Latest decisions by the Competition Commission

Latest decisions by the Competition Commission
15 Dec 2017

1. Key decisions on mergers and acquisitions

1.1 CTP Ltd v Private Property SA (Pty) Ltd
The Commission has approved the proposed transaction, with conditions, whereby CTP Limited (CTP) intends to acquire Private Property South Africa (Pty) Ltd (Private Property).

CTP is a wholly owned subsidiary of Caxton Publishers and Printers Limited and operates printing press facilities throughout South Africa. It prints products (including, magazines, daily newspapers, community newspapers, books and retail advertising catalogues) for entities within the Caxton Group, as well as for third parties CTP and its wholly-owned subsidiary, Ramsay Media (Pty) Ltd, publishes monthly and weekly magazines. Of relevance to the proposed transaction, are CTP’s activities in relation to the operation of a general aggregated services website, called Hozi which includes a property portal called Hozi Homes.

Private Property sells property related digital advertising services on an online platform which enables property shoppers to search and find property listings (both sales and rentals) as well as property related services such as bond origination services, finance services, insurance services, legal services, estate agency services, electrical services, entomological services and any other property related services.

The Commission however finds that the proposed transaction may create a platform that might facilitate information sharing in the bond origination and short-term insurance markets because two of the new shareholders in Private Property are also direct competitors in bond origination and insurance markets. The Commission therefore imposes conditions seeking to address the potential sharing of confidential information that may arise from cross directorships.

1.2 Strategic Partners Group Concessions (Pty) Ltd v Bombela Concessions Company (RF) (Pty) Ltd
The Commission has approved, without conditions, the proposed transaction whereby Strategic Partners Group Concessions Proprietary Limited (SPGC) intends to acquire Bombela Concessions Company (RF) Proprietary Limited (BCC).

SPGC is controlled by Strategic Partners Group Proprietary Limited (SPG), a private company. SPG is a black economic empowerment company, which was formed primarily to participate in the Gautrain Rapid Rail Link (Gautrain) project however SPG has the intention to become an integrated infrastructure investment company. SPG represents the interests of a wide range of previously disadvantaged groups and is not controlled by any single shareholder.

BCC was formed by a consortium of companies selected by the Gauteng Provincial Government (GPG) to undertake the Gautrain project and consists of: Murray and Roberts Limited, Bombardier Transportation UK Limited, Bouygues Travaux Public SAS, Calfshelf Investments Proprietary Limited and SPGC (collectively referred to as the Bombela Consortium).

BCC was selected as the preferred bidder to design, build, partly finance, operate and maintain the Gautrain. BCC was established solely for the purpose of the Gautrain project and as such does not compete with any other firms in respect of similar projects. The concession awarded to BCC in terms of the Gautrain project endures for a period of 20 years and will expire in 2026. The Gautrain was a once off project and it was never intended that BCC would engage in any other projects or activities beyond what was required for the Gautrain project. BCC is currently controlled by M&R.

The Commission is of the view that the proposed transaction is unlikely to substantially prevent or lessen competition in the affected markets. In addition, the proposed transaction does not raise any public interest concerns.

1.3 3 Health Holdco Mauritius Ltd v Newshelf 1273 (Pty) Ltd
The Commission has recommended to the Tribunal that the proposed transaction be approved, without conditions, whereby Health Holdco Mauritius Limited (3 Health Holdco) intends to acquire Newshelf 1273 Proprietary Limited (Newshelf).

3 Health Holdco is a special purpose vehicle company established specifically for the purposes of the proposed transaction and does not have any operations in South Africa. It is controlled, through various offshore holdings companies, by private equity investment funds established and managed by Abraaj Holdings Limited (Abraaj), a company established in the Cayman Islands. Abraaj is a private equity investing firm focusing on investments in growth markets throughout Asia, Africa, Latin America and the Middle East. Abraaj manages private equity funds directly and indirectly which control a company operating in South Africa, namely Libstar Holdings Proprietary Limited (Libstar). Libstar is a holding company and controls a number of companies active in the food sector, particularly the manufacture and distributions of food, beverage and other consumer products. 3 Health Holdco does not control any other firms and Abraaj does not control any other firms with operations in South Africa other than Libstar.

Newshelf is a wholly-owned subsidiary of Joint Medical Holdings Proprietary Limited. The shares of JMH are held by approximately 487 doctor and non-doctor shareholders, the majority of which are historically disadvantaged persons as defined in section 2(1) of the Competition Act 89 of 1998, as amended. Newshelf, in turn, holds shares of all subsidiaries of JMH, which amongst other things own and operate five private hospitals in Durban and wider KwaZulu-Natal Province (JMH Group). The JMH Group is a predominately black-owned independent hospital group.

The Commission finds that the proposed transaction will not result in any competition concerns and that it will not result in a substantial lessening or prevention of competition in any affected markets. In addition, there are no public interest concerns.

1.4 KAP Bedding (Pty) Ltd v Support a Paedic CC and RME Components CC
The Commission has approved the proposed transaction, without conditions, whereby KAP Bedding (Pty) Ltd (KAP Bedding) intends to acquire RME Components (Pty) Ltd and Support a Paedic (Pty) Ltd (Support a Paedic).

KAP Bedding operates three divisions namely, Diversified Industrial Division (Integrated Timber, Automotive Components and Integrated Bedding), Diversified Chemical Division (Safripol, Hosaf and Wood Chemicals South Africa) as well as Diversified Logistics Division (Contractual Logistics and Passenger Transport). Of relevance to the proposed transaction is the Integrated Bedding division. Within this division, KAP Bedding operates three business units: DesleeMattex, Restonic and Vitafoam.

RME manufactures timber bed bases from its premises in Cape Town. Most of its products are sold to Support a Paedic. The rest of RME’s products are sold to a single customer. Support a Paedic manufactures and supplies inner spring mattresses, including the Platinum Pocket Duo, Designer Pocket Series, the Bamboo Collection, the Lifestyle Health Series, Green Coil’s Aspire, Cashmere and Organic Cotton ranges. Support a Paedic also manufactures and supplies premium and medium foam mattresses called the Vitus brand. The activities of RME and Support a Paedic are linked because RME manufacturers the bed bases that Support a Paedic uses to supply base sets to its customers. Collectively, these firms are the target firms.

The Commission is of the view that the proposed transaction is unlikely to result in unilateral effects given the market shares of the merging parties in inner springs and premium and medium foam mattresses. The proposed transaction is unlikely to result in any foreclosure concerns. Further, the customers of the merging parties have also not raised any concerns as there are sufficient alternatives in the market.

However, the Commission finds that the restraint of trade imposed on the sellers of the target firms is too long and unjustified. It is the Commission’s view that a restraint of such a long duration will likely raise barriers to entry and restrict competition for an unjustified period of time. The Commission imposed a condition effectively reducing the restraint period.

1.5 Safety SA Holdco (Pty) Ltd v NOSA Investment Holdings (Pty) Ltd
The Commission has approved the proposed transaction, without conditions, whereby whereby First Carlyle Growth V (Carlyle) through its subsidiary, Safety SA Holdco (Pty) Ltd (Safety SA) intends to acquire shares held by NOSA Investment Holdings (Pty) Ltd (NOSA) in firms such as NOSA Global Holdings Limited, Action Training Academy (Pty) Ltd, Empowerisk (Pty) Ltd, NOSA Auditing and Inspection Services (Pty) Ltd and National Quality Assurance (Pty) Ltd and others. Further, Carlyle intends to acquire certain intellectual property rights from MICROmega Holdings Limited (MICROmega).

The primary acquiring firm is Safety SA, controlled by Carlyle. Carlyle is owned by Carlyle Sub-Saharan Africa Fund Limited (CSSAF), a Mauritian company. CSSAF is managed by its member, CSSAF Managing Partnership, L.P., a Cayman Islands limited partnership. CSSAF Managing Partnership, L.P. is indirectly, wholly-controlled by the Carlyle Group L.P. (the Carlyle Group), a Delaware limited partnership that is publicly traded and listed on the NASDAQ Stock Exchange. The Carlyle Group is not controlled by any firm. Safety SA does not control any firms. Safety SA is a newly-incorporated acquisition vehicle and, as such, does not conduct any business activities. The Carlyle Group is a global alternative asset manager which manages funds that invest globally across four investment disciplines: Corporate Private Equity (buyout and growth capital), Real Assets, Global Market Strategies and Fund of Funds Solutions. The primary target firm is NOSA, a private company incorporated in accordance with the company laws of South Africa. NOSA is directly owned by MICROmega. NOSA controls a number of firms. NOSA is an investment company and has interests in the companies which provide occupational health, safety and environmental risk management services and solutions. MICROmega publishes the monthly health and safety newspapers, and markets books, posters and booklets for the health and safety industry. In addition, MICROmega supplies branded educational and awareness items and also supplies, calibrates and repairs breathalyser machines.

The Commission is of the view that the proposed transaction is unlikely to substantially lessen or prevent competition in any market in South Africa. In addition, the proposed transaction does not raise any public interest concerns.

1.6 Trans Hex Ltd v West Coast Resources (Pty) Ltd
The Commission has recommended to the Tribunal that the proposed merger be approved, without conditions, whereby Trans Hex Group Limited (Trans Hex) intends to acquire West Cost Resources (Pty) Ltd (WCR) from RAC Investments Holdings (Pty) Ltd (RAC).

Trans Hex is engaged in diamond exploration and mining in the upstream market and has operations in South Africa and Angola. Trans Hex is also involved in cutting and polishing diamonds in the downstream market in South Africa and the marketing of diamonds worldwide.

WCR is engaged in the exploration and mining of rough diamonds and supplies rough diamonds from the Namaqualand Region to the international market. WCR is not active in the supply and marketing of its diamonds to the end customer. In this regard, Trans Hex contract manages WCR’s operations in Namaqualand. The Namaqualand Mine is located approximately 60 kilometres south of Port Nolloth, on the West Coast of the Northern Cape.

The Commission found that the proposed transaction is unlikely to substantially prevent or lessen competition in the market for the production of rough diamonds. In addition, the proposed transaction does not give rise to any public interest concerns.

1.7 The Prepaid Company (Pty) Ltd vs. 3G Mobile (Pty) Ltd
The Commission has recommended to the Tribunal that the proposed transaction be approved, without conditions, whereby The Prepaid Company (Pty) Ltd (TPC) intends to acquire 3G Mobile (Pty) Ltd (3G Mobile).

TPC is a distribution and trading business which focuses on the supply of prepaid secure electronic tokens of value to wholesalers, financial services providers, corporate and independent retail and petroleum outlets. TPC uses the technology it has acquired to service its distribution and add value to its channels through the provision of a rich bouquet of electronic token and associated services.

3G Mobile is involved in the sale, distribution and financing of new mobile handsets, electronic tablets and accessories related to mobile handsets and tablets. 3G Mobile supplies mobile handsets together with either another mobile handset, with a tablet and/or with an accessory. 3G Mobile supplies certain mobile network operators in the jurisdiction outside of South Africa with mobile handset, electronic tablets and mobile accessories.

The Commission found that the proposed transaction is unlikely to substantially prevent or lessen competition in the market for the sale and supply of mobile handsets and tablets. Further, the Commission is of the view that the proposed transaction is unlikely to raise any public interest concerns.

1.8 Sasol Mining (Pty) Limited vs. Anglo American Inyosi Coal (Pty) Ltd in respect of the mining right over certain immovable properties and geological data related thereto
The Commission has recommended to the Tribunal that the proposed transaction be approved, without conditions, whereby whereby Sasol Mining (Pty) Ltd (Sasol Mining) intends to acquire the mining rights over certain immovable properties and Geological Data related thereto (referred to as the target assets) which are currently held and in the name of Anglo American Inyosi Coal (Pty) Ltd (AAIC).

Sasol is a vertically integrated multinational manufacturer and supplier of chemicals and fuels. Core activities are complemented by coal-mining operations and oil and gas exploration and production. Through Sasol Proprietary Technologies and Processes the main products that Sasol produces are fuel, components, chemical components and co-products. From these main products and further value-adding processes Sasol deliver diesel, petrol (gasoline), naphtha, kerosene (jet fuel), liquid petroleum gas (LPG), olefins, alcohols, polymers, wax, solvents, surfactants, comonomers, ammonia, methanol, crude tar acids, sulphur, illuminating paraffin, bitumen and fuel oil. Sasol Mining forms a part of the Sasol Group. Sasol Mining is involved in coal mining activities. Sasol Mining produces coal, mostly for gasification feedstock and utilities coal for the Sasol Group’s complexes at Secunda and Sasolburg. Sasol Mining also supplies coal into the global export market from its Twistdraai Export Plant in Mpumalanga.

The primary target assets are the mining rights over the immovable properties and the Geological Data (comprising geological information, geological modelling, reports and information to the prospecting rights and mining rights) related thereto. The target assets have been identified as containing low grade bituminous coal and are situated at the Alexander Block.

The Commission is of the view that the proposed transaction is unlikely to substantially prevent or lessen competition in the tied domestic market for coal. In addition, the Commission found that the proposed transaction does not raise any public interest concerns.

1.9 Allmuss Properties (Pty) Ltd v The Immovable property and rental enterprise known as 45 Richard Carte Road, Mobeni
The Commission has approved the proposed transaction, without conditions, whereby Allumss Properties (Pty) Ltd (Allumss) intends to acquire the immovable property and rental enterprise known as: 45 Richard Carte Road, situated at 45 Richard Carte Road, Mobeni East, Durban South, 4060.

Allumss is a wholly-owned subsidiary of FB Ashman Investments (Pty) Ltd (Ashman). Ashman is a whollyowned subsidiary of ltaltile Ceramics (Pty) Ltd (ltaltile Ceramics). Italtile Ceramics is a wholly-owned subsidiary of ltaltile Limited (ltaltile), a public company controlled Rallen (Pty) Ltd. The acquiring group is primarily engaged in the retail of tiles, bathroom ware and related products in South Africa and also owns a portfolio of 103 immovable properties in South Africa, primarily intended to be utilised for group purposes.

The primary target firm is the immovable property and rental enterprise known as: 45 Richard Carte Road, situated at 45 Richard Carte Road, Mobeni East, Durban South, 4060. The target property is wholly owned by Capital Propfund (Pty) Ltd, a wholly-owned subsidiary of Capital Property Fund Limited, which is in turn wholly owned by Fortress Income Fund Limited. Fortress is a public company listed as a Real Estate Investment Trust on the JSE.

The Commission is of the view that the proposed transaction is unlikely to substantially prevent or lessen competition in any market in South Africa. In addition, the proposed transaction does not raise any public interest concerns.

1.10 DCT Holdings (Pty) Ltd v VH Fibre Optics (Pty) Ltd
The Commission has approved the proposed transaction, without conditions, whereby DCT Holdings (Pty) Ltd (DCT) intends to acquire VH Fibre Optics (Pty) Ltd (VHF).

DCT’s principal activity is that of an ICT investment holding company, which conducts business in two clusters: an ICT Distribution Cluster (offering hardware and software products) and an ICT Services and Solutions Cluster (offering ICT implementation solutions, IT consulting, project management, system integration, IT security, internet, data and voice services, outsourcing as well as complimentary products and services categories such as fire detention and prevention, audio visual technology, building management and access control as well as solar solutions).

VHF specialises in supplying Fibre-to-the-home (FTTH) and Fibre-to-the-Building (FTTB) passive network solutions to its customers with the ultimate aim of enabling the end-user to access the internet via a network. VHF also distributes fibre optic cables and systems.

The Commission is of the view that the proposed transaction is unlikely to substantially prevent or lessen completion in the FTTX market as there are viable alternatives. In addition, the proposed transaction does not raise any public interest concerns.

1.11 Riskowitz Value Fund LP v Taste Holdings Ltd
The Commission has approved, without conditions, the proposed transaction whereby Riskowitz Value Fund LP (RVF) intends to acquire Taste Holdings Ltd (Taste).

RVF is an American company controlled by Riskowitz Capital Management LLC (RCM) which is, in turn, controlled by Sean Riskowitz, a US citizen. He ultimately controls Protea Asset Management LLC (Protea) and Ithuba Investments LP (Ithuba) which are both situated in America. RVF, RCM and Sean Riskowitz do not control any firms in South Africa. They are collectively referred to as the RVF Group. The RVF Group is currently the largest shareholder in Taste.

Taste controls a number of entities active in the luxurious jewellery goods industry and food industry. In the food industry, Taste controls Buon Gusto Cuisine (Pty) Ltd, Taste Food Franchising (Pty) Ltd, five Domino’s Pizza, the then Scooters Pizza and Maxi’s Grill Marketing (Pty) Ltd. In the luxurious jewellery goods industry, Taste controls NWJ Holdings (Pty) Ltd, Taste Holdings Luxury Goods Division (Pty) Ltd and AKJ Holdings (Pty) Ltd. Taste owns and licenses (through its various subsidiaries) a portfolio of owned and franchised quick service restaurants and luxury retail brands.

The Commission is of the view that the proposed transaction is unlikely to substantially prevent or lessen competition in any market. In addition, there are no public interest concerns.

1.12 Fairvest Property Holdings Ltd v Barca Precinct (Pty) Ltd
The Commission has approved the proposed transaction, without conditions, whereby Fairvest Property Holdings Ltd (Fairvest) intends to acquire Barca Precinct (Pty) Ltd (BMP).

Fairvest is a JSE listed Real Estate Investment Trust with a unique focus on retail assets weighted toward non-metropolitan and rural shopping centres, as well as convenience and community shopping centres servicing the lower LSM market, in high growth nodes, close to commuter networks.

BMP is a private property holding company which holds certain rental property enterprises in the Bara Precinct which comprises rentable retail, residential and office space located in Diepkloof, Soweto.

The Commission is of the view that the proposed transaction is unlikely to substantially lessen or prevent competition in the market for the provision of rentable space in retail property. In addition, the proposed transaction does not raise any public interest concerns.

1.13 PSG Wealth Financial Planning (Pty) Ltd v The Short-term commercial and ancillary personal lines business of ABSA and involving Insurance and Financial Advisers (Pty) Ltd
The Commission has approved the proposed transaction, without conditions, whereby PSG Wealth Financial Planning (Pty) Ltd (PSG Fin Plan) intends to acquire the short-term commercial and ancillary personal lines business of ABSA and involving Insurance and Financial Advisers (Pty) Ltd (AIFA).

PSG Fin Plan is a financial services provider who provides a range of financial services that includes financial and investment planning and advice, stockbroking, and it conducts short term (personal and commercial lines) insurance financial advisory and administration and related services.

AIFA is a financial services provider in the Barclays Africa group of companies that distributes long term, short term insurance products and non-banking investment products to retail, commercial and corporate clients. The C&I Business comprising the short-term advisory/broker services of AIFA in the commercial and industrial short-term insurance sector.

The Commission is of the view that the proposed merger is unlikely to substantially prevent or lessen competition in the market. In addition, the proposed transaction is unlikely to raise any public interest concerns.

1.14 Advantage Solutions Inc. v Daymon Worldwide Inc.
The Commission has approved the proposed transaction, without conditions, whereby Advantage Solutions Inc. (Advantage) intends to acquire Daymon Worldwide Inc. (Daymon)

Advantage is an American company. It is a sales and marketing business solutions provider to consumer goods manufacturers and retailers. Through its sales segment it serves as a strategic intermediary between consumer goods manufacturers and their retailer partners. Services include headquarter relationship management, analytics, insights and intelligence, administration and retail services. Through its marketing segment, Advantage develops marketing programs for manufacturers and retailers that are designed to influence shoppers. Advantage’s services include experiential marketing, shopping and consumer marketing, digital marketing and media solutions. Advantage has no presence in South Africa. Daymon is also an American company. In South Africa, the company’s activities consist primarily of consumer experience marketing services and private brands development services. These are provided through Daymon’s South African subsidiary, Daymon Worldwide South Africa Inc. Daymon is a USA-based company that provides services to retailers, primarily in North America.

The Commission is of the view that the proposed merger is unlikely to substantially prevent or lessen competition in the market. In addition, there are no public interest concerns.

1.15 BBF Safety Group (Pty) Ltd v Quality Safety (Pty) Ltd
The Commission has approved the proposed transaction, without conditions, whereby BBF Safety Group (Pty) Ltd (BBF) intends to acquire Quality Safety (Pty) Ltd (Quality Safety).

BBF is jointly controlled by Bolton Footwear (Pty) Ltd and Beier Safety Footwear (Pty) Ltd. BBF controls Pinnacle Osh Holdings (Pty) Ltd and BBF Property Holdings (Pty) Ltd. BBF manufactures and supplies safety footwear in South Africa. Safety footwear generally includes all footwear which is used for the purposes of foot protection. BBF manufactures the following brands: Bova, Bronx, Frams. Fuel, Inyati, Lemaitre, Sisi and Wayne footwear.

Quality Safety manufactures and supplies protective gear and accessories such as gloves, overalls, hoods, boots, head protection hats and welding helmets, amongst others.

The Commission is of the view that the proposed merger is unlikely to substantially prevent or lessen competition in the market. In addition, there are no public interest concerns.

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
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