COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No.: 38/LM/Jul03
In the larger merger between:
Super Group Trading (Proprietary) Limited
and
The Micor, Sherwood, DNA Automotive, Streamworks and Jumpoint
Businesses of DNA Supply Chain Investments Limited
Reasons for decision
Approval
1. On the 3 rd September 2003 we issued a merger clearance certificate
approving unconditionally the merger between the abovementioned parties.
The reasons for our decision are set out below.
The merger transaction
2. The primary acquiring firm is Super Group Trading (Pty) Ltd (“Super
Group”), a wholly owned subsidiary of Super Group Limited (“SG”), which is
a listed public company on the JSE Securities Exchange.
3. This transaction involves the acquisition by Super Group of five businesses
belonging to DNA Supply Chain Investments Ltd. DNA’s businesses, which
are the subject matter of the proposed transaction, are comprised of its
logistics business (“DNA Automotive”) ; an IT sales, software development
and consultancy business relevant to supply chain services (“Streamworks”
and “Jumpoint”) ; a procurement outsourcing business (“Sherwood”); and
an airfreight clearing, forwarding and consolidation business (“Micor”).
4. On completion of the proposed transaction, ownership and control of these
DNA businesses will vest in Super Group.
Rationale for the transaction
5. According to the parties, the benefits of the proposed transaction to SG is
that it will introduce new areas of business which will complement the services
that SG currently provides to its clients thus enabling the merged entity to
provide a more comprehensive service to its customers both locally and
internationally. This will include the following services:
a) Logistic services comprising transportation, distribution, facilities and
warehouse management, managing both inbound and outbound cargo
on behalf of customers, including procurement outsourcing on the
clients’ behalf;
b) Airfreight clearing, forwarding and consolidation services; and
c) Information technology and consultancy services relevant to supply
chain management.
6. The parties further aver that the efficiencies which will result from the
addition of DNA’s systems, will, in turn, enable South African companies to be
more competitive in international markets 1.
The relevant market
7. The parties have defined the relevant markets as, firstly, logistic services
which comprise the provision of transportation, distribution, facilities and
warehouse management services as well as the management of inbound and
outbound cargo. The second relevant market is that for the provision of
airfreight clearing, forwarding and consolidation services. The third relevant
market is for the provision of information technology, consultancy and
systems relevant to supply chain services.
8. It appears that these services are provided throughout South Africa and
that the relevant geographic market is accordingly national.
9. As elaborated below, we are satisfied that there is no overlap with respect
to airfreight clearing, forwarding and consolidation. The only overlap thus
occurs in respect of the market for information technology, consultancy and
systems relevant to supply chain services. No overlap exists insofar as
logistical services is concerned.
Competition evaluation of the transaction
10. At the hearing Mr Schwikkard, the Chief Operating Officer of the DNA
Group, explained the activities of each of the target firms and indicated areas
Group, explained the activities of each of the target firms and indicated areas
of overlap with the acquiring firm 2. As indicated above the target firms include
Micor, Sherwood, DNA automotive , Streamwork and Jumpoint all being the
businesses of DNA Supply Chain Investments Ltd .
11. Micor is a clearing and forwarding company. Micor comprises two
companies, Trans Africa Logistics and Cosmotrans. Super Group does not
1 Refer to page 22 of the record.
2 Refer to page 2 of the transcript dated 3 September 2003.
2
perform any of these services and hence there is no overlap.
12. Trans Africa Logistics is a bulk handling and management company which
provides logistics services predominantly in the SubSaharan areas. It
appears that Super Group supplies certain services to Trans Africa Logistics.
Micor provides consultancy and advisory services with regard to the
transportation of bulk commodities, whereas Super Group is involved in the
actual physical handling and transportation of bulk commodities. It appears
then that there is no overlap between the parties in respect of these activities.
13. Cosmotrans is an international airfreight wholesale consolidator of
perishable and general cargo and household and personal effects 3. It appears
that this is a service provided to the smaller clearing and forwarding agents.
There is no comparable service provided by the Super Group.
14. It is accordingly concluded that no overlap exists in relation to Cosmo
Trans.
15. Sherwood is a procurement company operating predominantly in sub
Saharan Africa. It specialises mainly in the mining arena, but also provides
procurement services to major manufacturing companies.
16. Again, there is no overlap with respect to Super Group.
17. DNA Automotive deals with the logistics end of the auto spare parts
business. That is it manages the supply of spare parts to the different auto
dealerships. Its customers include Daimler Chrysler, Ford, Honda, and
Mitsubishi.
18. Although the Super Group owns significant auto dealerships, it does not
manage the supply of parts into those or any other dealerships. Accordingly
there is no overlap in relation to these activities.
19. The Streamworks business provides information technology services
relating to warehousing and distribution. With respect to warehousing,
Streamworks implement customised track and trace systems. It is also
Streamworks implement customised track and trace systems. It is also
involved in the automation side, mainly in the motor industry, where it does
programming where the assembly lines are automated.
20. It appears that there is an overlap with Super Group in the provision and
implementation of warehousing systems. However, whereas the Super Group
provides off the shelf packages, Streamworks actually builds software
specifically for its customers.
21. However this is a very fragmented market with the parties’ combined
3 Refer to page 1 of Super Group’s merger notice as contained in Schedule 1.
3
market share less than one percent. Large international players such as SAP,
IBM, and Oracle hold 3%, 5,5% and 1,5% market shares respectively.
22. Jumpoint specialises in the implementation of technology (advanced
planning logistics) relating to warehousing and distribution. Jumpoint is a
consulting business that undertakes the implementation of systems 4. Their
major competitors are the big five auditing companies. Hence, although
Super Group also has a division that specialises in this area the share of the
merged entity relative to the large auditing firms is very small.
23. We are satisfied that there appears to be no likelihood of a substantial
lessening or prevention of competition in the relevant markets as a result of
this transaction.
Public interest considerations
24. The impact of the transaction on employment was considered. The
parties submitted that the proposed transaction is structured so that the
DNA’s businesses will remain intact and employees will be transferred in
terms of section 197 of the Labour Relations Act. To the extent that, post
acquisition, operational considerations require any retrenchments which, at
worst, would be minimal, ‘lastin, firstout’ principles will apply together with all
applicable labour laws and guidelines.
25. The Tribunal is satisfied that there are no other public interest issues that
militate against the approval of this merger. We accordingly approve this
transaction unconditionally.
______________ 08 October 2003
D. Lewis DATE
Concurring: N. Manoim, U. Bhoola
For the merging parties: Mr. J Dvorak, Routlegde Modise Inc.
For the merging parties: Mr. J Dvorak, Routlegde Modise Inc.
Mr. P Coetser, Brink Cohen Le Roux.
For the Commission: Mr. H Shozi assisted by Mr. A Chetty, Competition
Commission
4 For instance, where a company is managing its supply chain and needs specific consulting work and
then the implementation of that software, Jumpoint manages that whole process for that company.
4