Insurer withdraws retrenchments appeal

Johannesburg - The board of directors of MMI Holdings [JSE:MMI] has decided to withdraw the appeal lodged with the Competition Appeals Court regarding employment-related conditions imposed by the Competition Tribunal.

On 14 October 2010, the tribunal approved the merger of Metropolitan Holdings [JSE:MET] and Momentum on condition that the merged entity ensured that there be no retrenchments resulting from the merger in its South African operations for a period of two years starting on 1 December 2010.

This condition does not apply to senior management.

The merged parties approached the tribunal during November 2010 for clarity on the definition of "senior management", voluntary termination arrangements and an explanation of how the redeployment of staff (to positions elsewhere in MMI), are affected.

"In order to comply with the timeframe of the appeal process, we lodged a notice of appeal with the Competition Appeal Court on 11 November 2010 to prevent a situation where we could lose our right of appeal. The noting of this appeal was, however, intended purely to keep MMI's options open pending the outcome of the request for clarification," said MMI group CEO Nicolaas Kruger.

The tribunal issued a further order on 9 December 2010 in which it explained its original order and provided the merging parties with the reasons for the ruling.

In the new order, the tribunal clarified the definition of senior management and confirmed that voluntary termination of employment will not infringe on the condition.

"We are now also comfortable that staff members may be redeployed within the MMI group as long as such redeployments comply with the Labour Relations Act. Once clarifications were received, it allowed us to carefully evaluate the situation and decide whether to proceed with the appeal to the Competition Appeal Court,"' said Kruger.

This is not the first time that the tribunal has imposed a restrictive condition on retrenchments in a merger.

However, this is the first time that such a wide prohibition has been imposed, albeit for a limited term.

"The apparent merit in pursuing an appeal is not the only relevant consideration for us. A lengthy appeal to the Competition Appeal Court would be of doubtful benefit," said Kruger.