JOHANNESBURG – The Competition Tribunal on Tuesday gave cigarette giant British American Tobacco (BAT) the green light to buy local e-cigarette company Twisp with employment and competition conditions.
The tribunal gave the merger, which initially raised concerns of possible price hikes and a reduction in the quality of innovation of vaping products, because of Twisp’s pole position in the product category, a go-ahead with conditions that include a two-year moratorium on job cuts from the date of its implementation.
“This includes employees on fixed-term contracts of varying lengths who perform specific roles at BAT South Africa and Twisp,” said the tribunal yesterday. It is expected to provide full reasons for the decision to approve the merger in due course.
It said, however, that competition conditions included preventing the merging parties from entering into deals with retail owners that incentivise them not to sell any Reduced-Risk Products (RRP) of competitors.
It prohibited the merging parties from incentivising retailers to allocate to them more than 70 percent of the visible space allocated to RRPs and not to require or incentivise retailers to prohibit competitors from selling, displaying and promoting RRPs.
It said the conditions would be applicable for a period of five years with the companies required to publish the conditions on its website for 90 days and to email them to grocery retailers, branded forecourts, specialist vape stores and tobacconists.
BAT, the world’s second-largest tobacco company by sales, announced the deal in 2017 as part of its efforts to increase its offering of so-called next-generation products or alternatives to smoking cigarettes.
BAT South Africa chief executive Soraya Benchikh said the acquisition would strengthen its RRP category in southern Africa, and offer consumers reduced-risk alternatives to traditional combustible cigarettes.
“We’ve worked with the Competition Commission for the past few months to satisfy their concerns on the merger, and look forward to investing further in the South African e-cigarette market and developing this innovative product category,” said Benchikh.
On Friday, BAT said in its annual report that its brands fell 5.4 percent in 2018 to 157 billion sticks, largely on the back of the growth of illicit trade in South Africa and Brazil.
BAT shares declined 2.49 percent on the JSE on Tuesday to close at R554.23.