COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 62/LM/Aug02
In the large merger between:
Capital Alliance Life Limited
and
Saambou Life Assurers Limited
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Reasons for Decision
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Approval
On 9 October 2002 we unconditionally approved the merger between Capital Alliance
Life Limited (“CAL”) Saambou Life Assurers Limited (“Saambou Life”). The reasons
for our decision follow.
The transaction
The transaction constitutes an acquisition of the entire issued share capital of Saambou
life.
The primary acquiring firm is CAL, a wholly owned subsidiary of Capital Alliance
Holdings Limited (“CAH”).
The primary target firm is Saambou Life, a wholly owned subsidiary of Saambou
Holdings Limited (“Saambou Holdings”).
The transaction forms part of the restructuring of the Saambou Group, necessitated by the
recent failure of Saambou Bank and the consequent negative impact thereof on the brand
name.
Evaluating the merger
The relevant market
Both parties are registered longterm insurers. While both parties offer individual life
insurance products, CAL also offers group life insurance and retirement fund products
and Saambou Life is involved in the funeral assistance business.
The relevant market is therefore the market for the provision of individual life insurance
products, while its geographic domain is national.
Effect on competition
The relevant market is not concentrated; in fact according to the Financial Services
Board’s database the market saw 17 new entrants during the past three years.
Furthermore, the parties’ combined post merger market share is estimated at a relatively
insignificant 1.56%. Thus, the transaction is unlikely to substantially lessen or restrict
competition in the relevant market.
However, we note that Investec, which is also active in the relevant market, is a
significant shareholder of Capital Alliance Holdings Ltd, since it holds shares in
CAH both directly and indirectly via a jointly held empowerment company. The
market share of the merged entity is, accordingly understated, although even after
including Investec’s share, we find that the transaction does not substantially lessen
competition.1
Public interest Issues
Prior to the merger Saambou Life employed 22 fixed term contract workers, which
contracts will be honoured by CAL. The transaction does not raise any public interest
issues.
For the above reasons, we agree with the Commission’s recommendation that the
transaction be unconditionally approved.
1 Investec Employee Benefits Ltd enjoys a market share of 13.43%, and the present
transaction may be deemed to indirectly increase Investec’s market share by 1.56% to
14.99%.
2
29 October 2002
N. Manoim Date
Concurring: D. Lewis, M. Holden
For the merging parties: Jowell Glynn & Marais
For the Commission: L. Mtanga, Legal Services Division, Competition
Commission
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