COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM113Oct23
In the matter between:
Hatfield Holdings (Pty) Ltd and Hatfield Property
Holdings (Pty) Ltd
Acquiring Firms
and
The Business of the Hatfield Haval Dealership and
The Property on which the dealership operates
Target Firms
Approval
[1] On 21 December 2023, the Competition Tribunal (“Tribunal”) unconditionally approved the
large merger wherein Hatfield Holdings (Pty) Ltd (“Hatfield Holdings”) will acquire the
Hatfield Haval dealership business (“Target Dealership”). As part of the proposed
transaction, Hatfield Property Holdings (Pty) Ltd (“Hatfield Property”) will acquire the
property on which the Target Dealership operates (“Target Property”). Upon
implementation of the proposed transaction, Hatfield Holdings will own and control the
Target Dealership and Hatfield Property will own and control the Target Property.
Parties to the transaction and their activities
Primary acquiring firms
Panel: T Vilakazi (Presiding Member)
G Budlender (Tribunal Member)
A Ndoni (Tribunal Member)
Heard on: 21 December 2023
Order issued on: 21 December 2023
Reasons issued on: 22 January 2024
REASONS FOR DECISION
2
[2] The primary acquiring firms are Hatfield Holdings and Hatfield Property. Hatfield Holdings
and Hatfield Property are jointly controlled by The Brad Kaftel Family Trust (the "Trust") as
to % and Grapevine Property Investments 103 CC ("Grapevine") as to %. 1
[3] In addition to Hatfield Holdings and Hatfield Property, the Trust controls Hatven Properties
(Pty) Ltd and Tarmigan Investments (Pty) Ltd (which in turn wholly owns Hatfield VW (Pty)
Ltd).
[4] Hatfield Holdings controls Summit Auto Investments (Pty) Ltd ("SAI") as to % and
Triumph South Africa (Pty) Ltd (“Triumph”) as to %.
[5] Hatfield Holdings and Hatfield Property, the firms controlling them as well as the firms
controlled by them will collectively be referred to as “the Acquiring Group”.
[6] The Acquiring Group is the holding company of a car dealership group which owns 39
dealerships based in Gauteng and Kwa-Zulu Natal retailing various brands of vehicles,
including Audi, Volkswagen, Ford, Haval, and MAN Truck and Bus. 2
Relevant to the
proposed transaction is the Acquiring Group’s activities in the sale of passenger vehicles
(“PVs”), light and medium commercial vehicles ("LCV" and "MCV", respectively) as well
as heavy commercial vehicles ("HCV").
[7] In addition, the Acquiring Group sells used vehicles; after-sales services and after-sales
branded Original Equipment Manufacturer (“OEM”) parts and accessories; accessories
(such as tow bars, tracking devices, and safety film); and top up maintenance plans; and
finance and insurance support services.
Primary target firms
[8] The primary target firms are the Target Dealership which operates out of 1207 and 1209
Burnett Street, Hatfield, Pretoria as well as the Target Property (the premises that the
Target Dealership operates on).
1 The trustees of the Trust are and
the members of Grapevine are
2 We note that the recent approval by the Tribunal of the acquisition by Hatfield of the Audi Somerset West
Dealership, will provide Hatfield Holdings with a presence in the Cape. (See Case No.: LM092Sep23).
3
[9] The Target Dealership is owned by Peng Investments (Pty) Ltd (“Peng Investments”) and
the Target Property is owned by Belgraveprop (Pty) Ltd (“Belgraveprop”). Both Peng
Investments and Belgraveprop are wholly owned and controlled by the Leo Haese Family
Trust.
[10] The Target Dealership is a Haval motor vehicle dealership which sells new and used Haval
PVs and LCVs. There is also a service centre in place at the Target Dealership which is
split into a Bosch centre, which services all vehicle brands, and a Haval service centre
which services only Haval vehicles.
Proposed transaction and rationale
Transaction
[11] In terms of the Sale Agreement, the Acquiring Group will acquire the Target Dealership.
Simultaneously, in an interconnected transaction, the Acquiring Group will also acquire the
Target Property. Post-merger, the Acquiring Group will own and control the Target
Dealership and the Target Property.
Rationale
[12]
.
[13]
Indivisibility assessment
[14] The Competition Commission (the “Commission”) considered the indivisibility of the
transaction and found that the Target Dealership and the Target Property have a common
shareholder; are involved in an interrelated line of business (in that the Target Property is
the property on which the Target Dealership operates); and that the target firms are to be
disposed of as part of a composite transaction. Following Tribunal precedent 3
, the
Commission found that the proposed merger constitutes an indivisible transaction for the
purpose of assessment. We concur with this finding.
3 Premier Fishing SA (Pty) Ltd and Talhado Fishing Enterprises (Pty) Ltd (“Premier Fishing/Talhado
”) (Case No:
LM299Mar18).
4
Competition assessment
[15] The Commission considered the activities of the merging parties and found that the
proposed transaction gives rise to a horizontal overlap as both the Acquiring Group and
the Target Dealership are active in the sale of new PVs and LCVs.
Product market
[16] In its assessment of product overlap, the Commission had regard to previous motor
dealership mergers such as McCarthy/Vereeniging Motors4
and Kempster/NMG5
where it
was found that the sale of new PVs and LCVs each constitute separate product markets.
In the instant transaction, the Commission therefore assessed the market for the sale of
new PVs and the market for the sale of new LCVs (as separate markets).
[17] As mentioned above, the merging parties are active in the sale of used vehicles as well as
after-sales service and after-sales parts, however there was no record of assessment of
the used vehicle market in the Commission’s merger report.
[18] The merging parties were of the view that there is a higher degree of competition for used
vehicles (as compared to new vehicles) since any party can buy used vehicles and sell
them, without requiring an agreement with any manufacturer or local distributor.
Accordingly, the market shares held by the merging parties in the used market will be even
smaller than their shares in the market for new vehicles. Market shares are unavailable
for used vehicles.6
[19] As regards after-sales service and after-sales parts (which constitute products and
services ancillary to the sale of vehicles), the merging parties submitted that these markets
are unnecessary to analyse in the context of this merger. Using new vehicle sale market
shares as a proxy will overstate the shares in the wider after-sales servicing and parts
markets, as once a maintenance plan expires, customers are free to service their vehicles
at any independent service provider, while post-warranty or maintenance plan, a material
percentage of vehicles are serviced in non-branded workshops.7
percentage of vehicles are serviced in non-branded workshops.7
4 McCarthy (Pty) Ltd and Vereeniging Motors (Pty) Ltd (“McCarthy/Vereeniging
”) (Case No: LM250Feb19).
5 Kempster Sedgwick (Pty) Ltd and NMG Umhlanga Ridge (Pty) Ltd (“Kempster/NMG
”) (Case No: LM268Mar19).
6 See the merging parties’ Joint Competitiveness Report (Merger Record at p44, para5.2.).
7 See the merging parties’ Joint Competitiveness Report (Merger Record at p45, para5.3.).
5
[20] The Tribunal raised the concern that the Commission’s merger report did not provide any
assessment or commentary on the used vehicle market, and therefore requested the
Commission to confirm its views on the used vehicle market. In response, the Commission
confirmed that in previous matters 8
, the market for used vehicles was characterised as
very competitive with low barriers to entry and a number of players active in the market
(corporate dealerships, individual dealerships and private individuals selling their cars
privately as well as online). Customers of used cars were also found not to be
geographically bound as they tend to source their cars broadly, including via the internet.
The Commission, in line with the views of the merging parties, explained that given the
very competitive nature of the market, it is unlikely that any significant competition
concerns would arise in the used car market. We agree with this conclusion.
Geographic market
[21] Whilst the Tribunal has previously considered the geographic market on a provincial basis,
and within different distances (radius)9 from the Target Dealership, the Commission in this
instance followed the conclusions accepted in Motus/Renault10
10 and Motus/North Motor
Group11
11 where it was found that dealerships surrounding the target dealership/s are likely
to constrain each other.
[22] Following this approach, the Commission found that the dealerships of the Acquiring
Group which are located closest to the Target Dealership are the VW Hatfield Pretoria
which is located 750m away from the Target Dealership, Haval Menlyn which is located
9.8km away from the Target Dealership, and Chery Silver Lakes which is located 14.5 km
away from the Target Dealership. Further, 30 out of the 39 dealerships owned by the
Acquiring Group are located in Gauteng.
8 Motus Group Limited and Sandown Motor Holdings (Pty) Ltd (Case No. LM062Jul22) and CFAO Motors (Pty)
Ltd and Buddingtrade 87 (RF) Pty Ltd (in respect of its motor vehicle dealership business, Continental Cars)
(Case no: LM138Oct22);
Janwertick Investments (Pty) Ltd and The General Motors Franchise Business of
Anderson Motors Ladysmith (Pty) Ltd (Commission Case No: 2014Oct0608.); Motus Group Ltd/ Atlantis Nissan
Centurion dealership business conducted as a going by Atlantis Motors (Pty) Ltd (Case No: LM069Jul20) and
DaimlerChrysler South Africa (Pty) Ltd and Sandown Motor Holdings (Pty) Ltd (Case No: LM025Jul01).
9 For example, the market was assessed: in a 100km radius from the target dealership in Hatfield Holdings (Pty)
Ltd/The business of Summit Auto Trading South Africa (Pty) Ltd; Summit Auto Investments (Pty) Ltd and Triumph
South Africa (Pty) Ltd (Case No.: LM064Aug21); in a 80km radius from the target dealership in
Unitrans
Automotive (Pty) Ltd And WhiteHouse Motors (Pty) Ltd Case No.: LM150Feb20) and in a 50km radius from the
target dealership in CFAO Motors (Pty) Ltd And William Simpson Cars (Pty) Ltd (Case No.: LM188Mar22).
1010 Motus Corporation (Pty) Ltd And Renault South Africa (Pty) Ltd (“(“Motus/Renault”) (Case No.: LM188Jan21).
1111 Motus Group Limited and North Motor Group (Pty) Ltd’s Kia Bryanston and Honda Sandton Motor Dealerships
(“(“Motus and North Motor Group”) (Case No.: LM012Apr21).
6
[23] The Commission therefore assessed the impact of the proposed transaction in Pretoria
(the vicinity wherein the Target Dealership conducts its activities) as well as the Gauteng
province. This included-
23.1. The market for the sale of new PVs within Pretoria;
23.2. The market for the sale of new LCVs within Pretoria;
23.3. The market for the sale of new PVs in Gauteng; and
23.4. The market for the sale of new LCVs in Gauteng.
Assessment
[24] In all of the markets identified above, the Commission found that the merged entity will
have a post-merger market share of less than %, with market share accretions of less
than %. The merged entity will continue to be constrained by competing dealerships in
each respective market.
[25] In the context of intra-brand competition 12, the Commission also assessed the Haval-
branded PV and LCV market in Pretoria.
[26] The Commission found that the merged entity will have a market share of % with a
market share accretion of % for Haval PVs, and a market share of % with a market
share accretion of % for Haval LCVs. The Commission found that the merged entity
will continue to face competition from other Haval dealerships located within Pretoria. This
includes Haval Pretoria Gezina (located 8.5 km away from the Target Dealership), Haval
Pretoria North (located 29.3km away from the Target Dealership), and Haval Silver Lakes
(located 17.1km away from the Target Dealership).
[27] While the market shares for Haval PVs and Haval LCVs are high on a narrow assessment,
they are lower when a provincial (Gauteng) market is considered. Hatfield in this regard
holds a provincial market share of % and the Target Business %, resulting in a
combined provincial market share of % for Haval branded motor vehicles. 13
[28] We agree with the Commission’s findings that the proposed transaction is unlikely to
substantially prevent or lessen competition in the market for the sale of new PVs and LCVs
within Pretoria and within Gauteng.
within Pretoria and within Gauteng.
12 Intra-brand competition refers to competition amongst dealerships selling the same brand of cars.
13 Merging parties’ Joint Competitiveness Report (Merger Record, p48 at para 6.4.)
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Public interest
Employment
[29] The merging parties submitted that there will be no retrenchments as a result of the
proposed transaction and employees will be transferred in terms of section 197 of the
Labour Relations Act 66 of 1995.
[30] The employees of the Acquiring Group and the Target Dealership are represented by the
Motor Industry Staff Association (“MISA”). The employees of the Acquiring Group are also
represented by the National Union of Metalworkers of South Africa ("NUMSA").
[31] Following engagements with the merging parties, MISA confirmed to the Commission that
it had no concerns with the proposed transaction. NUMSA did not submit any concerns
to the Commission.
Spread of ownership
[32] The Acquiring Group, via Grapevine, has a shareholding of % that is held by
historically disadvantaged persons (“HDPs”). Pre-merger, both the Target Dealership and
the Target Property do not have any shareholding that is held by HDPs.
[33] The Commission is of the view that the proposed transaction results in the promotion of a
greater spread of ownership by virtue of the increase in the HDP shareholding of both the
Target Dealership and Target Property HDP to %.
[34] We are satisfied that the proposed transaction is unlikely to raise any concerns from a
public interest perspective.
Conclusion
[35] Considering the above, we unconditionally approved the proposed merger.
22 January 2024
Prof Thando Vilakazi Date
Adv Geoff Budlender SC and Ms Andiswa Ndoni concurring
Signed by:Thando Vilakazi
Signed at:2024-01-22 12:56:31 +02:00
Reason:Witnessing Thando Vilakazi
8
Tribunal case manager: Leila Raffee
For the merging parties: Lara Granville and Taigrine Jones of Cliffe Dekker
Hofmeyr Inc
For the Commission: Nomthandazo Mndaweni and Themba Mahlangu