- CCA notes that the proposed transaction may give rise to public interest concerns and insists on involving a citizen-owned distribution company
The Competition and Consumer Authority has approved the proposed acquisition of a further interest in Namibia Breweries Limited (NBL) and the in-scope assets of Distell Group Holdings Limited by Heineken through Sunside Acquisitions Limited on condition that it empowers a citizen-owned distribution company.
“The merging parties must within a period of 24 months from the decision date identify a suitable citizen-owned company in the distributorship business,” a statement from CCA says.
“During this time, the parties are to develop a robust supplier (distributor) development programme in order to capacitate a local citizen-owned distribution company with the aim to absorb it within the merging parties supply.” Notified to CCA on 8 March 2022, Heineken sought to have a further interest in NBL and the combination of Heineken’s current South African business, Heineken South Africa (RF) (Pty) Ltd, through the proposed acquisition.
The proposed acquisition also included the flavoured alcoholic beverages (FABs), wine and spirits businesses (In Scope Assets) of Distell Group Holdings Limited excluding certain Distell Scotch Whiskey and South African spirit businesses (Out-Scope-Assets). The acquiring enterprise, Heineken, is active in Botswana through a wholly owned local subsidiary, Heineken Botswana Proprietary Limited (Heineken Botswana), which was established in Botswana in 2019.
Heineken does not have local manufacturing facilities in Botswana, and all Heineken beverages are imported into Botswana from South Africa through Heineken’s South African-based subsidiary, Heineken South Africa Export Company (HSAEC). “Heineken currently supplies international beer brands such as Heineken, Amstel and Amstel Life, as well as a Flavoured Alcohol Beverage (FABs) brand, Strongbow,” says the statement. These brands are distributed through an appointed distributor SMC Brands Botswana.”
The target entities in the merger include NBL Investment Holdings Proprietary Limited, which is a holding company controlling Namibia Breweries, which is known to produce a range of beers including Windhoek Lager. Distell Group Holdings Limited Distell controls Distell Botswana. Distell manufactures, markets and distributes wines, spirits and FABs brands. Distell operates distribution depots in South Africa and Namibia, with further depots in Botswana, Lesotho and Eswatini.
Both entities do not have local production facilities in Botswana and both supply their products into the local market through distributors. NBL imports products into Botswana from South Africa by Heineken through a pre-existing arrangement with HSAEC, distributed through SMC Brands while Distell supplies its products into Botswana from South Africa, and distributes them through an appointed local distributor, CA Sales and Distribution (Pty) Ltd.
CCA says its assessments show that there no substantive competitive concerns that will arise in both the markets for the supply of clear beer and FABs in Botswana but still the proposed transaction may give rise to public interest concerns. “In terms of Public Interest Considerations, the findings of the assessment revealed that the proposed transaction may give rise to public interest concerns, given that the merging parties’ local distributors, CA Sales and SMC Brands, are both foreign owned and infact owned by the same company, being CA Holdings (domiciled in South Africa),” it says.