Sefalana loses against Choppies’ Ram
- Sefalana fails in bid to stop Ram expansion
- We are smarter than them – Sefalana
- Competition Authority orders another sell off
Retailers, Sefalana have failed in their bid to stop Ramachandran Ottapathu, the top executive of their competitors, Choppies, from buying business interests in the brand.
The Sefalana Group wrote a letter to the Competition Authority, prior to the public hearing on the acquisition, warning of a breach of the section 30 of the Competition Act which makes reference to dominance and abuse of power in the marketplace. “We are of the view that allowing this proposed transaction would result in abuse of power in the market,” wrote Sefalana executives, in reference to Ram’s proposed purchase of Warbler.
The Competition Authority, last week, announced a decision to conditionally authorise the acquisition of the entire issued shareholding of Warbler Holdings (Pty) Ltd in electronics suppliers, IT4Africa Botswana (Pty) Ltd; Goldtech (Pty) Ltd; Healthwest Africa (Pty) Ltd; and Solid Logistics (Pty) Ltd, together with all assets related to the business operations of the aforementioned entities by Bluehearts (Pty) Ltd, a company owned by Ottapathu.
When the deal was subjected to public scrutiny beginning of July, this year via a public hearing, it attracted the attention of other key players in the retail industry as it involved Ottapathu who is synonymous with Choppies. There were a number of competition concerns raised especially by Sefalana Group, through a lengthy letter presented before the Competition Authority.
However, the regulator last week, ruled that Bluehearts (Pty) Ltd should continue to supply the same retailers that were previously supplied by Warbler Holdings (Pty) Ltd on terms no less favourable to those offered by Warbler Holdings (Pty) Ltd to the retailers, pre-merge.
Again, Bluehearts will, annually, for a period of five (5) years from the implementation date, submit to the authority a detailed report indicating a list of its new and old customers and the trading terms.
Furthermore, Ottapathu has been ordered by the CA to divest his interests in the following companies within 12 months from the decision date:
Montrose Investments (Pty) Ltd t/a RiteFurn; Callao (Pty) Ltd t/a RiteFurn; Peardale (Pty) Ltd t/a RiteFurn; Decolite (Pty) Ltd t/a RiteFurn; Mont Catering and Refrigeration and to inform the Authority of this disposal within 30 business days of concluding the final sale agreement(s).
This comes hot on the tracks of another sell off done in 2015 after the Botswana Stock Exchange advised Choppies top men, Ottapathu and Ismael Farouk to sell some companies they co-owned which were the bulk of “related party transactions” in Choppies’ books. The companies supplied Choppies stores with everything from services such as distribution, grain packaging, milling, pharmaceuticals’ distribution, and air conditioning supplies among others in a confounding P450 million deal that saw the duo offloading their shares to an international consortium. This deal was advised by the Botswana Stock Exchange to ensure that Choppies operates with proper corporate governance structured as a listed company.
There is no retail sector war between Choppies and Sefalana, according to Sefalana Group Managing Director Chandra Chauhan.
“It is a misconception that we are not doing as well as our competition, actually if you look at them, they are only really doing well in Botswana but they have stores in many countries,” said Chauhan, at a recent press engagement.
“We are going to expand very soon but we are more careful about how we do it because there are other considerations such as foreign exchange that can make or break the business. It is a creation of the media that we are in some kind of retail war, it’s not a war but we will talk to the authorities if we see anti competitive behaviour,” he said.
“We don’t have any of our major shareholders also supplying us with anything,” he quipped.
The companies’ rivalry last showed its head back in 2012, when Choppies acquired the Supa Save retail outlets, beating Sefalana to it. The acquisition was later approved by the Competition Authority on the basis that it was not anti-competition.