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Coca-Cola Beverages Africa (CCBA), the eighth-largest Coca-Cola bottling partner in the world, has won an appeal in the Constitutional Court in a case involving the retrenchment of nearly 400 employees.
In 2016, the Competition Tribunal approved the merger of several authorised Coca-Cola bottlers, which resulted in the creation of CCBA. There were a number of conditions attached to the merger, including maintaining a certain number of employees from the pre-merger operations and prohibiting merger-related retrenchments. There was, however, an allowance for retrenchments required by the ordinary course of business.
A further merger at holding company level was approved in 2017.
"Following the second merger, according to Coca-Cola, things took a turn for the worse. During 2017, economic conditions deteriorated. With effect from 1 April 2018 the Health Promotion Levy on Sugary Beverages, colloquially known as the 'sugar tax', was imposed. Input prices, particularly of sugar, rose sharply. Economic conditions in the country continued to deteriorate. Sales volumes were affected and competitors continued to gain market share," the Constitutional Court ruling reads.
"The upshot was that Coca-Cola wrote to the [Competition] Commission on 19 January 2019, informing it of the challenges faced and warning that retrenchments for operational requirements may be required."
CCBA also told the Food and Allied Workers Union (FAWU), and the National Union of Food, Beverage, Wine, Spirits and Allied Workers (NUFBWSAW) that it may have to retrench workers. FAWU filed a complaint with the commission alleging a breach of merger conditions.
At the end of May 2019, 368 workers were involuntary retrenched, while a "considerable number" opted for voluntary retrenchment.
The matter was brought to the tribunal, which found that CCBA had complied with the conditions. The commission approached the Competition Appeal Court, which overturned the tribunal’s finding. CCBA then approached the Constitutional Court to appeal the ruling.
"The Competition Appeal Court mischaracterised the nature of the appeal and applied the wrong tests in respect of both review and causation," the Constitutional Court found.
"There was no basis in law or fact for overturning the judgment of the tribunal. The appeal therefore succeeds."
