Just when Distell thought it was safe to concentrate on building its brands and structures, the Competition Commission has decided to appeal a Competition Tribunal’s findings on aspects of the company’s merger.
The case will now go before the Competition Appeal Court, probably later in the year, where the Competition Commission will argue the validity of its case about defining the liquor market in South Africa, as well as the remedies imposed by the Tribunal.
Earlier this year the Tribunal ruled that Distell cease from distributing KWV’s brandies and fortified wines in South Africa, as well as the Martel brandy range.
This new twist follows more than two years of wrangling over the R515m merger of Distillers Corporation and Stellenbosch Farmers’ Winery.
Ironically the Commission initially gave the Distell merger a green light to form South Africa’s largest wine and spirit company. It is particularly targeting Distell’s brandy portfolio, the biggest spirit category in South Africa and one where Distell still has the lion’s share in both volume and value.
The Commission’s head of mergers and acquisitions, Nkonzo Hlatshwayo, yesterday said it was not satisfied with the Tribunal’s broadening of the definition of market participation – and as a consequence the remedies it prescribed were insufficient.
Distell, however, were satisfied with the findings of the Tribunal. Corporate affairs director, André Steyn, said the company had received the Commission’s notice of appeal late on Wednesday, were studying it and would defend the Tribunal’s ruling.