Court Bars INNSCOR From Merging Profeeds and Ashram Investments
THE Supreme Court has granted the Competition and Tariff Commission (CTC) its appeal against a High Court judgment endorsing the merger between INNSCOR Africa Limited subsidiaries Profeeds and Ashram Investments.
The High Court had approved the merger, following an appeal lodged by Ashram Investments, determining that the transaction was in the public interest, as it created new jobs and expanded the merged businesses.
In a judgment delivered on October 3, 2024, Supreme Court judge Justice Tendai Uchena, overturned the lower court’s decision, citing the potential long-term risks of monopolistic tendencies.
INNSCOR Africa, wholly owns Ashram Investments, which separately acquired a 49% stake in Profeeds, a stock feed manufacturer and Produtrade, a property holding company leasing facilities to Profeeds.
The transactions were consummated in 2015 but only notified to CTC in 2019, nearly 4 years later, after the companies’ new legal counsel advised the parties of their obligations under the Competition Act.
Court Bars INNSCOR From Merging Profeeds and Ashram Investments
CTC had, however, initially prohibited an earlier transaction in which Ashram sought to acquire an even bigger stake in Profeeds, which would have seen it take a controlling interest in Profeeds, citing risks of market concentration.
The regulator argued that the combined influence of Profeeds and National Foods, an INNSCOR associate, would lead to a dominant position in the stock feed market by the Zimbabwe Stock Exchange-listed conglomerate.
Additionally, the CTC imposed a ZW$40,5 million penalty on INNSCOR for failing to notify the regulator about the merger within the prescribed period.
The Supreme Court criticised the High Court for focusing narrowly on short-term economic benefits while neglecting the merger’s potential to create a monopoly.
Court Orders INNSCOR Africa to Divest from Profeeds
Justice Uchena further noted that INNSCOR had a history of non-compliance with competition law, referencing its previous failure to notify mergers in 2013 and 2018.
