mbulelo smpofu
Sikhulekelani Moyo, mskhulekelani16@gmail.com
THE Competition and Tariffs Commission (CTC) has approved 12 mergers from different sectors of the country’s economy so far this year as businesses seek to expand operations and consolidate market growth opportunities.
A merger is an agreement that unites two existing companies into one new company.
There are several types of mergers and companies complete mergers for different objectives.
Mergers and acquisitions are commonly done to expand a company’s reach, expand into new segments, or gain market share.
All of these are done to increase shareholder value. Often, during a merger, companies have a no-shop clause to prevent purchases or mergers by additional companies.
In an interview on the sidelines of the World Competition Day commemorations held in Bulawayo yesterday, CTC mergers and acquisitions assistant director, Mr Tatenda Zengeni, said mergers prove that the economy is growing, with businesses seeing opportunities to invest in some of the businesses in the country.
“The commission has assessed a total of 12 mergers to date and there are still more, which are coming,” said Mr Zengeni.
“Of the 12 we have accessed, they are in various sectors, including finance, manufacturing, mining, and insurance.
“We also have some of them being in agriculture. So, we have assessed 12 transactions and we believe by the end of the year that number will increase because we have more transactions that we are assessing.”
Mr Zengeni said out of the 12 mergers assessed this year, around 61 percent were local mergers, and the remaining were done by regional and international companies.
He said some of the mergers are done because a local company sees an opportunity in another company or companies that are seeking working capital from companies that are performing well.
“When companies are merging, it’s something that can be attributed to economic growth as businesses see an opportunity and they decide to buy another company to grow,” said Mr Zengeni.
“It can be also in the sense that a company might be struggling so it seeks investors that are going to inject more capital into that business. That means the workers that were employed in that company that was going to collapse are going to be saved.
“There are various ways to explain the impact of mergers and acquisitions, but from the perspective of the commission, we are seeing it as a sign that we have a lot of local companies that are now believing in investing in local companies,” he added.
“One would say with the number of international and regional investors that are merging with local companies, they are seeing potential in the foreign direct investment we continue talking about.”
In her remarks during the World Competition Day commemorations, CTC director Ms Ellen Ruparanganda said CTC tackles inequality through merger regulation.
She said when firms merge to create or strengthen market dominance, they may raise barriers for smaller competitors, limit employment opportunities, and inflate prices for consumers.
“By assessing mergers, the commission ensures that markets remain contestable and that the benefits of competition are not concentrated in the hands of a few,” said Ms Ruparanganda.
“Unregulated mergers can also exacerbate inequality by consolidating market power among a small elite.
“The profits and benefits from such concentration are often enjoyed by a limited group, while consumers face higher prices and fewer choices.”
She said this dynamic widens the gap between the rich and the poor.
This year’s commemorations were running under the theme: “Competition Policy and Inequality” and spoke to one of the most pressing issues, which is economic inequalities.
This refers to the uneven distribution of income, wealth, consumption, and opportunities among different groups of people, which continues to hinder the growth of communities and nations. -@SikhulekelaniM1
