The Competition Commission said the sale of Burger King SA ‘WILL NOT negatively influence markets’. But they’ve stepped in for an entirely different reason.
The knives have been drawn for the Competition Commission of South Africa on Wednesday, after the organisation decided to block the acquisition of Burger King SA by a private firm. Their reasoning? Well, that’s the issue here – as ‘transformation’ appears to have been prioritised above all else.
In a statement issued on Tuesday, the Commission admitted that the sale ‘would not prevent competition in the market’. In fact, their ‘beef’ with this Burger King transaction rests with transformation. Concerned that ‘historically disadvantaged individuals’ would not be part of the new ownership, the powers that be decided to pull the plug on the deal.
“The Commission has prohibited a proposed transaction whereby ECP Africa, a private equity fund intending to buy Burger King South Africa from Grand Parade Investment. The merger would lead to a significant reduction in the shareholdings of ‘historically disadvantaged individuals’ (HDIs), taking this number down from 68% to 0%.”
“The proposed transaction is unlikely to result in a substantial prevention or lessening of competition in the markets. But as the acquiring firm has no HDI ownership, the merger will have a substantial negative effect on [transformation]”.
The decision has raised major concerns amongst business and political figures. The Competition Commission is seeking to protect buyers of a certain background, but inadvertently, they are now severely hindering the same sellers. There are fears that the share prices for all affected parties could crash later today – and the DA is enraged by the decision:
“So a ‘Competition Commission’ finds that this transaction will in no way negatively influence competition in the market – but then still goes ahead and blocks a private transaction based on the skin colour of the buyer? This racist garbage helps cause a 43% expanded unemployment rate.” | Leon Schreiber, Shadow Minister of Public Service
The Competition Commission has come out fighting this morning, however. Hardin Ratshisusu is the group’s deputy commissioner, and he has defended the conclusions that were published earlier this week.
“HDI shareholders can sell their assets as they always do. Merger evaluation since 2019 requires an assessment of the impact on HDI and worker ownership. See recent decisions on both Pepsi and Pioneer in South Africa. In this case, the impact was substantial and negative, and not adequately mitigated.” | Hardin Ratshisusu
Media Statement – @CompComSA #prohibits #acquisition between ECP Africa Fund, #BurgerKing South Africa and Grand #Foods pic.twitter.com/QcKnXsNtX9— CompComSA (@CompComSA) June 1, 2021