The Competition Commission has prohibited private equity fund ECP Africa’s proposal to acquire Burger King South Africa and Grand Foods Meat Plant from Grand Parade Investments.
It was found that as a result of the merger, the shareholding of historically disadvantaged persons (HDPs) in the target firm is expected to fall to 0% from more than 68% currently.
Burger King South Africa, through its various franchise subsidiaries, operates more than 90 fast-food restaurants across the country.
Grand Foods Meat Plant supplies burger patties to Burger King South Africa.
In a statement, the Competition Commission said: “With respect to public interest considerations, the Commission found that the target firms are ultimately controlled by an empowerment entity wherein HDPs hold an ownership stake of more than 68%.
“The acquiring firms have no ownership by HDPs. Thus, as a direct result of the proposed merger, the merged entity will have no ownership by HDPs and workers.
“The Commission is therefore concerned that the proposed merger will have a substantial negative effect on the promotion of greater spread of ownership, in particular, to increase the levels of ownership by HDPs in firms in the market as contemplated in section 12A(3)(e) of the Competition Act.”
Furthermore, ECP Africa’s proposed transaction is unlikely to result in a substantial prevention or lessening of competition in any relevant markets.
The Competition Commission concluded that the proposed deal has raised significant public interest concerns.
ECP Africa comprises ECP Africa Fund IV, ECP Africa Fund IV A and ECP Africa Fund IV A (ECP Funds IV).