The Competition Appeal Court of South Africa has found that Coca-Cola Beverages Africa (CCBA) breached merger conditions by retrenching 368 employees in 2019.
Approval of two mergers involving Coca-Cola could be revoked and the company could face an administrative fine or forced unbundling if the firm and the Competition Commission fail to agree on a plan to remedy the breach.
The two mergers included conditions designed to protect employees who were members of the negotiating team from redundancies as a result of the merger.
The first merger between SABMiller, Coca-Cola and Gutsche Family Investment, was approved by the Competition Tribunal in 2016, resulting in Africa’s largest bottling company, Coca-Cola Beverages Africa (CCBA). The next merger deal took place in 2017, when Coca-Cola acquired a stake in CCBA SABMiller.
In 2019, the local subsidiary of the beverage manufacturer, Coca-Cola Beverages South Africa, cut 368 employees in the negotiating unit.
The Competition Commission then issued a Notice of Obvious Violation. The CCBA argued that the reduction process was necessary at the time due to macroeconomic problems, the introduction of a government tax on sugar and rising raw material prices.
The Competition Tribunal accepted the CCBA's reasons for the redundancies and considered that the CCBA had complied with the terms of the merger.
However, the Competition Appeal Court last week upheld the Commission’s complaint that the CCBA had violated the terms of the merger.
Source: Compcom.co.za, ZA News Live
