Familiarize yourself with the developments surrounding Shoprite’s takeover of certain divisions of Masstores. (Merger)

QUESTION 1 

Familiarize yourself with the developments surrounding Shoprite’s takeover of certain divisions of Masstores. (Merger)

1.1 Massmart, the owner of Makro and Game stores, announced that it would sell its non-core business to the Shoprite Group for over R1 billion. The sale will ensure that Shoprite owns Cambridge Food, Rhino, Massfresh and 12 Cash & Carry stores. 1.1.1 Discuss whether the above transaction would constitute a merger or not. If it is a merger, discuss the relevant procedure that needs to be followed for the merger to be approved. In the alternative, if it is not a merger, provide reasons for your answer and how the parties should approach the transaction. (5) 

1.1.2 Assuming that the above transaction is a merger, advise the parties on factors that will be relevant for consideration of the merger. You will need to research the companies to provide an answer linking facts and legal principles. Eventually, you should decide on whether to approve, approve subject to conditions or reject the merger. Your discussion must be coherent, and the facts and legal principles must inform your conclusion. (10) 

1.2 South African citrus farmers have been struggling to export their produce for several months because the European Union introduced new storage requirements for citrus produce exported to Europe. As a result, the South African Citrus Association (the Association), to which 80% of SA citrus farmers are affiliated, called an urgent meeting to find ways to ensure that their produce (citrus) is sold locally. It was decided in that meeting that all members of the South African Citrus Association would sell their produce as per the tariffs set by the Association. Further, each farmer will only sell a particular quantity of his/her produce to the allocated market. Therefore, no farmer must sell his/her produce in a market that he or she is not authorised to sell. Failure to adhere to these rules will disqualify the farmer from being a member of the Association. 

1.2.1 Advise South African Citrus Farmers Association and its members whether their resolutions would amount to a contravention of the Competition Act 89 of 1998 and list the alleged contraventions. (5) 

1.2.2 Assuming that there is a contravention of the Competition Act 89 of 1998, discuss those contraventions and whether a defence is available to the parties who have committed such contraventions. Finally, highlight the appropriate orders that the Competition Tribunal can issue. (10)

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