The Tribunal’s reasons for conditionally approving the large merger whereby The Foschini Group Limited (“TFG”) intends to acquire Tapestry Home Brands (Pty) Ltd (“Tapestry”) have been released. Upon the implementation of the proposed transaction, TFG will exercise sole control over Tapestry. The reasons are available at https://www.comptrib.co.za/case-detail/19935. In summary:
 
The Tribunal approved the proposed merger subject to conditions including a three-year moratorium on any merger related retrenchments. In addition, the conditions stipulate that there will be no downward variation of wages and conditions of work in relation to employees of the merged entity, as a result of the proposed transaction. Furthermore, provided it is economically feasible to do so, the merged entity will (within a specified period) establish new retail stores across the Tapestry Brands and create new positions to service the new stores.
 
Competition
 
The Tribunal concluded that it is unlikely that the proposed merger will result in a substantial prevention or lessening of competition in any relevant market. Among others, the Tribunal considered the market shares; closeness of competition between the parties; and competitive constraints posed by alternative suppliers. The merger parties will continue to face competition from other established players in the market and it is unlikely that the merger will grant the merged entity the ability to price unilaterally post-merger.
 
Public interest
 
The proposed transaction will not result in any job losses and is likely to result in the creation of new jobs throughout the TFG value chain, according to the merger parties. In addition, the Tribunal has imposed a three-year moratorium on merger-related retrenchments.
 
Post-merger, a HDP shareholder will be introduced within the Tapestry Group, and this will have a positive effect on the spread of ownership. Having considered this and the conditions relating to expansion commitments and employment, the Tribunal is satisfied that the public interest concerns are adequately addressed.
 
The merger parties
 
The TFG Group is an independent chain-store group with a diverse portfolio of fashion retail businesses offering clothing, jewellery, cell phones, accessories, cosmetics, luggage, sporting apparel and equipment, homeware and furniture. Of particular relevance to the proposed transaction are the activities of TFG in the broader homeware sector. TFG controls numerous firms including Prestige Clothing, Foschini Stores, Cotton Traders and Markhams.
 
Tapestry is a manufacturer and retailer of household textiles, furniture, bed sets and mattresses. The Tapestry Group also offers a portfolio of popular home furnishing consumer brands such as Dial-a-Bed, the Bed Store, Volpes and Coricraft.