Pepkor has lashed out at Lewis’s attempt to block its bid to buy the furniture business of retail major Shoprite, warning the Constitutional Court that such a move would have a chilling effect on domestic and offshore investors in South Africa.
For its part, Lewis, which is seeking to set aside a Competition Appeal Court ruling that blocked its attempt to use competition law to stop the deal, argues that the transaction will harm consumers.
In April, the competition commission recommended the deal to the competition tribunal on condition that jobs would not be lost and the merged business would increase procurement from local furniture suppliers.
Pepkor aims to buy Shoprite’s furniture assets, including Bradlows, Russells, OK Furniture and House and Home, for R3.2bn. The brands have served lower- and middle-income consumers in South Africa for decades.
In its papers before the apex court, which Business Day has seen, Lewis says the proposed merger will create an “insurmountably dominant firm of a size and scale” that no other South African furniture retailer will be able to match.
“On Lewis’s assessment, the merged entity would have a 59% market share based on store count in the relevant market, with over 1,100 stores,” reads an affidavit by Lewis’s head of legal, Ryan Lepart.
“It will result in higher prices and worse credit terms for a section of the South African citizenry who are vulnerable to increases in price and decreases in quality and are unable to protect themselves against such developments.
“The impact will be particularly pronounced in poorer and outlying areas of South Africa (including places like Ramalema and Tibane in Limpopo, Umzimkhulu in KwaZulu-Natal and Flagstaff in the Eastern Cape) where, in certain instances, the merger parties are the only national furniture retailers in particular towns.”
The Constitutional Court is expected to adjudicate on the matter on an urgent basis. The competition tribunal, the final authority on merger & acquisition deals, granted Lewis’s application to intervene as a participant in the transaction, first announced in 2024.
The Competition Appeal Court set the tribunal’s decision aside after Shoprite and Pepkor challenged it. The court was scathing in its judgement, finding that a merger inquiry, due to the nature of a proposed merger transaction, should be conducted expeditiously and that absent such an approach, mergers are less likely to take place in South Africa.
Pepkor and Shoprite hope that the Constitutional Court, as the final arbiter of legal disputes in South Africa, will arrive at the same conclusion as the Competition Appeal Court.
Peter Mark Griffiths, CEO of Pepkor Lifestyle, in his affidavit on behalf of the group, says Lewis wants to intervene so that it can frustrate a transaction between two of its competitors.
“The notion that a major transaction—one capable of contributing meaningfully to South Africa’s economic growth—can be held hostage for months if not years by an intervenor’s litigation budget is untenable,” Griffiths says.
