There may be no retrenchments in South Africa as a result of the
merger for two years after the implementation of the transaction (1
December 2010), except senior management.
On 14 October 2010 the Competition Tribunal announced the
approval of the merger of Metropolitan Holdings Limited and
Momentum Group Limited subject to certain conditions. There may be
no retrenchments in South Africa as a result of the merger for two
years after the implementation of the transaction (1 December
2010), except senior management.
The Competition Act requires the tribunal to "initially
determine" the competition effects of a merger. If the merger
is not likely to substantially prevent or lessen competition, then
the tribunal must still consider its effect on the public interest.
The Act sets out the public interest grounds. Employment is one of
the public interest law grounds listed found to be relevant to this
merger because the merging parties had indicated that the merger
may lead to up to 1000 retrenchments.
The tribunal confirmed that merging parties are not required to
affirmatively justify a merger on public interest grounds. However,
once the merger, on the face of it, may not be justifiable on
substantial public interest grounds, the burden shifts to the
merging parties to rebut the inference. The merging parties must
prove that a rational process has been followed to arrive at the
determination of the number of jobs to be lost; and that the public
interest in preventing employment loss is balanced by an equally
weighty, countervailing public interest justifying the job loss
which is recognized under the Act.
Even if the merging parties make a good efficiency argument for
job losses, if the job losses are substantial this efficiency gain
must, be justified on a ground that is public in nature to
countervail the public interest in preserving jobs. The Act refers
to the public interest which must be distinguished from a private
interest. The merger must be assessed on public policy grounds even
after it has been justified for its efficiency.
The tribunal found that that the merging parties failed to prove
a rational connection between the efficiencies sought from the
merger and the job losses claimed to be necessary on their worst
case scenario. Thus the tribunal found that the merging parties had
not met the second leg of the criteria, namely, that the job losses
can be justified for a reason that countervails the job loss
incurred by the merger.
The tribunal accepted that there may be certain circumstances
where efficiency gains with substantial job losses may be
justifiable on public interest grounds. However, in this case the
merger leads to an adverse effect on the public interest on
employment. response to a request to take a deferential approach to
labour issues, the tribunal held that it has a discretion that it
must exercise. The employment loss would be of a considerable
magnitude and the short term prospects of re-employment for a
substantial portion of the affected class are limited. Thus an
unconditional merger would have a substantial adverse effect on the
The merger was, therefore, approved subject to the limited
moratorium on retrenchments for two years, except in the case of
senior management. This merger clearly illustrates how public
interest and employment considerations can have an impact on
proposed mergers and can serve to delay or stall or attach
conditions to a merger even a merger with limited anti-competitive
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guide to the subject matter. Specialist advice should be sought
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Employees must understand the notice periods stipulated by law. When an employee gives notice of their resignation to an employer, they is advising the employer that they will cease to work for the employer from a certain date.
Nigeria is a federal constitutional republic located on the west coast of Africa. Modern Nigeria has its origins as a British colony through the 19th and 20th century until it achieved independence in 1960.
The jurisprudential basis is pithily expressed as staying in sync with the global position on employment relationship, easily summed up as "International Labour Standard" and "International Best Practice".
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