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The Competition Tribunal has set aside a previous finding by the Competition Commission that Coca-Cola Beverages Africa (CCBA) was in breach of merger conditions when it retrenched staff.
The competition authorities approved two of the bottler's mergers with conditions, including that it couldn’t retrench workers as a result of the transactions.
The first merger was in 2015, when independent Coca-Cola bottlers in South Africa were merged into one entity (CCBA). This was followed in 2017 by The Coca-Cola Company’s acquisition of SABMiller’s majority shareholding in CCBA.
But in March 2019, 368 employees were retrenched by Coca-Cola Beverages South Africa, a subsidiary of CCBA, and the Food and Allied Workers’ Union complained to the Competition Commission that this was in breach of CCBA’s merger conditions.
CCBA said the retrenchments due to the weak economy, large increase in raw material prices (sugar, in particular) and the introduction of the sugar tax. According to CCBA, the sugar tax cost the company R2.1 billion between April 2018 and December 2018.
It said that the retrenchments were needed to ensure CCBSA’s continued profitability.
However, the commission found that the retrenchments were "merger specific", and issued the CCBA with a "Notice of Apparent Breach".
The CCBA then applied to the Competition Tribunal to set this ruling aside - which it did, on Wednesday.
"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 Tribunal found.
In a statement issued on Wednesday, it said that cutting of costs in challenging economic circumstances is an operational requirement, that is protected in the Labour Relations Act.
