After the Competition Commission boldly stepped in to block the sale of Burger King SA to a private firm over “transformation issues”, concerns are growing that this move could set a dangerous precedent for future investment into South Africa.
The Competition Commission said on Wednesday that the proposed merger would lead to a “significant reduction in the shareholdings of ‘historically disadvantaged individuals’ (HDIs), taking this number down from 68% to 0%”, while also conceding that the move would have little impact on actual market competition.
Dean MacPherson, the DA’s Shadow Minister of Trade, Industry and Competition, said in a statement on Thursday 3 June that the move to block the acquisition of Burger King by ECP Africa – a private equity fund – constitutes no more than “racial bean counting”, and said that the decision sets an “incredibly dangerous precedent about how future sales of business will be conducted”.
“Because of this intervention by the Competition Commission, it has effectively devalued every business in South Africa and sent a warning signal to foreign investors that they have no business in South Africa if they do not confirm to Broad Based Economic Empowerment,” said MacPherson.
The DA said that this was proven by the 17% crash in the value of Grand Parade Investments (GPI), which owns Burger King in South Africa on the JSE following the announcement.
“It is staggering that the Commission would see fit to block R600 million worth of investment in our country when it is so desperately needed.”
MacPherson said that the decision only succeeds in damaging the current workers of Burger King and investors in GPI, of which up to 28 000 are black.
“In a time when 74% of young people are unemployed and South Africa hitting record unemployment of 42%, we are shooting ourselves in the foot by blocking much needed foreign investment like this,” he said, while also urging GPI to fight the decision in the Competition Tribunal “and if needs be, approach the courts for relief”.
“It is our firm belief that the actions and motive of the Commission are not in the public interest of South Africans and the unemployed.”’