EDGARS CONSOLIDATED STORES LIMITED
"Edcon"
Registration number 1946/022751/6
Incorporated in the Republic of South Africa
ISIN number: ZAE000018388
Share Code: ECO
The Competition Tribunal announced yesterday that Edcon"s first acquisition from
the liquidators of Retail Apparel Group (RAG) on 16 June 2002 was more than
merely the acquisition of a debtors book but rather constituted the purchase of
RAG"s custom, being a "part of the business" of RAG which could result in future
sales and market share gains to Edcon, which should have been notified to the
Competition Commission before implementation.
The Tribunal accepted that Edcon"s decision not to notify the Competition
Commission before implementing the transaction was made in good faith and based
on the legal advice of its attorneys, Werksmans. The Tribunal expressed the
view that, given the facts and although it reached a different conclusion, it
could not suggest that the advice Edcon received was unreasonable or not
considered. The Tribunal"s view of the transaction as being more than a sale of
book debts, led the Tribunal to refrain expressly from deciding whether a sale
of book debts constitutes a notifiable merger. The Tribunal did, however, note
its disagreement with the Competition Commission"s initial stance that, because
book debts are assets, every sale of book debts is a merger.
The Tribunal found that Edcon did not intend to evade competition scrutiny and
co-operated with the Competition Commission and that the violation was of a
procedural rather than a substantive nature. It also acknowledged that Edcon
has never previously been found to be in contravention of the Competition Act.
The Tribunal has therefore ruled that the fine payable by Edcon be reduced from
R85, 5 million to R250 000. Edcon does not intend to appeal the decision.
25 March 2003
Sponsor
Cazenove
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