Mmegi Online :: Transporter dejected by Competition Authority’s embargo
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Thursday 18 January 2018, 13:00 pm.
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Transporter dejected by Competition Authority’s embargo

Local transport company, 4MS Group Holdings yesterday expressed its disappointment at the Competition Authority (CA)’s decision to block its deal with Transport Holdings. The CA on Friday announced it had blocked a bid by South African company, Transport Holdings to buy 4MS citing competition and public interest concerns.
By Isaac Pinielo Wed 18 Jan 2017, 18:00 pm (GMT +2)
Mmegi Online :: Transporter dejected by Competition Authority’s embargo








4MS finance director, Michael Stoneham yesterday told Mmegi Business that the decision by CA to block the deal poses major challenges for the cash-strapped company.

“Like we said before, we are in financial doldrums and we are looking to sell our assets since our business is no longer sustainable,” he said.

He noted that 4MS, which has been providing line haul services to the Kgalagadi Breweries Limited (KBL) since 2004, faces a bleak future as a result of the change in policy of the beer company.

At an earlier hearing, it emerged that the contract between 4MS and KBL was coming to an end with only one year remaining, which is highly likely that KBL will implement a new procurement policy that will allow other companies to bid for tender. Stoneham also indicated that Anheuser-Busch InBev’s takeover of rival SAB Miller, a technical partner in the operations of KBL and a largest shareholder has brought major changes to KBL operations, making it reasonable for them to sell their assets to Transport Holdings. “This transaction will save us as the funds raised from the sale of our assets will go towards retrenchment packages of the 40 employees that will be retrenched,” he stated.

One of the largest transport operators in South Africa, Transport Holdings, had intended to acquire assets and cession of the main contract belonging to 4MS Group, which currently has liabilities of P14 million.

However, the Authority found that there are competition and public interest concerns that arise in the line haul transportation services market on

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account of the acquisition in Botswana.

“The Authority further took cognisance of the fact that the proposed transaction is likely to result in reduced competition due to the removal of a competitor in the line haul transportation services market,” it said.

According to the Authority, the implementation of the proposed merger is expected to result in the merged entity attaining a dominant position, and the proposed transaction is expected to result in retrenchments and citizen disempowerment.  It further noted that given the competition and public interest concerns identified in the transaction, and the fact that Transport Holdings /Mulbridge Transport is the only other entity apart from 4MS having a contract with Kgalagadi Breweries that expires in January 2020.

The competition ordered that Transport Holdings or Mulbridge Transport or any other entity related in anyway with Transport Holdings or Mulbridge Transport is restrained from participating in the tender to be issued by KBL upon the expiry of the existing 4MS contract with KBL in October 2017, and for the entire period leading up to the end of the Transport Holdings or Mulbridge Transport contract in January 2020, including any extension period that may be granted thereafter.

The decision of the Authority comes at the back of fear among other local transport operators that if the deal was approved, Transport Holdings would acquire the assets of 4MS, which include 23 trucks, thereby giving Transport Holdings an upper advantage over the other transporters. Transport Holdings is said to be already transporting some KBL volumes to Maun.

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