Tobacco industry players allowed to ‘intervene’ in British American Tobacco / Twisp merger

Two large players in the tobacco industry, Gold Leaf Tobacco and Philip Morris South Africa, have been recognised as participants in the ongoing large merger proceedings involving British American Tobacco and Twisp

Gold Leaf Tobacco and Philip Morris South Africa recently applied to the Tribunal for leave to intervene in the merger proceedings.

The Tribunal’s order means that the two companies now have a right to access case documents, to file witness statements, to give evidence at the hearing and to cross-examine witnesses, among others.

The Commission, which refers large mergers to the Tribunal for a decision, initially recommended that the proposed merger be prohibited due to competition concerns. However, it subsequently indicated that it no longer recommended a prohibition and had come to an agreement on conditions with the merging parties.

Gold Leaf Tobacco and Philip Morris South Africa thereafter launched an intervention application. They argued that they would provide information that would be of use to the Tribunal in coming to its decision regarding the merger.

In its order, the Tribunal says the companies may participate in the merger hearing in respect of the portfolio/conglomerate effects of the proposed merger, but limited to the following issues:

1. The incentive and ability of the merged entity to engage in exclusionary conduct at the retail level;
2. The conditions that should be imposed by the Tribunal to address the portfolio/conglomerate effects of the proposed merger; and
3. Any increase in barriers to entry in relation to the e-cigarette market in SA, as a result of the merger (in the case of Gold Leaf Tobacco).

A date for the merger hearing will be determined in due course.