COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case Number: 82/LM/Jul00
In the large merger between
Ford Motor Company
and
Land Rover Group Ltd
Reasons for the Competition Tribunal’s Decision
Approval
The Competition Tribunal issued a Merger Clearance Certificate on 6 September
2000 approving the merger between Ford Motor Company and Land Rover
Group Ltd without conditions. The reasons for our decision are set out below.
The merger transaction
Ford is purchasing all the ordinary shares and redeemable ordinary shares in the
Land Rover Group Limited in Jersey, all of the issued common shares in the
capital of the U.S. company Land Rover Group USA, Inc, and the entire issued
share capital of the Canadian company Land Rover Canada Newco from BMW.
Although the transaction occurs wholly outside of South Africa among foreign
companies the parties need the approval of the South African Competition
Authorities before the South African portion of the transaction can be
implemented.
The U.S. Federal Trade Commission granted early termination of its waiting
period on 6 June 2000 and the EEC approved the merger on 29 June 2000.
Background
The Rover Group Ltd was a wholly owned subsidiary of BMW. BMW has
reorganized Rover into two new businesses, the Rover Business (which includes
Roverbranded vehicles), which is being sold to the Phoenix Consortium, a group
of financial investors and former Rover managers, and the Land Rover Business
(which includes Land Roverbranded vehicles), which is being sold to Ford.
This internal reorganization involves 1) the creation of new Land Rover
subsidiaries and 2) the transfer of these subsidiaries, production and R&D
facilities, intellectual property, inventory and staff to several newly created
companies, including in particular the newly created Jersey (Channel Islands)
company Land Rover Group Ltd.
Land Rover Group Ltd includes the worldwide Land Rover Business outside the
USA and Canada (separate companies have been created by BMW in North
America which are acquired directly by Ford) and is the owner of shares in Land
Rover South Africa (Pty) Ltd.
Evaluating the merger
Ford, which is the second largest motor manufacturer in the world, is active in
South Africa only in respect of its sales to Samcor and by virtue of its interests in
Samcor and Ford Credit SA. Ford does not supply products or services in South
Africa other than to these two companies.
Land Rover is engaged in the manufacturing, marketing, selling and distribution
of 4X4 vehicles (also called utility vehicles) and related parts and accessories. It
also manufactures one pickup model classified as a light commercial vehicle
(LCV).
According to the parties both Ford and Land Rover are targeting younger buyers
and people with higher incomes.
Whether we define the market to include all passenger vehicles, or as light
commercial vehicles (LCV) only, or whether we define it more narrowly as the
commercial vehicles (LCV) only, or whether we define it more narrowly as the
market for utility fourwheel drive passenger vehicles is, for purposes of this
evaluation, not important. Since, as we show below, in none of these categories
the post merger concentrations are sufficiently significant to be raised as
competition concerns. 1
1 The EU in its decision, Case No COMP/M.1998Ford/LandRover, says that: “In previous passenger
2
The five largest producers of passenger cars, according to NAAMSA, are
Volkswagen (21%), Toyota (20%), Samcor (14.2%), DaimlerCrysler (10%) and
Delta (9%). Samcor’s market share after the merger will increase with 2% to
16% in this market. NAAMSA only included data of companies that are part of
NAAMSA and, accordingly, the data underestimates the size of the South African
market and does not, for example identify competitors such as Ssangyong,
Daihatsu, Subaru and KIA, all of which import vehicles into South Africa.
In the LCV market Toyota is the largest with a market share of 26,2%, Delta has
22,5, Samancor 20,6% and Land Rover 0,4%. Samancor’s market share, post
merger will increase to 21%.
The five largest producers of the utility fourwheel drive passenger vehicles are
Delta (26.1%), Toyota (17,3%), Daimler Chrysler (16.9%), Samcor (13.4%) and
Land Rover (12%). Samcor’s market share will increase to 25% after the merger.
(The parties provided these figures at the hearing.)
Samcor, Toyota, Delta (GM), BMW, Nissan, and Daimler Crysler have
manufacturing facilities in South Africa. BMW will continue to assemble Land
Rover at the BMW plant in Rosslyn for at least the next 18 months after which it
will be moved it to Samcor’s Silverton plant.
According to the parties Ford does not intend to decrease the staffing level, the
type of business performed or the way in which Land Rover’s business operates
in South Africa. The transaction will have not impact on distributors of Land
Rover, as dealerships are dealer owned.
The merger, therefore, does not raise any public interest concerns listed in
section 16(3).
7 September 2000
N. M. Manoim Date
vehicle cases the Commission has left open both product and geographic market definitions, the narrowest
possible definition being separate segments in individual countries.” Segments being the different
categories such as, for instance, S class = Sports Coupe, M class = Multipurpose and J class = Sorts
Utilities. In the Commission Decision of 24/05/1996 (Case No IV/M.741 – Ford/Mazda) the Commission
says that “In the end it can however be left open whether, for the purposes of the competitive analysis, the
car market should be considered as one product market.”
3
Concurring: D.H. Lewis, P.E. Maponya
4