The Namibian Competition Commission (NaCC) has granted Vitol Emerald Bidco Proprietary Limited (VEB) conditional approval to acquire Engen Limited.
According to the NaCC, the conditional approval reflects the Commission’s concern over potential competition issues and the impact on employment.
The merger, identified as an international transaction, involves VEB acquiring 74% of Engen’s entire issued share capital, thereby securing sole control over the company.
Dina //Gowases, Corporate Communications Practitioner at NaCC, said the competition analysis conducted by NaCC raised concerns about the potential prevention or substantial lessening of competition resulting from the merger.
To address these concerns, the Commission has imposed specific conditions on the approval.
In terms of horizontal conditions, “the merged entity is required to divest the Divestiture Business within the First Divestment Period. This divestment is to be made to a Namibian-owned undertaking or consortium with less than 10% fuel retail market share, excluding those with pre-existing relationships with the merged entity.”
NaCC warns that failure to divest in the First Divestment Period triggers a Second Divestiture Period, and if divestment is not achieved even after this, termination of retail supply agreements with undivested service stations may follow.
Furthermore, the merged entity is prohibited from supplying fuel to divested service stations for a period of five years after divestment.
“Another critical condition is the prohibition of the merged entity, its shareholders, and special purpose vehicles from acquiring service stations or retail licences during the divestment period,” noted //Gowases.
In addressing employment concerns, the NaCC has stipulated that no merger-specific retrenchments are permitted for a period of two years after the implementation date.
However, the merged entity may offer voluntary severance packages to employees in overlapping positions.
The conditions set forth by the Commission aim to ensure that the merger does not result in anti-competitive effects and minimises negative impacts on the labour market.
VEB is ultimately controlled by the Vitol Group, a prominent entity in the energy marketing and trading sector, with a history dating back to its founding in 1966.
In Namibia, the Vitol Group operates through Validus, engaged in the trading, import, and distribution of refined petroleum products, and Vivo Namibia, focusing on marketing and distributing petroleum products under its Shell-licensed brand.
This follows the recent recommendation by the South African Competition Commission earlier this month, advising the Competition Tribunal to approve Vitol’s acquisition of South Africa’s largest gas station chain, Engen, albeit with certain conditions.
These conditions encompass a commitment from Vitol to invest a predetermined amount over a five-year period in capital investments and production.
Additionally, the stipulations include ongoing procurement of locally refined petroleum products for an extended duration, and a heightened focus on localisation throughout the value chain.
Furthermore, the promotion of Historically Disadvantaged Persons (HDP)-owned suppliers, the establishment of a new Employee Share Ownership Plan (ESOP) for the merged entity’s South African employees, an increase in the number of independently and HDP-owned retail stations, and a moratorium on retrenchments specific to the merger.
