The Competition Commission of South Africa wants former SABMiller employees to be paid entitlements under the Zenzele Employee Share Ownership Programme to bring finality to the issue and to help the former workers who are faced with a tough economic situation.
The Competition Tribunal of South Africa heard submissions on the merits relating to a settlement agreement signed by the Competition Commission, the South African Breweries and the chairperson and trustees of the SAB Zenzele Employee Share Trust.
This became necessary after the Coca-Cola Beverages South Africa lodged a complaint with the Commission in 2020, alleging a breach of a condition to the 2017 merger which saw the Coca-Cola Company South Africa acquire the interests of Anheuser-Busch InBev (AB InBev) in Coca-Cola Beverages Africa.
AB InBev exited as a shareholder of CCBA and the Coca-Cola Beverages South Africa subsequently alleged that employees, who had previously formed part of the SABMiller group, had been excluded from the 2019 allocation of SAB Zenzele ESOP benefits.
“It would be very unfair that these beneficiaries, through a settlement agreement to which they were not a party at divested of their rights to this R37 000 payment minus whatever deductions are allowable, and that by stroke of a pen in the form of the settlement agreement, you take away what you had informed to them,” Mduduzi Skhosana, legal representative for the affected employees, told the hearing.
This “would be very unfair”, he added. The Competition Commission has already ruled that benefits be shared among the beneficiaries who remain in SAB and those who went to Coca-Cola Company.
Candice Slump, litigation manager for the Competition Commission, told the Tribunal hearing that it was “essential that the settlement agreement be confirmed” as an order. SAB would then have to ensure that payment from the trust funds is effected.
“We do submit that the Competition Commission has made out to the proper case for confirmation of the settlement terms, and we request that the settlement agreement that we made, an order of the Tribunal in order to give finality to this matter, which is relevant, relatively simple,” said Slump.
Further delays to finalise the settlement were causing tremendous prejudice to employees excluded from the scheme, given the “tough economic times” currently obtaining in South Africa.
While a breach had been cited in that other employees had been excluded, the Competition Commission was satisfied “with the remedial action taken” and there was therefore “no reason why the Tribunal cannot grant” the order to finalise the issue.
“The Commission is satisfied with the remedial action, progresses the breach, but SAB has indicated that, as is recorded in in the settlement agreement, that it will comply with the remedial plan upon confirmation of this order,” explained Slump.
In 2022, the Competition Appeal Court of South Africa ruled that Coca-Cola Beverages Africa had violated conditions to protect employees after its merger. The breaches related to two merger transactions completed in 2016 and 2017.
The court’s findings, delivered in June, were that Coca-Cola Beverages Africa had breached merger conditions after it laid off 368 employees.
Coca-Cola Beverages South Africa had sought to interdict and restrain SAB and the chairperson of the Zenzele scheme allocation committee from disbursing benefits pending the outcome of the Commission’s investigation into whether the decision to disburse benefits to the exclusion of the former SABMiller employees constituted a breach of the conditions for the merger.
“Former SABMiller employees shall not lose any benefits of the Zenzele Scheme by virtue of the proposed transaction. In respect of participants that do not yet have fully vested rights, the same vesting profile will apply as if CCBA was still part of the SABMiller group,” reads one of the conditions for the merger.
The Zenzele Scheme was set to mature on March 31, 2020 where upon the unwinding of the trust the scheme beneficiaries would have been entitled to participate in a new scheme that SAB intended to implement.
SAB planned to launch its new empowerment transaction, the Zenzele Kabili Scheme, through the newly formed SAB Zenzele Kabili Holdings (RF) Limited which was to be listed on the B-BBEE segment of the main board of the JSE.
This means that retail shareholders and beneficiaries of the Zenzele Scheme who participated in the new empowerment transaction would have been free to trade their shares on the JSE.