On Friday, the Competition Tribunal disallowed a proposed merger between the US-based Pioneer Hi-Bred International with Pannar Seed of South Africa. The merger would reduce the number of maize suppliers in the country, the commission said, and thus the prospects of maize prices going up were increased. By SIPHO HLONGWANE.
According to reports, the tribunal’s decision not to allow the two seed companies to merge is rooted on the fact that fewer players in the market would mean that prices would likely go up.
“In terms of the proposed tie-up, Pioneer would acquire control of Pannar. They are the second and third largest maize seed producers and suppliers in SA, respectively,” I-Net Bridge said. “The only other significant player in this market is Monsanto SA. Thus the proposed merger would reduce the number of players in this market from three to two, the tribunal noted.”
In December last year, the Competition Commission barred the merger on the same grounds.
The companies said that they would study the decision before deciding on what to do next. “We still believe this transaction is in the best interests of both companies, their employees and their customers in South Africa and throughout Africa,” the companies said in a joint statement.
Had the Competition Tribunal allowed the deal to go through, the minister for Agriculture, forestry and fisheries Tina Joemat-Pettersson would probably have appealed the decision (as she has done with the Walmart deal) on the basis that more expensive maize would imperil South Africa’s food security. DM
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