Bakhresa meets CTC conditions on Blue Ribbon
THE Commission Tariff Commission (CTC) says Bakhresa Zimbabwe has met all the conditions set by the commission when the Tanzanian-owned company acquired the then-struggling Blue Ribbon Industries.
In 2016, CTC conditionally approved Bakhresa’s acquisition of Blue Ribbon after concerns were raised during the assessment of the acquisition bid, resulting in the deal being approved subject to certain conditions being met.
Upon approving the deal CTC said, “At least 80 percent of the wheat and maize products to be sold and utilised by the merged entity (Bakhresa Zimbabwe), all its subsidiaries and its successors in title, shall be produced in Zimbabwe”.
The commission said Bakhresa Zimbabwe should utilise at least 50 percent of locally produced raw materials, including wheat, maize and packaging, subject to the availability of such raw materials while all of the company subsidiaries and successors, would be mandated to supply all its products to all customers on non-discriminatory terms and conditions.”
CTC is required in terms of Compliance Monitoring Guidelines and Section 33(5) of the Competition Act to periodically undertake compliance monitoring investigations to ascertain the merging parties’compliance with imposed conditions.
For Blue Ribbon, some stakeholders raised competition concerns concerning the possibility of the merged entity engaging in discriminatory conduct as far as procurement of packaging material and supply of flour is concerned.
It was further established that there was a possibility of the merged entity refusing to deal with local suppliers of wheat and maize.
Bakhresa Group is a Tanzanian family-owned multinational company, which owns Bakhresa Zimbabwe, which acquired Blue Ribbon and all its subsidiaries.
The group is a diversified food manufacturing company, involved in maize and wheat milling, bread making, confectionery, beverages, logistics and freight, marine transport and real estate. It has operations in nine African countries.
Blue Ribbon and its subsidiaries were placed under judicial management in 2012 and the merger was the judicial manager’s strategy to save the ailing business.
CTC said, “Products of the merging parties overlapped in the baking of bread and maize and wheat milling. Furthermore, the Bakhresa Group has a packaging unit, Omar Packaging Industries Limited in Tanzania, which has the likelihood of supplying Blue Ribbon with packaging materials.
“There thus existed a vertical relationship between the merging parties in that respect. Noting the overlaps and vertical linkages, the relevant market was defined as the production and distribution of mealie-meal, flour, flexible packaging material, bread, and biscuits”.
In its periodic assessment, CTC found that none of the products were being produced by any of Bakhresa Zimbabwe’s sister companies in Tanzania.
The commission also noted that to guarantee continued production of flour in Zimbabwe, a new flour milling plant was installed at Blue Ribbon’s Msasa plant and the company’s maize milling plants in Harare and Bulawayo were also operational.
Bakhresa Zimbabwe is thus using locally produced maize, wheat, and packaging in its operations to the satisfaction of the commission.
According to the Grain Marketing Board (GMB), Bakhresa Zimbabwe has been consistent in procuring both maize and wheat from the local market.
“From GMB’s statistics, Bakhresa Zimbabwe procures an average of 50 percent of its total production requirements of both maize and wheat from GMB. However, the balance is supplied by other local farmers,” the commission noted.
The top five customers of Blue Ribbon that were consulted, all stated that they never had challenges in their trading with Bakhresa Zimbabwe, to the extent that some of them had arrangements with the entity that were negotiated and agreed upon with individual customers.
Conclusively the CTC said,“Based on information gathered during investigations, it can be concluded that Bakhresa Zimbabwe is complying with the conditions of approval.
Regarding the relevance of the conditions, the commission concluded that the conditions are still relevant and should be maintained as long as Bakhresa Zimbabwe remains a subsidiary of the Bakhresa Group.”