South Africa: Antitrust regulators request extension for review of AB InBev’s takeover of SABMiller on ‘concerns that need to be resolved’

South Africa’s antitrust regulators have requested an extension for their review of Anheuser-Busch InBev NV’s proposed takeover of rival brewer SABMiller PLC, saying the deal raises concerns that need to be resolved, The Wall Street Journal reported on April 4.

A spokesman for South Africa’s Competition Commission, which is reviewing the deal, said the regulator had “communicated the concerns to the merging parties and needs more time to engage with the parties in order to find solutions to the said concerns.” He didn’t clarify what those concerns were or provide insight into how AB InBev and SABMiller might address them. He said the commission is still discussing the extension with the brewers.

An AB InBev spokeswoman said the company agreed to the extension. "We are confident that the Competition Commission is as committed as we are to ensuring that South Africa does not delay the global timetable for clearing the combination,” she said. The company expects to close the deal in the second half of the year.

In addition to the regulatory review in South Africa, AB InBev needs regulatory approval in the U.S., Europe and other markets. Those processes are continuing.

South Africa’s Competition Commission antitrust laws allow the commission to extend its review period if necessary. Requesting one or two extensions is relatively common, according to Heather Irvine, an antitrust attorney at Norton Rose Fulbright South Africa who isn’t involved in the deal.

AB InBev submitted paperwork in December to South Africa’s competition commission and said the deal wouldn’t result in layoffs. However, the Congress of South African Trade Union, which represents workers across the country, has raised concerns about the deal.

South Africa’s regulatory process requires weighing a deal’s impact on so-called public interest, which includes unemployment. That consideration has contributed to lengthy review processes in some global mergers such as the soft-drink bottling tie-up among Gutsche Family Investments, Coca-Cola Co. and SABMiller. The deal was agreed to in Nov. 2014 but hasn’t been completed.

AB InBev’s deal for SABMiller was driven in part by the opportunity to gain access to the African market, where SABMiller has a strong presence. Africa is one of the few global beer markets expected to grow in the coming years, with compound annual growth in volume of 3.7% through 2020, according industry tracker Plato Logic.

06 April, 2016