Expert opinion on BATSA and Twisp merger

Genesis assisted Bowmans on behalf of Phillip Morris South Africa (PMSA) on whether an acquisition by British Tobacco South Africa (BATSA) of Twisp might lead to the foreclosure of PMSA and others in the market for similar products.

Tobacco regulations limit the sale and promotion of tobacco products to certain retail points of sale. These regulations do not apply to e-cigarettes, which enable the sale of e-cigarettes in pharmacies for example. As such, PMSA’s concern relates to the ability for the merger between BATSA and Twisp to limit PMSA’s ability to display, advertise or sell its range of e-cigarettes, through Trade Investment Agreements.

Drawing on its competition and economic expertise, Genesis undertook careful analysis of the potential conglomerate effects arising from the merger.

The analysis of the competitive effects was underpinned by the extent to which Twisp relies on specific retail channels where cigarettes and e-cigarettes are sold. This was taken into consideration and included providing guidance on the thresholds above which foreclosure might be considered by competition authorities to be problematic. It also involved assessing the extent to which BATSA’s bargaining power might alter as a result of the merger.

Genesis provided its expert opinion to the legal team. The merger has been approved subject to conditions.