COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM145Jan25
In the matter between:
Novus Proprietary Limited Primary Acquiring Firm
and
Mustek Limited Primary Target Firm
I Valodia (Presiding Member)Panel:
A Ndoni (Tribunal Member)
G Budlender (Tribunal Member)
Heard on: 10 March 2025
Last date of submission: 13 March 2025
Decided on: 14 March 2025
Reasons issued on: 04 April 2025
REASONS FOR DECISION
Introduction
[1] On 14 March 2025, the Competition Tribunal (“Tribunal”) conditionally approved
a large merger in which Novus Holdings Limited (“Acquiring Firm”) will acquire
Mustek Limited (the "Target Firm") (the "Proposed Transaction").
Parties to the transaction and their activities
[2] The primary acquiring firm is Novus Holdings Limited (“ Novus Holdings ”).
Novus Holdings is controlled by A2 Investment Partners Proprietary Limited
(“A2”) (67.22%).1 Novus, through its wholly owned subsidiary Novus Packaging
1
Proposed transaction
Transaction
[9] The proposed transaction is notified on the premise that Novus Holdings will
acquire control over Mustek in terms of sections 12(2)(a), (b), (c) and/or (g) of
the Competition Act 89 of 1998 (as amended). In terms of the proposed
transaction, the Acquiring Group intends to acquire the additional shareholding
in Mustek in either one of two ways, as follows:
9.1. In terms of the Mandatory Offer which was triggered when the Acquiring
Group made an offer to all of the issued share capital in Mustek; or
9.2. In the instance that Mustek’s shareholders reject the Acquiring Group’s
Mandatory Offer, the Acquiring Group will then proceed to acquire
additional shares in Mustek in the open market.
[10] Post-merger, Novus Holdings’ shareholding and voting rights in Mustek may
amount to less than 50% of the issued share capital. However, it may still acquire
de facto control over Mustek.
Competition assessment
[11] The Competition Commission (“Commission”) found that the Proposed
Transaction does not give rise to a horizontal overlap between the merger
parties, as the Mustek Group does not supply any products or services that are
similar to or substitutable with those of the Acquiring Group. In addition, no
vertical concerns arise as a result of the Proposed Transaction since the merger
parties are not active at different levels of the same value chain nor do they
supply each other with goods or services.
[12] According to the merger parties, the Proposed Transaction will not result in the
merged entity having market power post-merger, as there are many competitors,
including several smaller players, that will be able to compete effectively with the
merged entity.
[13] The Commission further noted that Novus Holdings, through its newly acquired
subsidiary On the Dot Supply Chain Management Proprietary Limited (“On the
Dot”), purchased IT equipment on a ‘once off basis’ from Mustek. The merger
parties indicated that Novus Holdings does not currently intend to switch from
its existing IT equipment suppliers as a result of the Proposed Transaction.
[14] The merger parties submitted that the Proposed Transaction will not result in an
input or customer foreclosure concerns as Mustek will post-merger continue to
supply other customers and the Acquiring Group will continue to procure its IT
equipment from third party suppliers. As a result, the Proposed Transaction does
raises no competition concerns.
[15] The Commission agrees with submission that the merger parties are relatively
small players in the market for the supply of IT equipment in South Africa.
Therefore, concluded that the Proposed Transaction will not result in any
competition concerns.
[16] In line with the Commission’s recommendation and having considered the
activities of the merger parties, we agree that the Proposed Transaction is
unlikely to lead to a substantial lessening or prevention of competition in the
relevant market in South Africa.
Public interest assessment
Employment
[17] The merger parties submitted to the Commission that the Proposed Transaction
does not result in any retrenchments or job losses.
[18] In assessing the effect of the proposed transaction on employment, the
Commission raised concerns regarding Mustek's employees. These concerns