Maravi

ZCC nods National Breweries, Trade Kings deal on Maheu

ZCC nods National Breweries, Trade Kings deal on Maheu
Written by Chiwoyu Sinyangwe
Monday, August 31, 2009 3:41:27 PM

THE Zambia Competition Commission(ZCC) has approved National Breweries’ purchase of the Maheu business of Trade Kings Limited. ZCC director for consumer and public relations, Brian Lingela, stated in a press release that the approval was conditional, in that National Breweries Limited should not engage in anti-competitive pricing to eliminate potential competitors in the Maheu product market.

“The board recognised that while it was not in the interest of expanding the base of entrepreneurship by prohibiting Trade Kings to sale its Maheu brand in order to raise capital for its steel and other projects in Zambia,” Lingela stated. “ZCC will activate a vigilant monitoring system to ensure that the merged company does not frustrate new entrants through abuse of its dominant position.”

Lingela also stated that although the transaction had the potential to raise competition concerns in the Maheu product market through creation of a monopoly, the competition status quo remained substantially the same as there was already a de-facto monopoly in the sector.

Trade Kings held 98 per cent of the total market share for Maheu in the country while National Breweries, a subsidiary of Heinrich Syndicate held an insignificant 2 per cent.

“The board observed that the same market arrangement is likely to remain after this transaction and further entrenchment of dominance will not arise because entry costs into Maheu production were low and the market was fertile for any prospecting entrants,” stated Lingela.

And commenting on the transaction, ZCC executive director Thula Kaira said it was unfortunate that most transactions the Commission considered were of a big scale and went beyond the ambit of an average Zambian business individual or company in terms of the kind of price tags on businesses that were up for sale.

In the Maheu business case, the amount was US $20m.

Kaira said this transaction was a balancing act between a willing seller and a willing buyer and that in the absence of an alternative offer, ZCC could not stop Trade Kings from exiting the market for any reason.

“Since National Breweries is listed on the Lusaka Stock Exchange, we hope ordinary Zambians will be interested to buy shares as a way of participating in the shareholding,” said Kaira.

Labels: COMPETITION, NATIONAL BREWERIES, TRADE KINGS GROUP, ZCC

posted by MrK @ 1:52 PM