COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 14/LM/Mar03
In the large merger between:
ABSA Group Limited
And
Meeg Bank Limited
Reasons for Decision
________________________________________________________________
APPROVAL
On 9 April 2003 the Competition Tribunal issued a Merger Clearance Certificate
approving the merger between ABSA Bank Limited and Meeg Group Limited in
terms of section 16(2)(a). The reasons for the approval of the merger appear
below.
The Parties
1. The primary acquiring firm is ABSA Group Limited (“ABSA”), one of the top
four major banking groups in South Africa . The primary target firm is Meeg
Bank Limited (“Meeg”), formerly the Bank of Transkei.
The Merger Transaction
3. ABSA currently holds 15.2% interest in Meeg. Following the transaction,
its direct shareholding will increase to 49.8%. in terms of the requirements
of the Securities Regulation Panel, ABSA is required to make a similar
offer to all other minority shareholders of Meeg. ABSA intends to hold
100% of the issued share capital in Meeg.
Rationale for the Transaction
4. Meeg requires ABSA’s operational and financial support to stay afloat in
the banking industry.
The Relevant Market
5. Both parties are engaged in providing banking services at various levels.
Each provides the services of retail, commercial and wholesale banking,
therefore there is a product overlap in each of these three categories.
Geographic market
6. Approximately 80% of Meeg’s banking activities are conducted in areas
previously known as the Transkei. ABSA conducts its activities only in
South Africa, to the exclusion of the formerTranskei area. There is some
reciprocal use of facilities insofar as ABSA clients might access the bank
through a Meeg branch in the former Transkei area, and vice versa.
7. The Commission accordingly defines the geographical market as the
region of the Eastern Cape, formerly known as Transkei.
6.
Impact on competition
8. No regional market shares were available. In any event, any overlap in
geographical areas is insignificant enough not to raise any competition
concerns.
Conclusion
We conclude that the merger will not lead to a substantial lessening of
competition. There are no public interest concerns which would alter this
conclusion. The merger is therefore approved unconditionally.
_____________ 17 April 2003
N. Manoim Date
Concurring: D.Lewis, M. Holden
For the merging parties: Webber Wentzel Bowens Attorneys