Choppies favoured in takeover - Sefalana

A  corporate war of words has erupted between two major retailers, Choppies and Sefalana over the acquisition of Supasave.


Botswana Guardian is reliably informed that before Choppies showed interest in acquiring Supasave/Megasave, Sefalana Holdings had already shown interest together with another unidentified suitor in acquiring Supersave. A reliable source closer to the acquisition told Botswana Guardian that initially Choppies appeared reluctant to acquire the loss making Supasave/Megasave group, but changed its mind when directors realised that its direct competitor, Sefalana, is pursuing the deal. Sources say Choppies then made a counter offer allegedly to frustrate Sefalana from expanding its retail footprint.


 This week, Sefalana Holdings Group Managing Direct Chandra Chauhan confirmed to Botswana Guardian that his company had been frustrated by Choppies given its financial muscle and ability to counter any offer they would have made to SupaSave.


“Choppies bought SupaSave to try and stop Sefalana from expanding and compete fairly with them, they want to remain dominant in the market and they will do anything to remain in control of the market,” Chauhan claimed in a fit of anger. Chauhan said the Competition Authority ignored its advice, which was against the takeover and made a wrong and misinformed decision meant to favour Choppies by allowing it to take over Supasave/Megasave.


“Just look at the reasons the Competition Authority gave for authorising the merger. They say they wanted Choppies not to fire any employees, however in our proposal we were actually going to increase employment because we wanted to expand those stores and actually employ more people,” he said. Previously Competition Authority acting Chief Executive Officer (CEO) Magdeline Gabaraane told the media that a number of stakeholders and competitors were against Choppies taking over SupaSave. She did not clarify the nature of the objections from other possible suitors. “We however decided to give the merger a green light on conditions that they keep employees and vacate the premises occupied by SupaSave in a period of five years,” she had previously said. Chauhan is however convinced that Competition Authority’s wrong decision is anticompetitive because Choppies abused its financial strength to block Sefalana from merging with Supasave, thus blocking its growth and presence in the market as well as its competitiveness, thus killing competition in the retail market.

This is despite the fact that Gabaraane said Choppies would not abuse its market dominance to its advantage. SupaSave operates six stores in Gaborone, Molepolole and Palapye and Mogoditshane making just over 1 percent of the retail market’s total market share, compared to Choppies whose market share exceeds is close to 40 percent, way above the 25 percent threshold set by the anti-competition watchdog with stores approaching 60 nationwide, while 15 are in South Africa. “We have objected Competition Authority’s decision to give Choppies a go ahead to buy Supasave because it was a misguided decision by the Competition Authority. We wrote a letter to Competition Authority against their choice, telling them that they should revoke that decision,” Chauhan said. Botswana Guardian has also been informed that the Competition Authority met under an emergency arrangement this week in a meeting that discussed Sefalana’s objections. The Competition Authority’s Director for Communications and Advocacy Gideon Nkala confirmed that Sefalana objected in a letter to a decision by Competition Authority to give the merger the green light.


“The matter will be reviewed and the material brought to our attention by Sefalana will also be considered and we will announce the outcomes very soon,” Nkala said. However Nkala explained that in circumstances where a decision made by the competition watchdog is rejected the way Sefalana did in the Choppies issue, the Authority will go back to the drawing board and consider the material brought forward for consideration. “If by any chance it is found out that the competition watchdog made a decision that was based on incorrect information and findings, then the Competition Act allows for such a decision to be revoked,” Nkala explained, adding that since such matters are always likely to have grievances, the decision made by the Authority is not necessarily final to allow room for review with new emerging evidence that might force the competition watchdog to revoke its decision.


However if by any chance the CA decides to stand by the decision which the other party feels is wrong, Sefalana is highly likely to appeal the matter to the High Court which would then be taken to the Competition Commission for reconsideration.
Reached for comment Choppies CEO, Ramachandran Ottapathu refused to be drawn into the acquisition saying as a suitor, he only deals with Competition Authority and Supersave. He claimed ignorance to a complaint letter written by aggrieved competitors – Sefalana.

 

 

 

Last modified on Wednesday, 31 July 2013 16:26

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