8 June 2021

BUSA Press Release on Competition Commission’s decision to block the sale of Burger King

BUSA has taken note of the Competition Commission’s recent decision to block the sale of Burger King by Grand Parade Investments (GPI) to ECP Africa on the basis of public interest concerns, specifically the lack of black ownership credentials of the buyer. While BUSA recognises the value of the 2019 amendment to the Competition Act in creating greater certainty regarding the role of public interest provisions, it is concerning that the decision of the Commission in blocking the Burger King sale appears to give rise to a number of unintended consequences.

 

According to BUSA CEO, Cas Coovadia, the decision could have implications for how black investors realise value: “A 68% black-owned firm took a decision to dispose of an asset – presumably with a view to realising maximum value for shareholders – only to have this commercial decision overturned by the Commission. The unintended consequences of this include the uncertainty and deal-risk generated, a potential slowdown in investment and merger activity, as well as significant constraints on the ability of black investors to realise value from investments at a time of their choosing – constraints not applicable to white investors.” Coovadia adds that “assuming the commitments made to invest in the development of new Burger King outlets, increase employment and increase procurement from black suppliers was realised, the Commission has implicitly favoured ownership criteria over job creation and growth.”

 

Coovadia furthermore states that “while BUSA fully supports efforts to transform the economy and broaden ownership, the decision of the Commission raises questions around whether this is an appropriate mechanism to advance transformation and promote black ownership in the economy. We are also concerned that the Competition Commission is pronouncing on issues related to black economic empowerment, which is the ambit of the B-BBEE Commissioner.”

 

ENDS

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For more information, please contact:

Sizwe Maswanganye

Communications Manager

Tel: 011 784 8000

Email: sizwe.maswanganye@busa.org.za