Merger nearing completion for second quarter of 2023

Durrant Pate/ Contributor

Jamaica’s competition regulator, the Fair Trading Commission (FTC) has cleared the planned merger of Jamaica Producers (JP) Group and PanJam Investment to form what would be the island’s largest conglomerate, Pan Jamaica Group.

The transaction is expected to be completed at the beginning of the second quarter of 2023, which starts next month. The FTC decided to review the merger, which was announced on November 18 last year, pursuant to section 17 of the Fair Competition Act (FCA), which prohibits an agreement containing provisions that have the effect of substantially lessening of competition in a market.

In its assessment, the FTC concludes, “the amalgamation agreement does not have as its purpose, the substantial lessening of competition in any market. Neither does it have, nor is likely to have, the effect of substantially lessening competition in any market.” The FTC also concludes, “the amalgamation agreement does not contain provisions that are likely to breach the FCA.

Non-objection to be issued

Based on the information available, the FTC staff in its 12-page report recommends that its Commissioners issue a Statement of Non-Objection regarding the consummation of the agreement. This is based on the fact that the amalgamation agreement does not contain any provision, which has as its purpose, the substantial lessening of competition in any market.

In addition, the agreement does not contain any provision, which has the effect of substantially lessening competition in any market nor does it contain any provision, which is likely to have the effect of substantially lessening competition in any market.

“As such, the Amalgamation Agreement does not breach section 17 of the FCA,” the report declared.

In Section V of the report, it was determined that the agreement does not involve overlapping products and therefore the parties do not compete against each other in any market. This means that without more, there is no concern that the merger would remove competitive constraints in any market.

In furthering the analysis, the FTC staff “assessed the extent to which the parties offered goods and services, which were strong compliments in demand. Mergers involving complementary goods and services could raise concerns for competition if one of the parties to the agreement held significant market power for one of the complementary goods.”

An examination of the goods and services offered by the parties to the agreement, it was determined that the products involved in the agreement are not strong complements in demand.

Combined strength of the two

Both JP and PanJam are convinced that their combined strength operating as one will enhance shareholder returns through further diversification and a stronger platform for organic and acquisition-led growth. JP and PanJam both operate as holding companies with PanJam having diverse holdings operated by several subsidiaries, associated companies and business interests.

Its subsidiaries span one investment company, nine property development, management, and rental companies, two hotel management companies and one food manufacture and distribution company. PanJam also have shares in two financial service providers and a hotel management company.

For JP, it too has diverse holdings operated by seventeen subsidiaries and associated companies. Its subsidiaries operate in shipping and logistics; food manufacture and distribution and infrastructure financing.