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Date of release: 5 July 2022
Tribunal releases reasons for conditional approval of
Ardagh, Consol merger  

The Tribunal has released the reasons for its decision to conditionally approve the international transaction wherein Ardagh Group S.A (“Ardagh”) intends to acquire Consol Holdings (Pty) Ltd (“Consol”). Post-merger, Ardagh will have sole control over Consol. Below is a summary:
The Tribunal found that the proposed transaction does not substantially prevent or lessen competition in any relevant market in South Africa.
Public interest assessment
The Tribunal considered, among others, the Competition Commission’s assessment of the proposed transaction including: the effect on employment; the effect on a greater spread of ownership; the effect on particular industrial sector or region; the ability of national industries to compete in international markets; and the effect on the ability of small businesses or firms controlled/owned by historically disadvantaged persons (“HDPs”) to become competitive.
Following concerns raised by the Chemical, Energy, Paper, Printing, Wood, and Allied Workers’ Union (“CEPPWAWU”), the merging parties submitted that the proposed transaction will not result in any job losses or retrenchments. The proposed moratorium on retrenchments was increased from two to three years.
Regarding concerns that the merger will have a negative effect on the promotion of a greater spread of ownership as it will dilute the HDP shareholding in Consol, the merging parties submitted that they intend to implement an additional ESOP post-merger to ensure that Consol maintains its direct Broad-based Black Economic Empowerment (“B-BBEE”) shareholding percentage of approximately 11% in aggregate on a flow through basis. The merging parties agreed to the imposition of a condition in this regard. The proposed transaction will therefore not have any negative effect on ownership by HDPs as it will restore the pre-merger levels.
Merger conditions – a summary
Broad-Based Black Economic Empowerment (“B-BBEE”) / worker ownership: In addition to an existing employee share ownership programme (“ESOP”) through which workers have an interest in Consol, the merging parties will establish a new ESOP within 12 months of the merger implementation date that will hold 7% of the issued shares of Consol.
Employment: There will be no merger-related retrenchments for three years from the merger implementation date. Employees of the merged firm will remain employed by Consol with all existing terms and conditions of employment. Any collective agreements in terms of the Labour Relations Act with respect to Consol in South Africa will be unaffected.
Investment in capacity: The merged firm undertakes to incur all reasonable capital expenditure required to finalise construction of the second furnace at Consol’s Nigel facility at an anticipated total cost to Consol of about R1.5 billion. It also undertakes to start construction of a third furnace, production lines and warehousing at the Nigel facility, involving similar expenditure to that associated with the second furnace.
Glass recycling: The merged firm will procure recycled glass or cullet for use in its operations in the ordinary course and will favour historically disadvantaged persons (“HDPs”) provided that the cullet is procured on commercially reasonable terms. In addition, it will expand Consol’s existing Cullet Owner Driver Scheme from two to six owner drivers within three years of the merger implementation date. 
Small, medium or micro enterprises (“SMMEs”): Ardagh shall ensure that Consol supports SMME customers through a reduction of minimum order quantities (from currently a minimum three-day production run to a minimum two-day production run).
Product range: Once the second furnace at Consol’s Nigel facility is fully operational (and subject to customer demand, favourable macro-economic factors and no adverse change to the merged firm’s financial performance), the merged firm will use reasonable endeavours to produce at least five million units of Dining Glassware per annum for sale into the budget conscious market.
Food jars: Provided it is commercially viable to do so, the merged firm commits to continue to manufacture food jars for seven years from the merger implementation date.
The merging parties
Ardagh is a private company registered in Luxembourg. Among others, it manufactures glass packaging such as beverage bottles and glass jars and metal packaging products. The glass packaging business includes an engineering business which sells glass manufacturing equipment (through its subsidiary Heye International GmbH (“Heye”) and the sale of glass moulds (through its subsidiary UniMould GmbH (“UniMould”).
Consol is a South African manufacturer and supplier of glass packaging for the beverage, food, pharmaceuticals and cosmetics industries. Consol also has a small retail presence. Consol also owns and operates a silica sand mine to supplement and ensure adequate supply of silica sand (the main raw material input) for its glass manufacturing facilities. In addition, Consol has subsidiaries and glass manufacturing facilities in Nigeria, Kenya and Ethiopia. Ardagh will thus also acquire (indirect) control over these other African operations.
Issued by:

Gillian de Gouveia, Communications Officer
On behalf of the Competition Tribunal of South Africa
Tel: +27 (0) 12 394 1383
Cell: +27 (0) 82 410 1195
Twitter: @comptrib
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