COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case Number: 46/LM/Apr00
In the large merger between
Secotrade 72 (Pty) Ltd and
Imperial Holdings Ltd
and
Hyundai Motor Distributors (Pty) Ltd
Reasons for the Competition Tribunal’s Decision
Approval
The Competition Tribunal issued a Merger Clearance Certificate on 1 June 2000
approving the merger between Secotrade 72 (Pty) Ltd and Hyundai Motor
Distributors (Pty) Ltd without conditions. The reasons for our decision to approve
the merger are set out below.
The merger transaction
Secotrade will acquire the assets of Hyundai, which has been placed under
provisional liquidation since 11 January 2000.
Secotrade will have an exclusive contract to import and distribute Hyundai
vehicles, parts and accessories in South Africa. It will buy assets from Hyundai
that will, inter alia , include passenger cars and light commercial vehicles, parts
and accessories, and assets of preferred dealerships.
Background
The Motor Company of Botswana manufactured passenger cars and light
commercial vehicles in Botswana. Hyundai distributed the vehicles in South
Africa, which were sold through its own dealership network at retail level.
Hyundai was placed under provisional liquidation on 11 January 2000. The
liquidators have confirmed by means of an affidavit that several buyers were
approached by the consortium. Imperial, however, was the preferred bidder.
Associated Motor Holdings (Pty) Ltd controls 80% of Secotrade and Imperial
Holdings Ltd in turn controls 90% of Associated Motor Holdings.
The Imperial Group, inter alia , imports Renault, Kia and Daihatsu passenger
vehicles into South Africa. The companies involved in the importing of passenger
vehicles are Imperial Car Imports (Pty) Ltd, Kia Motors South Africa (Pty) Ltd and
Imperial Daihatsu (Pty) Ltd. The Group owns its own dealerships and also
distributes passenger cars to independently owned dealers that sell and service
passenger cars.
Evaluating the merger
Three relevant markets are involved namely the market for passenger vehicles,
the market for retail distribution of passenger vehicles and the market for spare
parts and services.
Imperial’s market share in the passenger vehicle market (post merger) is less
than 7%, which is much smaller than the market shares of its main competitors
Volkswagen (22%), Toyota (21%) and Samcor (12%).
The parties could not provide market shares for the retail distribution of
passenger vehicles market, due to the size and nature of the retail sector.
Imperial competes with McCarthy Motor Holdings, Barlow Motor Holdings,
Supergroup, Unitrans and Combined Motor Holdings, which are all major players.
Supergroup, Unitrans and Combined Motor Holdings, which are all major players.
Imperial estimates its market share (post merger) at 11,1%.
With regard to the after sales market in spare parts and accessories Imperial
estimates its market share to be 6,7% post merger. The parties could not provide
market shares for this market because it is fragmented and diversified. However,
they estimate that Original Equipment Manufacturers (OEM’s) hold approximately
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60% of the business in their specific franchise and imports, both genuine and
generic, holds 40%.
The Tribunal is satisfied that the change in Imperial’s total market share is
negligible, from 6% to 7% post merger, and does not create competition
concerns. Moreover an effective competitor will not exit the market and inter
brand competition will be enhanced.
We wish to point out that although we have been informed, at the hearing, that
an exclusive distribution agreement for three years was negotiated, the Tribunal
has not received a copy of it. Approval of the transaction, therefore, does not
necessarily mean that we approve the exclusive distribution agreement.
D.H LEWIS 27 June 2000
Concurring: N.M. Manoim and P.E. Maponya
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