Tribunal approves Pioneer Foods, Futurelife JV with conditions
The merger between JSE-listed Pioneer Foods and Futurelife Health Products has been approved by the Competition Tribunal with conditions to ensure that competition between the two products is unrestrained in the short term.
The merger will see Cape Town-headquartered Pioneer Foods acquire a 50% shareholding in Durban-based Futurelife.
According to a statement released by the tribunal on Monday, the conditions stipulated that the joint venture (JV) be managed by Futurelife founder and CEO Paul Saad, who would be in control of the day-to-day running of the JV.
Secondly, the merging parties needed to prevent an information flow from the JV to persons in the Pioneer Foods business who dealt with competing products. The companies were also required to ensure that investment in the ProNutro brand was maintained at its current level for two years after the merger.
The Competition Commission originally approved the merger without conditions, but this was prior to a six-day hearing, which included intervention by breakfast cereal manufacturer Kellogg South Africa, which opposed the merger.
The key issue raised during the merger hearing was the competitive relationship between Pioneer Foods’ ProNutro products and Futurelife’s nutrient-dense health food product.
The merging parties asserted that these products formed part of a broader breakfast food/functional food market. However, Kellogg believed the products formed part of the ready-to-eat porridge market, in which ProNutro and Futurelife were close competitors.
The Competition Tribunal was, however, now satisfied that the undertaking, as proposed by the parties, was adequate to ameliorate any anticompetitive effects that could be brought on by the merger.
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