Cape Town - Job security was the key issue addressed at the start of the Competition Tribunal’s hearings into the €1.3 billion (R23.8bn) cash takeover by Heineken, the world’s second largest beer maker, of South Africa’s Distell Group.
The move will bring liqueur brand Amarula and wine labels Nederburg and Two Oceans under Heineken, which will also own Distell’s British-based Scotch whiskies.
The Heineken Group is also acquiring Namibia Breweries Limited (NBL), which will be combined with Heineken South Africa into a new Heineken majority-owned business, Newco, with a total valuation of approximately €4bn.
Distell is Africa’s leading producer and marketer of ciders, flavoured alcoholic beverages, wines and spirits, and NBL is the beer market leader in Namibia.
During opening statements at the hearing, which began yesterday and is set to run until next Monday, the Competition Commission, which approved the transaction in September, said only employees at a management and executive level could potentially be affected by the merger as a result of duplication of roles in a worst-case scenario.
As for Heineken SA employees currently at or below employment grade level 9 and Distell employees currently at or below Paterson employee grade level C3, there would be no retrenchments of the merged companies for three years.
The commission was concerned about the potential negative impact the proposed transaction would have on employment given the current economy of South Africa.
The same concerns were shared by the Food and Allied Workers Union (Fawu) and the National Union of Food Beverage Wine Spirits and Allied Workers (FoodBev), and the DTIC.
Numsa’s Katishi Masemola said the merging parties must not retrench any employees as a result of this merger, and asked for the commission to impose this as a condition to the approval of the transaction.
FoodBev urged the commission to impose a condition which restricts the merging parties from effecting any voluntary or involuntary retrenchments for at least 10 years.
In response, the merging parties committed to limit the potential retrenchments to 230 retrenchments or 5% of the total workforce, on a worst-case basis.
They also agreed for a period of five years following the merger, Newco would maintain at least the combined number of all employees of the merging parties in South Africa as at the closing date.
They said compliance with this condition would be measured from the second to the fifth anniversary of the closing date.
Fawu and FoodBev also asked that the new company should agree to the harmonisation of wages and working conditions. This request was also agreed to by the merging parties.
The tribunal is a specialist independent adjudicative body which hears and decides cases involving mergers and prohibited practices, including cartel and abuse of dominance cases.
Tribunal members adjudicate matters before the tribunal and write judgments, akin to a judge in a high court.
mwangi.githahu@inl.co.za