OLAM GROUP ACQUISITION BY SAUDI FIRM: Why Ugandan farmers shouldn’t be worried

 

BY PAUL TENTENA

KAMPALA, UGANDA- Saudi Arabia based company Saudi Agricultural and Livestock Investment Company (SALIC) has acquired 64.57% in Olam Agri Holdings Limited (Olam Agri), a deal that was okayed and approved by the COMESA Competition Commission (CCC).

The deal was over US$50million and, was therefore mandatory to be notified to the COMESA Competition Commission. The CCC took the decision to allow the merger/acquisition after it determined that the merger was not likely to substantially prevent or lessen competition amongst the COMESA countries or substantial part of it, nor would be contrary to public interest.

In its determination, the Committee Responsible for Initial Determination (CID) noted that the transaction was unlikely to negatively affect trade between the COMESA member states.

In the approval notice signed by the Chairperson of the CID Commissioner Mahmoud Momtaz, they found that the merged entity would remain a marginal player in relevant markets and, the proposed transaction would not meaningfully alter existing market dynamics.

 “Given the existing control held by SALIC in Olam Agri, the CID concluded that this proposed transaction was not changing the market structure of the relevant markets and was therefore unlikely to raise competition concerns,” read the approval notice signed by Momtaz and others.

Countries where Olam Agric has been operating in the Common Market are Djibouti, where they owned less than 5% wholesale trading of rice, Egypt, where they had less than 5%wholesale trading of Wheat and Kenya with less than 5% wholesale trading in rice.

In Sudan and Tunisia, Olam Agric had less than 5% wholesale trading of rice as well.

However, with in the Common Market, Olam Agric operated in Eswatini, Ethiopia, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Uganda, Zambia and Zimbabwe.

The proposed transaction concerns the indirect acquisition by SALIC of 44.58% and up to 64.57% of the issued share capital of Olam Agri Pte Limited to acquire sole control over Olam Agri.

However, Ugandan farmers and agribusiness dealers should not be worried of the transaction with fears that it could create a monopolistic situation in the country.

The Committee Responsible for Initial Determinations observed that despite the absence of the exact respective market shares of SALIC and Olam Agri in the relevant Common Markets, the origination of oil seeds in the Common Market, the marketing of grains in the Common Market and the marketing of oil seeds are characterized by the presence of strong players such as Agricor, Bunge, Cargill and ADM Germany.