NDAMU SANDU
A regional regulatory body has directed Heineken NV not to tamper with distribution agreements in markets such as Zimbabwe among a raft of conditions for the brewer to acquire Namibia Breweries Limited and Distell Group.
The world’s second largest brewer wants to take control of spirit and wine maker Distell Group and Namibia Breweries Limited as it plots to counter rival Belgian multinational drink and brewing company, AB InBev, on the continent.
In an update on Tuesday, the Comesa Competition Commission (CCC) said it was blessing the merger but with tough conditions which have to be followed lest the merged entity would be fined or the body would revoke the deal.
In Zimbabwe, the regional regulatory body said it was concerned that the merger would result in potential anti-competitive conduct with Delta, Heineken’s competitor in the beer market with whom it would have joint shareholding in AfDIS, which is involved in the supply of ciders in Zimbabwe. Delta controls AfDIS in which the Distell Group is a 5% shareholder. Heineken’s rival AB InBev controls Delta.
“…in Zimbabwe, the CCC identified a number of public interest concerns like the need to maintain the local distribution system and that no distributorship agreements should be terminated as a result of the merger,” CCC executive director and CEO Willard Mwemba said.
Heineken supplies Strongbow brands in Eswatini, Zambia and Zimbabwe while Distell is the supplier of Hunters and Savanna cider brands in the three countries.
The CCC said it was concerned that the merging entities were the only two suppliers of ciders in Eswatini, Zambia and Zimbabwe pre-merger and thus, after the merger, ciders in these three countries would have been supplied by one company.
“Such a development in the market is not good as it has the potential of resulting in price increases and other potential violations that may erode consumer welfare,” it said.
The CCC said it had extensive discussions with the parties on the remedies in which the parties agreed to divest of Heineken’s Strongbow brand in Eswatini, Zambia and Zimbabwe which “would allow competition to return to the level prevailing before the merger”.
The parties have to meet a number of “behavioural obligations” to get full clearance from the CCC.
There will be restriction on the sharing of information by Heineken directors who would be sitting on the AfDIS board and restriction from tying the purchase of Heineken beer brands with Distell cider brands.
“The CCC in reviewing the merger proposal also considered the potential public interest concerns which could arise from the transaction, and the parties committed not to terminate existing distributorship agreements in one of the affected member state, namely Zimbabwe, and further shall be required to submit a list of objective criteria considered for the renewal or appointment of new distributors,” it said.
