The Competition and Consumer Authority has approved the proposed acquisition of parts of the Edgars by Retailability Group through Oclin Botswana with conditions.
The target entity, Edgars, is part of the Edgars Division which is Edcon’s department store that sells clothing, footwear, and accessories for men, women, and children.
The stores additionally sell textiles, cosmetics, and cellular products The Edgars business is controlled by Edcon Botswana, which in turn is controlled by the Edcon Group.
The acquiring company, The Retailability, is an entity registered in South Africa and operates clothing apparel retail stores trading under the names, Beaver Canoe, Style, and Legit.
On the 13th of October this year, the Authority received a notification for a possible takeover for some parts of the Edgars business.
The Authority’s Chief Executive Officer (CEO), Tebelelo Pule says the assessment of the proposed transaction has revealed that from a general perspective the two parties may be regarded as competitors as they appear to be active in a similar market segment.
However, Pule says a more advanced analysis has shown that the markets of the two entities in Botswana are differentiated to accommodate the diverse tastes, preferences, and income levels of Batswana.
“Therefore, for purposes of analyzing the proposed transaction, and given the nature of the products offered by the two parties, the Authority determined the relevant product market to be the market for the clothing apparel; cosmetic and mobile cellular products markets,” said Pule.
In terms of a substantial lessening of competition, Pule says it was established that the proposed transaction would not result in a substantial lessening of competition since there will be a minor change in the market.
She explained that this is because other large departmental stores will act as a constraint to the acquired entity post the acquisition.
As a result, she says the acquisition will not give rise to any substantial lessening of competition or restrict trade or endanger the continuity of supplies or service in the relevant market of Botswana.
The Authority has further discovered when analyzing the proposed transaction that the acquisition of the business by Retailability would not result in the attainment of a dominant position as the combined market share would be insignificant in the relevant markets.
Regarding public interest, Pule says the assessment revealed that the transaction is a result of a ‘business rescue’ by the target enterprise and necessary to avoid closure of all Edgars stores in Botswana.
It is feared this could lead to considerable loss of businesses to some people and entities involved in the target business’s broader supply of chain.
“On that note, the Authority found it necessary to ensure that the proposed transaction does not result in any job losses and redundancies,” noted Pule.
The transaction has been approved with some conditions, including that there be no acquisition-specific retrenchments or redundancies that may affect the employees of the two entities.