Metropolitan and Momentum plans to merge soon
The Competition Tribunal has said that merger may not cause worker retrenchment.
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When Metropolitan and Momentum, two of South Africa's biggest insurance groups, announced plans to merge, they knew that their last hurdle would be obtaining permission from the country's Competition Tribunal.
While there was no doubt that the tribunal would give them the green light to merge, the groups were not sure what conditions would be placed.
As such, the insurance groups admitted that the Competition Tribunal's condition that no retrenchments may take place as a result of the merger for a period of two years was "more rigid" than anticipated.
The group Chief Executive designate of the new MMI Holdings, which is what the new merger will be known as, Nicolaas Kruger said: "While we wait for the Competition Tribunal to give the reasons for their decision, which will provide us with a clearer indication of the way forward, we are considering the alternatives open to us, among which are accepting the decision or lodging an appeal."
However, analysts believe that an appeal may be pointless, given the fact that the entire process could take up to two years to resolve.
Should an appeal process get underway, the merger will still be allowed to go ahead, however the conditions need to be adhered to until a final decision is made.
Part of the condition is that MMI Holdings inform all of its employees of the decision that no retrenchments are allowed to take place.
Last week, both insurance groups told the tribunal at a hearing that they would limit the number of retrenchments to 1,000 in the first three years following the merger.
They promised to offer skills training to those retrenched so that they could find other jobs.
While MMI Holdings argued that they did not need to justify how many retrenchments will take place after the merger, South African law actually makes provision for this factor when the tribunal makes a decision about mergers.
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