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Mist surrounds Carlsberg deal

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A few days after Carlsberg Breweries AS of Copenhagen sold off its stake in Carlsberg Malawi to French beverage company, Castel Group, it is yet to be known whether the transaction will be handled by the domestic competition organ, the Competition and Fair Trading Commission (CFTC) or the regional instrument, the Comesa Competition Commission, bodies that are expected to approve or disprove mergers that have an effect on trade in Malawi.

Carlsberg sold its 59.48 percent stakes in the company to Castel after Press Corporation Limited, which owns 39.65 percent in Carlsberg Malawi, failed to exercise pre-emptive rights to buy Carlsberg Breweries shares.

While not confirming whether or not it had received an official notification of the proposed takeover, CFTC said the notification process will be dependent on whether or not the transaction will have an effect in more than two countries in the Common Market for Eastern and Southern Africa (Comesa).

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Malawi’s Competition Act makes provision for a non-suspensory regime for authorization of mergers and acquisitions where parties to a merger in Malawi may make an application for authorization before or after closure of the transaction depending on various circumstances surrounding the merger.

CFTC Executive Director, Wezi Malonda, confirmed that officials from Carlsberg Malawi and Castel Group have arranged to meet CFTC in the next few weeks for consultations.

In approving mergers and acquisitions, CFTC, carries out assessments on the impact of transactions on competition in the market as well as human interest, where the body assesses the risks of job losses.

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However, in the case of the Carlsberg deal, CFCT says it will only be able to give a position on whether job losses should be expected from the transaction after it completes its assessment procedures. CFTC has, however, commended the par ties involved in the transaction for showing commitment to comply with statutory obligations provided in the Competition and Fair Trading Act.

‘We have noted with interest the proposed takeover of Carlsberg Malawi by a foreign investor. The parties have arranged to meet the Competition and Fair Trading Commission in the next few week,” Malonda said.

But an economic commentator, Ben Kalua, says job loss risks will only come into play if the new shareholder, Castel, decides to adopt a capital intensive business strategy where the owners invest heavily in machinery and technology.

“There is a possibility that Castel will use the same labour ratios which were used by Carlsberg considering that the two [Carlsberg and Castel] come from similar developed market economies. But if in the event that people are retrenched, then obviously that will have negative effects on communities,” Kalua said.

Carlsberg has exited Malawi after operating in the country for 49 years. T he new shareholder, Castel Group, is an internationally recognised name, with presence in over 130 countries across the globe.

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