Innscor was fined $9 million and compelled to withdraw from Probrands

Innscor Africa pumps US$70m into expansion

Innscor was fined $9 million and compelled to withdraw from Probrands

According to Business Weekly, the Competition and Tariff Commission (CTC) fined Innscor Africa Limited (Innscor) US$9,1 million for completing the merger of one of its subsidiaries without the Commission’s approval.

Innscor was also instructed to withdraw from the deal “immediately.”

In its Newsletter for the first quarter of 2022, the CTC revealed that Innscor implemented the merger of one of its subsidiary Ashram Investments and Progroup Holdings’ subsidiary Amiata Investments without the Commission’s approval, and in the process violating notification provisions of the Act.
Allegations are that in December 2019, the Commission received a post-merger notification of the transaction involving subsidiaries of Progroup Holdings (Amiata Investments) and Innscor Africa Limited (Ashram Investments).

The transaction was consummated in June 2016 where Progroup Holdings underwent a Scheme of Reconstruction which resulted in Ashram Investments – a subsidiary of Innscor, injecting USD$2,38 million into its subsidiaries Probrands and Probottlers.

Post the Restructure, in January 2018, Probrands disposed of its dairy assets to a newly incorporated company – Prodairy, which is a dairy and dairy products processor.

Prodairy’s shareholders since incorporation are Innscor and Rowcost Investments holding 50,1 percent and 49,9 percent respectively.

However, following an analysis, the CTC revealed that the merger resulted in unilateral effects which substantially lessened competition by according Probrands /National Foods the ability to exercise market power as a result of the lower competitive constraints between the merging parties.

“This merger created a single firm with anti competitive effects as well as substantial market power with long lasting consequences on consumers,” CTC said in disapproving the merger.

In light of the foregoing, “it is recommended that the Commission prohibits the Ashram/Amiata merger and orders Ashram to divest from Amiata forthwith”.

Further, it is recommended that the CTC “imposes a penalty of USD$9,143,597.86 or its equivalence in ZWD at the time of settlement on IAL for consummating the merger without the Commission’s approval”.

The merger was analysed in light of the theories of harm associated with horizontal mergers namely unilateral effects.

Unilateral effects entail where a merged entity can act independently of the reaction of competing firms, for example, by profitably raising prices, reducing output, quality or variety as a result of elimination of competition.

In other news,

Prophet Magaya Drives A $90k Land Rover Defender X Dynamic

Prophet Walter Magaya is the latest preacher driving an expensive vehicle, Magaya was pictured rolling in a Usd$90 000 Land Rover Defender X Dynamic which is one of the latest offerings from the Land Rover company.

Prophet Magaya Drives A $90k Land Rover Defender X Dynamic

Magaya is known for his humility as he once said he didn’t need an expensive vehicle, In late 2018 Magaya hogged limelight after he pulled in…Learn More

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.