Heineken International BV (Heineken BV) plans to acquire a controlling interest in Namibian Breweries Investment Holdings Limited (NBLIH) and Distell Namibia Ltd have received a blessing from the Namibia Competition Commission (NaCC).
However, the competition watchdog has warned the international brewer that Distell’s products consumed in Namibia must be manufactured or at least be bottled locally, among a raft of conditions.
NaCC’s decision comes barely a week after the South African Competition Commission also conditionally approved the Heineken/NBL deal.
Heineken NV, which already owns a 49.99% interest in NBLIH, offered to buy Ohlthaver & List Group of Companies (O&L)’s 50.01% stake in the national brewer.
According to Namibia Breweries Limited (NBL), its planned acquisition by Heineken NV has the potential to attract investment worth N$10 billion for the country.
Below are some of the conditions set by NaCC:
Manufacturing
“After careful analysis of the proposed merger, which included extensive consultations with customers, competitors and other relevant industry stakeholders, the Commission approved the proposed merger with the following conditions.”
Firstly, up to 50,000 HL of Distell’s production and packaging of Hunters and Savanna brands should be moved from South Africa to Namibia within approximately two years. Secondly, up to 200,000 HL of Distell’s packaging of selected wine brands must be moved from South Africa to Namibia within approximately three years.
“The Commission determined that products consumed in Namibia must be manufactured or at least be bottled in Namibia and in so doing create additional employment and contribute to further industrialization and economic growth.”
Local Sourcing
To avoid the possibility of the merged entity resorting to procuring certain products and services abroad, NaCC has ordered that local sourcing continues post-merger.
“The condition stated that the Merged Entity shall not require customers in Namibia to purchase products within one product category (e.g. beer products) on condition that they also purchase products within any other product categories (e.g. wines) supplied by the Merged Entity.”
Employment
The NaCC has imposed a five-year moratorium on retrenchments amid concerns over the possibility of duplication of roles due to similarity in operations between the entities.
“The Commission noted that due to the similarity in the operations of the merged entity, the merger may result in a duplication of functions and positions, the Commission imposed a moratorium on retrenchments by way of an employment condition. The condition states that, following implementation, there shall be no retrenchments of employees below management level of the Merged Entity in Namibia as a result of the merger for a period of five years.”
Access to refrigerators
The Competition Commission ordered the amendment of NBL’s existing policy which prohibited retailers from placing other brands in NBL branded refrigerators post-merger, after it found that the rule is likely to deter or limit entry of Namibian-owned and Namibian-controlled undertakings in the market.
“The conditions state that the Merged Entity shall ensure that retailers shall be free to allocate up to 10% of Chilled Space/refrigerators in each beverage cooler owned by NBL or Distell Namibia in any on and off-consumption Outlet in Namibia. This allocation right shall apply only to products manufactured or packaged in Namibia by Namibian-owned and Namibian-controlled companies.”
Strongbow disposal
The NaCC has also ordered for the disposal of Heineken’s Strongbow brand to remove an overlap in the flavored alcoholic beverages (FAB) category in respect of Heineken and Distell that is expected post-merger.
“The condition states that within 1 (one) year, the Merged Entity will license the rights to produce, market, distribute and sell Heineken’s Strongbow brand in the Territory, to a Purchaser. Strongbow must be divested to an entity that does not have any relationship with the Acquiring Group and its subsidiaries,” the commission said.
MSME Fund
The NaCC imposed a condition requiring the establishment of an micro, small and medium enterprises (MSME) Development Fund to be used to build the capacity of selected MSMEs and thereby make them sustainable considering the effects of the COVID-19 pandemic on the economy and especially on MSME.
“The MSME Development Fund will be used to develop amongst others, technical trade and operational skills, end-to-end business management skills, digital, technology or related skills; or build capacity in areas of business directly or indirectly related to servicing the Merged Entity, including but not limited to the supply of technical services (e.g. stainless steel welding); the supply of secondary packaging (e.g. paper or plastic labels); the supply of advertising and promotion(al) services (e.g. manufacture of branded apparel or other branded items).”
