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Competition Commission prohibits Jasco’s acquisition of Cross Fire

3rd July 2017

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

     

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The Competition Commission has blocked JSE-listed Jasco’s proposed acquisition of a 65.4% stake in Cross Fire Management on the basis that the R52.3-million merger is likely to result in a consolidation of the market in Gauteng and the Western Cape.

The now-prohibited proposed deal was announced in March, when Jasco aimed to merge subsidiary Jasco Fire with Cross Fire, bolstering Jasco’s existing fire solutions portfolio in the blue-chip corporate market and lifting it into the top three suppliers of fire detection, suppression and protection solutions in various industries.

“The merger will result in a reduction of the number of firms in markets that are already highly concentrated. This will make it easier to perpetuate existing cartel conduct of price fixing, market allocation and collusive tendering,” the commission said in a statement on Monday.

The commission was referring to several companies in the industry, including Cross Fire, which had been implicated and subsequently referred to the Competition Tribunal for prosecution for alleged price fixing, the division of markets and collusive tendering, with two companies recently having entered into settlement agreements with the commission.

“The commission is concerned that the merger will result in the removal of a potential disruptor in the market, Jasco Fire, which has not been implicated in cartel conduct,” it said.

Further, the remedies proposed by the merging parties had not been sufficient to address the potentially significant prevention and lessening of competition in the active fire protection systems market.

Edited by Creamer Media Reporter

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