CA BLOCKS TRANSPORT HOLDINGS FROM KBL’S TENDER

CA BLOCKS TRANSPORT HOLDINGS FROM KBL’S TENDER

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The Competition Authority (CA) has barred South African owned Transport Holdings (TH), and its subsidiaries from competing for any tender that might arise from a split between Kgalagadi Breweries Limited (KBL) and 4Ms Group Holdings (Pty) Ltd.

 

 
4Ms, which was established as a Citizen/ Driver Empowerment Scheme by KBL has until October before its agreement with its main contractor elapses. The company has been enjoying a lucrative contract, constituting 19 percent of its revenue, alongside TH’s subsidiary: Mulbridge Transport Holdings, whose term has an additional 3 years before it ends. Since 2004, the sole listed brewer has been renewing 4Ms contract every 5 years.
However, following SAB miller acquisition by Anheuser-Busch InBev (which indirectly owns the KBL), KBL announced in 2015 that when the contract expires it will introduce a tender procurement process.

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CA Acting Chief Executive Gideon Nkala says Transport Holdings/Mulbridge Transport or any other entity related in anyway with the companies are restrained from participating in this tender to be issued by KBL upon the expiry of the existing 4Ms contract with KBL. Given the competition and public interest concerns identified by CA, Nkala has banned TH Holdings for the entire period leading up to the end of the Transport Holdings /Mulbridge Transport contract in January 2020, including any extension period that may be granted thereafter.

 

 
Transport Holdings and Mulbridge Transport are the only other entity apart from 4Ms having a contract with KBL.

 

 
Transport Holdings acquired the business of Mulbridge Transport early in 2015 which was approved by the authority. Its latest bid for the acquisition of assets and cession of the main contract belonging to 4Ms, its competitor, hit a snag.

 

 
Last week the authority determined not to approve the transaction after facts, analysis and conclusions of the assessment found that there are competition and public interest concerns that arise in the line haul transportation services market in Botswana.

 

 
The CA found that the proposed transaction was likely to result in reduced competition due to the removal of a competitor in the line haul transportation services market. 4MS is in the businesses of ad hoc line haul transport to the general market and line haul transport services. Further, Transport Holdings wholly owns Express Cartage (Pty) Ltd which is engaged in general consolidation transportation and provides line haul for some contract customers. The company also has a 70 percent stake in Imperilog Botswana, an agent for global freight forwarders and engaged in customs clearing services. It owns subsidiaries that have been carrying out large scale transportation in Botswana since the 1970s. TH, together with its subsidiaries is operational in Botswana, South Africa, Mozambique and Namibia.

 

 
Nkala was therefore worried that the implementation of the proposed merger was expected to result in the merged entity attaining a dominant position; and the proposed transaction was expected to result in retrenchments and citizen disempowerment. “Therefore, pursuant to the provisions of section 60 of the Competition Act, the Authority does not approve the proposed acquisition.”

 

 
Transport Holdings is incorporated in Botswana, and is owned 80 percent by Imperial Holding Group which is incorporated in South Africa. The remaining 20 percent is held by Anthony Lee, the incumbent Managing Director (MD) of the company.

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