Friends on a coffee break at a cafe in the Cape Town CBD create a cloud of water vapour from their e-cigarettes. File photo THE TIMES/RUVAN BOSHOFF
Friends on a coffee break at a cafe in the Cape Town CBD create a cloud of water vapour from their e-cigarettes. File photo THE TIMES/RUVAN BOSHOFF

The Competition Tribunal has set several conditions barring British American Tobacco SA’s (BATSA) recently acquired Twisp from squeezing out competitors. 

BATSA, the second-largest company listed on the JSE by market capitalisation, has acquired SA’s largest e-cigarette retailer, but the tribunal’s approval of the transaction came with a number of competition and employment conditions.

The deal will see BATSA increase Twisp’s product offering in the so-called reduced-risk product category, according to BATSA CEO Soraya Benchikh.

Reduced-risk products present less risk of harm to smokers than traditional cigarettes and include vaping products (such as e-cigarettes) and heat-not-burn tobacco products.

The Competition Commission, which makes recommendations to the tribunal on large mergers, had initially proposed that the tribunal prohibit the merger but it later changed its recommendation to a conditional approval after “further economic input”. The commission was initially concerned that the transaction would lead to higher vaping prices in SA.

In its decision, the tribunal said BATSA and Twisp should not enter into agreements or arrangements with landlords preventing the owners of retail space from renting space to competitors. It said the two companies were also barred from entering into similar agreements with retailers such as grocery and liquor chains, pharmacies, convenient stores and service station forecourts.

Twisp’s products are distributed through its branded kiosks, retail outlets and online channels. Twisp’s vaping products include various bespoke e-cigarette devices, flavours and accessories.

The tribunal said BATSA and Twisp could not incentivise or force retailers to prohibit competitors from promoting their reduced-risk products.

In another move to prevent exclusionary conduct, the tribunal said the two companies were not allowed to retrench any employees as a result of the merger for two years. This included employees on fixed-term contracts.

“BATSA has been impressed by Twisp’s unique product offering and plans to expand this for customers while growing Twisp’s leadership position in the potentially reduced-risk product category. Our acquisition will strengthen this category in Southern Africa and offer our consumers potentially reduced-risk alternatives to traditional combustible cigarettes,” said Benchikh.

Benchikh said the company had worked with the Competition Commission for months to address competition concerns.

BAT shares were down 2.49% to R554.23 on Tuesday. 

njobenis@businesslive.co.za