'If they dump foreign milk here, what will we do?' Unions fume over Clover takeover

Unions are fuming over the Competition Tribunal's decision to approve the buyout of South Africa's largest dairy company, Clover, by Milco SA – with the Congress of South African Trade Unions saying it would consider legal steps.

Milco, which has Tel Aviv-based Central Bottling Company as majority shareholder, offered to buy 100% of Clover in February this year at R25 a share, valuing the company at R4.8bn. The Competition Tribunal announced on Wednesday that it had given the deal the go-ahead, subject to conditions relating to employment, local procurement and information sharing.

Cosatu spokesperson Sizwe Pamla told Fin24 that the Competition Tribunal should have rejected the proposed takeover, purely based on its impact on jobs. The Food and Allied Workers Union (FAWU), meanwhile, has raised concerns about the impact on local suppliers.

Jobs

A total of 516 employees were initially set to be retrenched ahead of the takeover as a result of the completion of Clover's so-called Project Sencillo, a project aimed at ensuring its assets, including factories, production lines and vehicles, were better utilised.

Clover has previously told Fin24 Project Sencillo was unrelated to the transaction. It also said it had managed to reduce net job losses to a maximum of 277 positions, partly because Milco undertook to create 550 new permanent jobs over a period of five years through the expansion of Clover's Masakhane Project.

"Our view is that mergers that result in job losses should be rejected by the Competition Commission. It’s as simple as that. The unemployment rate […] is sufficient grounds to reject that submission," said Pamla.

Pamla added that while Cosatu would consider legal remedies, it would also support any union which opposed the takeover in their efforts to prevent it being finalised.

"We will have to study the developments closely.

"If FAWU (the Food and Allied Workers Union) is the only union in the sector that is recognised, then we will give them all the support that they need to oppose this.

"If we don't show solidarity as workers on the shop floor, we will meet each other at the unemployment line," he said.

FAWU, alongside other unions, submitted their concerns to the Competition Commission and Tribunal. The Tribunal ultimately ruled that no jobs may be sacrificed as a direct result of the takeover.

Local business

FAWU deputy general secretary Mayoyo Mngomezulu told Fin24 that the union had long opposed the deal, as it believed the takeover would have a harmful impact both on jobs and the sovereignty of local businesses.

"We participated in the commission to place our view in terms of our own remaining company being sold to foreign investors. We have had companies like Nestle and Parmalat that are foreign-owned.

"It is important that government step in to protect the sovereignty of our local businesses," said Mngomezulu.

Mngomezulu told Fin24 that small, emerging farmers enjoyed the benefit of getting into business with Clover. The South African Federation of Trade Unions-allied union worries that it might not be the same once Milco takes over.

The Tribunal included procurement-related conditions in its ruling, referring specifically to bulk juice concentrate. Mngomezulu voiced concern for milk producers.

"As much as they will be expected to procure milk locally, two years is short in the lifetime of the companies.

"If Milco decides to dump foreign milk here, what will we do? We are not anti-foreign direct investment, but the way that foreign companies are taking over becomes worrying," Mngomezulu said.

Mngomezulu said FAWU was still seeking legal advice on how best to respond to the now-approved takeover. However, he said, a boycott was not on the cards as the union did not want to jeopardise already vulnerable jobs in the business.

Pro-Palestine pressure

In its submission to the Competition Tribunal, the General Industrial Workers Union of South Africa (Giwusa) had accused the Central Bottling Company, through its subsidiary the Central Company for Sales and Distribution, of violating human rights and international laws; which Pamla echoed in his comments to Fin24.

The Tribunal on Wednesday declined to comment on these submissions, saying they fell outside of its jurisdiction.

In April, Brimstone Investment pulled out of the consortium under pressure from pro-Palestinian activist group Boycott Divestment Sanctions SA (BDS).