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Tribunal approves Mr Price acquisition of Otto Brothers Distributors
with conditions to promote local procurement
The Tribunal has conditionally approved the merger whereby Mr Price Group Limited (“Mr Price”) will acquire the retail apparel business operated by Otto Brothers Distributors (Pty) Ltd (“Otto Brothers”) and its subsidiaries, trading as Power Fashion.
The Tribunal has concluded that the transaction is unlikely to substantially prevent or lessen competition in any market in South Africa. However, conditions have been imposed on the merger to promote local procurement within the Mr Price Group post-merger. This follows concerns raised by the Minister of the Department of Trade, Industry and Competition (“DTIC”) in relation to local procurement. As such, the merged entity must ensure that:
- Power Fashion maintains or improves its current level of locally procured goods and services; and
- Power Fashion participates in the DTIC’s Retail, Clothing, Textile, Footwear and Leather (R-CTFL) Masterplan initiative along with the rest of the Mr Price Group. This DTIC initiative seeks to, among others, increase the share of local retail sales of locally manufactured clothing and footwear to 65% by 2030.
Merger parties
Mr Price is a national clothing retailer offering fashion and sport clothing, footwear, accessories, homeware and mobile products under various brands. Mr Price targets a wide range of customers and is well known for its fashion-value offering. It also has an established financial services division which offers credit, insurance products, cellular offerings and value-added services. Mr Price also operates in other African countries including Botswana, eSwatini, Ghana, Lesotho, Kenya, Namibia and Zambia.
The target business is Power Fashion, which is a national clothing retailer that services low to middle income households. It offers affordable clothing, cosmetics, mobile handsets, airtime, basic household items, electricity and other products. Power Fashion stores are typically located in ‘high street’ and community-centered malls and commuter nodes.
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