The Tribunal has set aside a finding by the Competition Commission in October 2019 against Coca-Cola Beverages Africa (“CCBA”), effectively clearing the company of claims that it had breached merger conditions relating to retrenchments. This matter ultimately relates to two mergers involving Coca-Cola which were approved with conditions in May 2016 and September 2017.
 
CCBA applied to the Tribunal in March 2021 to review and set aside the Commission’s decision to issue CCBA with a Notice of Apparent Breach in relation to the merger conditions. This followed a complaint by the Food and Allied Workers’ Union’s (“FAWU”) to the Commission in March 2019 that the retrenchment of 368 employees by Coca-Cola Beverages South Africa (Pty) Ltd (“CCBSA”), a subsidiary of CCBA, was in breach of CCBA’s merger conditions.
 
CCBA said the retrenchments were necessitated, at the time, as a result of the macro-economic climate, the imposition of the sugar tax and the large raw material price increases, in particular the price of sugar. CCBA stated that the retrenchments were required in order to mitigate the losses attributable to the sugar tax, which between April 2018 and December 2018 cost the company R2.1 billion, and to ensure CCBSA’s continued profitability. However, following an investigation the Commission concluded that the retrenchments were merger specific.
 
The Tribunal has found that CCBA has substantially complied with its obligations with respect to the merger conditions and has set aside the Notice of Apparent Breach issued by the Commission.
 
In its order and reasons, the Tribunal notes: “Given that there is no dispute in respect of the evidence provided by CCBA in respect of the macro-economic climate, the R2.1 billion sugar tax imposed in 2018 and the anticipated sharp increase in the costs of input raw materials, the probabilities strongly favour CCBSA’s stated reasons for cutting costs generally and specifically in respect of the reduction of staff costs, which included the involuntary retrenchments. The cutting of costs in challenging economic circumstances is a requirement in response to an economic need of an employer and accordingly an operational requirement as it is contemplated in the definition of ‘operational requirements’ in the LRA [Labour Relations Act].”
 
The order and reasons for the Tribunal’s decision is available on the Tribunal’s website at https://www.comptrib.co.za/case-detail/19398