Business Reporter
The Competitions and Tariffs Commission denied Innscor Africa the chance of creating a monopoly in the stock feeds industry after rejecting the listed company’s bid to acquire a 59 percent stake in Profeeds through Irvines Zimbabwe.

CTC disapproved the transaction after noting concerns arising from the vertical and horizontal nature of the transaction.

In terms of vertical concerns, it was noted that Irvine’s and Profeeds had entered into an exclusive dealership arrangement, which is in contravention of the Competition Act. This is because Profeeds is tied to distributing Irvine’s day-old chicks, vitamins and poultry hardware only.

“Through Prostores, Profeeds is the largest distributor of poultry products in Zimbabwe. As such Irvine’s Zimbabwe is foreclosing its competitors from accessing the services of a key distributor, Profeeds,” said the commission in its notification seen by The Herald Business.

CTC said the remedy prescription to the vertical concerns of the transaction requires that Irvines Zimbabwe completely divests its proposed shareholding and revokes all exclusive dealing arrangements with Profeeds.

Concerns were also noted from the direct relationship existing between Innscor and National Foods. Innscor has a 49 percent shareholding in Irvine’s and is also a significant shareholder in National Foods. In both instances the group has management control.

CTC said the possible remedy to the competition concerns arising from the horizontal nature of the proposed merger would be to negotiate, in terms of Section 30(b), or issue an order against Innscor in terms of the competitions Act (Chapter 14:28) to reduce its shareholding in National Foods to below 30 percent.

The transaction envisaged the acquisition of 59 percent of the issued share capital in Profeeds and Produtrade by Ashram which is an investment vehicle jointly owned by Irvines with 66 percent (herein referred to as IZIM) and Annunaki Investments Private limited owning 34 percent.

Irvines which is Zimbabwe’s biggest day-old chick breeders who are also into large scale production of table eggs and broiler chicken meat is jointly owned by Irvines Day- Old Chicks private limited and Innscor.

CTC assistant director (Competitions) Mr Benjamin Chinhengo confirmed the collapse of the deal.

“Innscor has since written to us notifying of their intentions to withdraw from the deal the same day that the CTC board had agreed to turn down the transaction,” said Mr Chinhengo.

The commission received notification in terms of Section 34A of the Act, detailing the proposed acquisition of Profeeds Private Limited and Produtrade limited by Ashram Private Limited.

According to the analysis made by the authorities it has been reviewed that the acquisition was set to create some market imbalances and approval of the acquisition has been hanging in the balance for some time.

However, due to the complexities around Annunaki Investments which is the venture capitalist company who partnered IZIM to acquire shareholding in Profeeds are bringing in capital while IZIM was to oversee the management of their investment in Profeeds.