Retail giant Pick ‘n Pay’s dream of owning Fruit and Veg City may be crumbled if the Competition Tribunal agrees with the Competition Commission’s recommendation to oppose the deal.
The commission said that the merger between the two companies should be prohibited because the acquisition would result in the removal of an effective competitor in the retail sector.
Pick `n Pay announced in June last year that it would be buying the entire issued share capital of specialist fruit and vegetable retailer, Fruit and Veg City.
It also said that the sale would be subject to relevant competition authorities approval.
Sean Summers, then CEO of Pick `n Pay, said that the company was very pleased at the potential of this acquisition, both in terms of its current performance and its future growth.
“We see this as a particularly good opportunity to enhance our current franchising options,” he said.
CEO designate, Nick Badminton said that it could not comment on the commission’s recommendation at this stage.
“We are waiting documentation from the Competition Commission on its findings, after which we will weigh up the option available to us,” he said in a statement.
The commission said that Pick ‘n Pay and Fruit & Veg City are competitors in the retail market for fresh food and that at national level, the combined market share of the parties in the retail fruit and vegetable market is 58%.
The commission also said that the two companies have significant market share in various local markets. In Newcastle, Richards Bay, Bloemfontein, Lenasia, Mafikeng, and Knysna their market share exceeds 75%.
“Fruit & Veg City is an increasingly effective competitor to Pick ‘n Pay and the other major retailers; and its growing product offering will result in it being even more effective on a wider product range in future.
“The acquisition of Fruit & Veg by Pick ‘n Pay will therefore not just limit the current competition in the market, but will weaken future competition in this market,” the commission said.