SA Regulator Urges ARC to Sell Fresh Produce Unit Over Market Control

AFRICAN BUSINESS AND ECONOMYJanuary 13, 2025 at 11:24 PM UTC

TLDR

South Africa’s Competition Commission has recommended that African Rainbow Capital (ARC) divest from one of the country’s leading fresh produce agencies
ARC holds significant stakes in the RSA Group and Subtropico, which together control between 50% and 90% of South Africa’s fresh produce markets
The commission found that ARC’s cross-shareholding in these entities distorts competition in an industry dominated by four key agents

South Africa’s Competition Commission has recommended that African Rainbow Capital (ARC), backed by billionaire Patrice Motsepe, divest from one of the country’s leading fresh produce agencies, citing anti-competitive practices.

ARC holds significant stakes in the RSA Group and Subtropico, which together control between 50% and 90% of South Africa’s fresh produce markets, including staples such as potatoes, apples, and tomatoes. The commission found that ARC’s cross-shareholding in these entities distorts competition in an industry dominated by four key agents.

The commission advised the Competition Tribunal to require ARC to divest from either RSA Group or Subtropico if it does not voluntarily do so within six months. This follows a two-year inquiry into the fresh produce sector aimed at addressing concerns over market concentration, fairness, and inclusivity.

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Key Takeaways

The Competition Commission’s findings shed light on the oligopolistic nature of South Africa’s fresh produce industry, where a few agents dominate markets critical to food security. Despite a large number of agents, the concentration of control among four entities limits competition, raising concerns about fairness and inclusivity. The report’s 31 recommendations aim to promote market reform, support emerging and historically disadvantaged farmers, and address systemic inequities. For ARC, the divestment requirement poses a strategic decision that could reshape its agricultural investments. The outcome of this regulatory intervention may have broader implications for South Africa’s efforts to enhance competition and equity in key industries, especially amid concerns over food inflation.

Business

South Africa

Finance

African Rainbow Capital

Patrice Motsepe