Choppies Supermarket Namibia has entered a settlement agreement with the Namibian Competition Commission (NaCC), which was made a court order in the High Court on 19 November 2024, following an investigation that found Choppies contravened Chapter 4 of the Competition Act (2 of 2003) for implementing a merger without approval. 

The transaction amounted to a merger in contravention of the Act, and was done without approval of the Commission.

As a result, the Commission and Choppies agreed to settle the matter and entered a settlement agreement, wherein Choppies will pay a pecuniary penalty of N$2 200 000, and implement a compliance programme on Competition law in Namibia. 

“The Commission wishes to encourage concerned stakeholders to ensure that they remain in compliance with the Competition Act, specifically Chapter 4. Where stakeholders are not sure whether the transactions they wish to pursue are notifiable or not, the Commission encourages such stakeholders to approach the Commission, and seek an advisory opinion before proceeding,” read a statement from NaCC spokesperson, Dina //Gowases. 

The Commission’s investigation found that Choppies contravened Section 44, read with Sections 51 and 53 of the Competition Act. The NaCC stated that Choppies and Johannes Jacobus de Jager, trading as Grootfontein Supermarket and Grootfontein Bottle Store, entered an agreement on 12 May 2022 and 19 May 2022, which agreement constituted an acquisition for purposes of the Competition Act.

“The acquisition by Choppies constituted a change of control in Grootfontein Supermarket and Grootfontein Bottle Store, as it resulted in a merger as defined in terms of Sections 42(1) and (2) of Chapter 4 of the Competition Act. The merger falls within the prescribed notification thresholds, and the parties failed to notify the Commission, as required in terms of Section 44 of the Act,” //Gowases stated. 

The NaCC spokesperson said that the parties to the merger operate in the Commission’s defined market of fast-moving consumer goods. This entails the selling of goods to consumers that generally have a short shelf life, in relatively small quantities for use or consumption rather than for resale. 
//Gowases added that in its investigation, the Commission found that although
the transaction did not have a negative impact on competition – due to the existing market concentration in the town of Grootfontein at the time of the transaction, the transaction nonetheless breached notification thresholds made pursuant to the Competition Act.

“It is, however, important to note that the investigation by the Commission informing the fine emanates from the Commission’s mandate that results in providing consumers with competitive prices and product choices  that develops the Namibian economy. 

“As mentioned, the parties operate within the market of fast-moving consumer goods, and as such, the economic and commercial activities have a day-to-day bearing on every person within Namibia. The products in this market include the staples of our daily lives such as food, beverages, toiletries, over-the-counter medicines and cleaning products,” //Gowases noted.  She added that investigations by the Commission for mergers implemented without prior approval are thus not a mere punitive exercise, but a realisation of the Commission’s mandate to ensure fair market competition for inclusive growth and development. For this reason, it is imperative that all mergers above the monetary thresholds are notified to the Commission to ensure the protection of consumer rights, opportunities and the general welfare of the competitive landscape. 

//Gowases continued: “The determination, fit for the Commission, can best be determined during the consideration of a merger notification before any possible anti-competitive effect realises in the market after a transaction which may not have been notified to the Commission”.

NaCC enforcement and merger regulation establishes a system of preventive control against increases in market power. The rationale, the Commission clarified, is to prevent market structures conducive to anti-competitive conduct from developing, and the assessment of mergers enables the Commission to implement such a preventative control system prior to the implementation of a transaction.

All transactions meeting merger thresholds are required to be notified for assessment of possible market effects and clearance by the Commission. This has the benefit of protecting consumers from potential abuses that can result from any market dominance. Specifically, the merger assessments aim at ensuring merging firms will not have the ability to raise prices, reduce quantity and/or quality, and reduce the range of customer service post-merger.