Government interference in Burger King transaction poses a threat to free market system
22 October 2021
The terms and conditions for the Competition Tribunal's approval of the acquisition of Burger King South Africa by the private equity fund ECP Africa Fund, pose a serious threat to free market principles and economic progress in the country.
This acquisition is, thus far, the first that the Competition Commission wanted to deny based on the fact that it would have a negative impact on Black Economic Empowerment (BEE).
The initial offer for the acquisition of the Burger King restaurant franchise by ECP Africa Fund from Grand Parade investments (GPI), a Cape-based empowerment firm, would in the Competition Tribunal's view have reduced BEE and according to the Tribunal, that would not have been in the "public interest".
The transaction was eventually approved by the Tribunal, but it is subject to a number of Black Economic Empowerment requirements that Burger King will have to meet within the next five years. These include drastically increasing its number of outlets in the country; permanently employing at least 1250 new employees from historically disadvantaged groups; increasing payroll and employee benefits; improving the rating on its B-BBEE scorecard; and establishing an employee share ownership program for an effective 5% interest in Burger King SA.