under section 189 of the Labour Relations Act with the 424 affected workers. However, GroundUp reported that during CCMA talks, Premier objected to non-employee representatives sitting at the negotiating table, arguing that consultations must strictly follow statutory labour representation rules.
The closure of the Tulbagh factory threatens thousands of jobs and the way of life for many people in the area. The Competition Commission and labour unions argue that withholding plans about closing the plant during approval talks violates the duty of full disclosure. Pushing workers into voluntary exits after announcing a plant shutdown is seen by unions as bypassing job protection rules. Premier would also be on the hook to supply processing machinery to rival company Langeberg Foods so it can take over some of FPWC's farmer contracts, alongside costs to repurpose the Tulbagh site.
Key points
- The Competition Commission has filed an application to revoke the R6.5 billion merger between Premier Group and Rhodes Foods Group due to Premier's failure to disclose plans to close the Rhodes canning facility in Tulbagh.
- The merger was initially approved on March 6, 2026, with explicit rules to protect jobs, including a three-year moratorium period on retrenchments.
- The closure of the Tulbagh factory could result in significant financial consequences for Premier Group, including a potential fine of R2.1 billion and the unwinding or divestment of the R6.5 billion RFG transaction.
