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422 jobs will be saved as a result of the large merger whereby Blue Falcon 188 Trading (Pty) Ltd (“Blue Falcon”) will acquire certain portions and assets of the “John Craig” Business, a Division of Pepkor Speciality (Pty) Ltd (“the transferring business”).
 
The transaction is taking place against the background of several John Craig store closures and staff retrenchments due to financial difficulties faced by the transferring business.
 
The Tribunal has approved the transaction subject to public interest-related conditions. In particular, they relate to employment and local procurement concerns. In regard to competition concerns, the Tribunal has found that the merger is unlikely to substantially prevent or lessen competition in any relevant market in South Africa.
 
Jobs saved
 
The 422 employees of the transferring business will be transferred to Blue Falcon in line with the provisions of section 197 of the Labour Relations Act. This excludes certain executives who have concluded "opt–out" agreements and voluntary separation agreements with Pepkor Speciality.  
 
Moratorium on retrenchments
 
Blue Falcon will not retrench any employees as a result of the merger for a period of two years from the merger’s implementation date.
 
Preference to already retrenched employees
 
In terms of the merger conditions, both Blue Falcon and Pepkor Speciality should give preference to eligible John Craig employees, who lost their jobs as a result of store closures, when new vacancies become available, for a period of two years from the implementation date of the merger. Internal vacancies must also be communicated to the affected former employees.
 
In addition, Blue Falcon and Pepkor Speciality must establish a database of the former employees and make this database available within Pepkor Speciality and John Craig for the purpose of availing employment opportunities to them.
 
Local procurement
 
The Department of Trade, Industry and Competition earlier raised a concern about the effect of the transaction on local procurement i.e., whether the John Craig stores will maintain the same ratio of procurement of apparel products from South African manufacturers.
 
Blue Falcon, as the acquiring firm in this transaction, has therefore agreed to a condition that it will use its best efforts to procure the labels it intends to offer at the John Craig stores from local manufacturers.
 
The merger parties will be required to provide the Commission with detailed reports annually, for a period of two years, regarding their compliance with the conditions.
 
Background
 
The Blue Falcon group is an independent retailer specialising in sports-lifestyle, "athleisure" oriented men's clothing, footwear and accessories. It sells international sporting, leisure and lifestyle brands to various emerging market consumer segments throughout sub-Saharan Africa. These brands include Adidas‚ Ellese, Puma‚ Converse‚ Nike‚ Guess‚ Superga and Levi.
 
The transferring business mainly sells smart and formal men's apparel including chinos, formal footwear, jackets, knitwear, coats and suits. It owns an in-house label, "Muratti", which has been specifically designed for the John Craig customer and is the largest retail stockist of the "Polo" brand in South Africa.

Issued by Competition Tribunal