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Africa|Business
Africa|Business
africa|business

Busa expresses concern over commission’s rejection of Burger King sale

8th June 2021

By: Marleny Arnoldi

Deputy Editor Online

     

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Business Unity South Africa (Busa) has noted with concern the Competition Commission’s recent decision to block the sale of Burger King by Grand Parade Investments to ECP Africa, saying it would have unintended consequences.

The commission cited ECP’s lack of black ownership credentials as the basis of its decision.

Although Busa recognises the value of the 2019 amendment to the Competition Act in creating greater certainty regarding the role of public interest provisions, the organisation believes the decision could have implications for how black investors realise value.

“A 68% black-owned firm took a decision to dispose of an asset – presumably with a view to realising maximum value for shareholders – only to have this commercial decision overturned by the commission.

“The unintended consequences of this include the uncertainty and deal-risk generated, a potential slowdown in investment and merger activity, as well as significant constraints on the ability of black investors to realise value from investments at a time of their choosing – constraints not applicable to white investors,” Busa CEO Cas Coovadia explains.

He adds that assuming the commitments made to invest in the development of new Burger King outlets, increase employment and increase procurement from black suppliers are realised, the commission has implicitly favoured ownership criteria over job creation and growth.

Coovadia states that, while Busa fully supports efforts to transform the economy and broaden ownership, the decision of the commission raises questions around whether this is an appropriate mechanism to advance transformation and promote black ownership in the economy.

“We are also concerned that the Competition Commission is pronouncing on issues related to black economic empowerment, which is the ambit of the Broad-Based Black Economic Commissioner.”

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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