Opinion: SABC-Guinness Cameroon takeover bid, impunity and still-birth

*By Roland Abeng*

No better word than “IMPUNITY” comes to my mind at this moment as I try to reflect on the news that broke at the end of last week related to the bid whereby the biggest Cameroonian Brewery, Société Anonyme les Brasseries du Cameroun (SABC), owned by the French Group CASTEL, has agreed with Guinness Cameroon
SA (owned by the British DIAGEO Group), for a complete take over of 100% shares of the latter in a transaction where the outcome will see SABC control about 90% stake in the brewery business in Cameroon, if we go by the current data indicating that SABC presently controls 75% and Guinness Cameroon controls 15%.

The fact that these two entities in total cognizance of the Cameroonian and CEMAC antitrust legislation, which legislation geared towards encouraging competition by limiting the market power of any firm, could dare such a project tells millions on their perception of the jurisdictions in which they operate.

PROBABLY THAT CAMEROON IS A BANANA REPUBLIC OR JUSRISDICTION?
Probably not. The applicable texts were crafted to ensure that mergers and acquisitions don’t overly concentrate market power or form monopolies, as well as breaking up firms that have become monopolies. If SABC is not a quasi-monopoly at this stage with a 75% market share, the take-over of Guinness Cameroon evidently makes it one.
What does the applicable law say by the way? Simple. It is forbidden (globally speaking), to engage in a merger or take-over bid which transaction would negatively impact on the choice of suppliers/clients and consumers and also limit access to sources of supply or market outlets. The law fixes the threshold for the
competence of the CEMAC antitrust watchdog at a 30% market control or at an annual revenue of 10 billion CFA francs.

This watchdog would have to decide on whether or not to approve the transaction within a period of 6 months and the parties to this transaction are certainly confident that the CEMAC watchdog will approve the transaction in spite of the blatant legal, ethical and factual circumstances that all point to the fact that this is simply wrong.

The reason for this transaction as mentioned in the joint DIAGEO-CASTEL communique has nothing to do with economic or financial difficulties of the target Company Guinness Cameroon. Au Contraire Guinness Cameroon is thriving in a buoyant Cameroonian Brewery industry with bumper profits and an ever-
increasing demand for their products. The amount of the transaction speaks for
itself.
Amongst all the breweries in Cameroon and even in CEMAC, Guinness Cameroon (despite its limited number of brands) has been a veritable competitor to SABC, all to the advantage to the Cameroonian consumer. We are all aware of the failures of SABC over the years in replicating or producing products similar to Guinness or Malta. “Castel Milk Stout” and “Malt-up” are some of the products which SABC probably regrets venturing into as these SABC products never prospered in the Cameroonian market.

This envisaged takeover bid would certainly put an end to this competition that could only have benefited the Cameroonian consumer, government and the Cameroonian worker. With Guinness now in SABC’s portfolio/pocket, we should not even expect much more creativity and innovation from SABC.

A consumer talked of “betrayal” on the part of Guinness and the consumer might not be totally wrong. So, give me a better word than “impunity” in the circumstances the two entities decide to proceed with such a transaction which is wrong on almost all fronts including the negative effects on;
 The Work Force (SABC will take over 100% of Guinness Cameroon but will never take over 100% of its employees and suppliers). At a time when we should be encouraging as many new investors as possible into the sector, we are rather witnessing collusion to prevent the entry of such investors.
 Competition (SABC shall own about 90% of the market and shall dictate what happens therein). Competition becomes stifled. This would have the effect of foreclosing competitors, thereby eliminating competition in this market, ultimately affecting adversely product quality, service and
consumers’ prices.
 Consumers shall see their marker power completely reduced.

Product Quality will be at the mercy of one producer.
 Politically wrong and neither fosters the economic ambitions of Cameroon nor CEMAC. Cameroon’s brewery market is very buoyant and has quite interesting local and other foreign stakeholders who could take the business to another level.

We are informed in the famous joint communique that the transaction has been submitted for regulatory clearance to the CEMAC authorities. I personally do not doubt the negative outcome of this clearance control for the two entities, but I
still ask the question why DIAGEO (which is reputed for its fair business practices worldwide), would choose the route of selling its Cameroonian affiliate to an entity with such a dominant position in this market and which entity even lacks the same business scruples as DIAGEO? I also ask myself what arguments the
entities would take to convince the CEMAC antitrust commission.

My opinion remains just my opinion, but who knows? Who knows if those in-charge of regulatory clearance of the transaction see things within the same prism? I might be predicting a still-birth for the “baby” in gestation but who
knows if a “bouncing baby” shall be born within the next six months? Who knows if those advising the parties to the transaction have not opined that thing shall go hitch-free? It is often said that “if you make yourself a banana, monkeys will eat you”. Someone should tell the announced visit of the French President to
Cameroon completely unrelated to this!

■ *Barrister Roland Abeng* is a member of the American and Cameroon Bar Associations. With headoffice in Douala, Cameroon, Barrister Roland Abeng recently joined the Commonwealth Lawyers Association Council, as a new co-opted Council member for Cameroon.