Competition Authority approves Warbler acquisition

SHARE   |   Wednesday, 17 August 2016   |   By Staff Writer
Competition Authority leadership Competition Authority leadership

Competition Authority (CA) has approved with conditions the acquisition of Warbler Holdings (Pty) Ltd by Bluehearts (Pty) Ltd, a company owned by Ramachandran Ottapathu, the leading investor at leading retail group, Choppies. The CA has reasoned that the proposed transaction is not likely to result in the prevention or substantial lessening of competition, or endanger the continuity of the services offered in the distribution of branded consumer electronics (domestic and commercial) to resellers. The Authority feels the market structure in the distribution of branded consumer electronics to resellers will not be altered as the acquiring entity will be inheriting the position of the target enterprise; and no significant negative effect on public interest in Botswana has been identified, in relation to the provisions of section 59 (2).

CA, however, says its analysis has identified potential competition concerns which could arise in the retailing of branded consumer electronics market, given that post-merger, the acquirer will be present in both the upstream and downstream markets, and as such potentially have the ability and incentive to foreclose players in the downstream market, particularly in instances where the merged entity is a sole distributor of the branded products, and where it enjoys a dominant position.To that effect the authority has imposed a few conditions that would govern the transaction.The conditions are that Bluehearts (Pty) Ltd is to continue supplying the same retailers that were previously supplied by Warbler Holdings (Pty) Ltd on terms no less favourable to those offered by Warbler Holdings (Pty) Ltd to the retailers, pre-merger.

Bluehearts (Pty) Ltd is also expected to annually, for a period of five years from the implementation date, submit to the Authority a detailed report indicating a list of its new and old customers and the trading terms referred to above. Further to that, Ottapathu has been requested to divest his interests within 12 months from the decision date in the following companies: Montrose Investments (Pty) Ltd t/a RiteFurn; Callao (Pty) Ltd t/a RiteFurn; Peardale (Pty) Ltd t/a RiteFurn; Decolite (Pty) Ltd t/a RiteFurn; and Mont Catering and Refrigeration, and shall inform the Authority of this disposal within 30 business days of concluding the final sale agreement(s) and submit a signed copy of the sale agreement(s) to the Authority as proof thereof.