The Competition Commission has recommended that the Competition Tribunal approve the proposed transaction whereby Luxembourg-based packaging manufacturer Ardagh Group intends to acquire glass manufacturer Consol, with conditions.
Ardagh, through its subsidiaries, is also involved in the supply of glass manufacturing equipment and the sale of glass moulds. Ardagh does not have any glass manufacturing facility in South Africa and only exports its glass products to its customers in South Africa.
Consol is a manufacturer and supplier of glass packaging for the food and beverage industries including the beer, alcoholic beverage, wine, fruit juice, soft drinks, mineral water and spirits industries, as well as for pharmaceuticals and cosmetics industries.
Consol also has a small retail presence, supplying empty glass containers to various retailers for sale to consumers.
“The commission found that the proposed transaction raises significant public interest concerns. In addition, the commission was concerned about the effect of the merger on the market for food jars and wide-mouth jars.
“To remedy this concern, the merging parties agreed to a condition that merged entity will continue to supply food jars or wide-mouth jars,” the commission said.
Further, the commission and the merging parties agreed that the merging parties will establish a new employee share ownership programme, which will hold a 7% shareholding in Consol.
Ardagh will incur all reasonable capital expenditure, including raising necessary debt funding required to finalise the construction of the glass manufacturing facility planned by Consol, and Ardagh will invest in the construction of a new glass manufacturing facility.
Further, Ardagh committed to procuring recycled glass, or cullet, for use in its operations in the ordinary course, and will favour historically disadvantaged persons in such procurement.
Additionally, within a specified time frame, Ardagh shall expand Consol’s existing cullet owner-driver scheme and support small, medium-sized and microenterprise customers through a reduction of minimum order quantities.
“Consol shall also increase its pre-merger procurement of cullet from small or historically disadvantaged person vendors. Ardagh undertakes to use reasonable endeavours to introduce a new production line of glass-related products.
“The commission is of the view that the proposed remedies or conditions adequately address the public interest concerns resulting from the proposed merger.”