COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case no.: 95/LM/Nov04
In the large merger between:
Steinhoff Africa Holdings (Pty) Ltd
and
Unitrans Ltd
________________________________________________________________
Reasons
________________________________________________________________
Introduction
1. On 12 January 2005 the Competition Tribunal unconditionally approved
the merger between Steinhoff Africa Holdings (Pty) Ltd (“Steinhoff Africa”)
and Unitrans Ltd. The reasons are set out below.
The transaction
2. Steinhoff International, through its subsidiary Steinhoff Africa, is increasing
its shareholding in Unitrans Ltd from 22.40% to 60.8%, by exercising its
preemptive right over the shares held by Murray and Roberts Holdings in
Unitrans. As a result of the transaction Steinhoff will control Unitrans.
Parties to the transaction
3. The primary acquiring firm is Steinhoff Africa Holdings (Pty) Ltd, which is
controlled by Steinhoff International Holdings Ltd (“Steinhoff”). Steinhoff is
vertically integrated in the manufacturing and distribution of furniture and
household goods as well as raw products used in the manufacturing of
these products. Steinhoff Africa also owns a joint venture company with
Unitrans called Roadway Logistics (Pty) Ltd. 1
4. The primary target firm, Unitrans, is not controlled by any single or group
of shareholders. Its shareholders are:
United Investments (Pty) Ltd 2 38.41%
Steinhoff Africa 22.40%
Old Mutual Life Association Society 7.98%
Clidet No 518 (Pty) Ltd 3 13.02%
5. Unitrans is a diversified transport, distribution and logistics group, active in
harvesting, transport, the logistics services provided by the joint venture
Roadway Logistics, warehousing, distribution, freight and passenger
transport, express delivery, fleet management, vehicle leasing, motor retail
and related financing and insurance.
Rationale for the transaction
6. During August 2004 Murray and Roberts received an offer for its shares in
Unitrans. Both Unitrans and Steinhoff felt that it was not in the best
interest of Unitrans to accept the offer. Steinhoff Africa was concerned
about the influence that the new shareholder would have on the logistics
part of the Unitrans business, more specifically on its joint venture
Roadway Logistics. Unitrans was concerned about its motor dealerships
since the potential investor was one of its major competitors in the motor
retail sector. Unitrans felt that the transaction could lead to a major
restructuring or selloff within the Unitrans Group. In light of this Steinhoff
decided to exercise its preemptive right to acquire Murray and Robert’s
interest in Unitrans.
Competitive assessment
7. This is a vertical merger. The relevant product markets, which the
Competition Commission identified relate to the vertical supplychain.
These are:
1) The local market for the supply of saw logs, pulp logs, poles and
woodchips (”forest material”) in which Steinhoff Africa operates;
1 Post the transaction Steinhoff will control Roadway Logistics.
1 Post the transaction Steinhoff will control Roadway Logistics.
2 This is a wholly owned subsidiary within the Murray and Roberts Group.
3 Clidet No 518 is a black empowerment company.
2
2) The local market for harvesting and transportation in which Unitrans
operates;
3) The national market for the supply of sawn timber in which
Steinhoff Africa operates;
4) The national market for the supply of particleboard in which
Steinhoff operates;
5) The national market for the manufacturing of furniture, household
goods and raw materials in which Steinhoff operates; and
6) The national market for warehousing, distribution and logistics in
which the joint venture between Unitrans and Steinhoff Africa,
Roadway Logistics, operates.
8. We will focus on the potential vertical affects that the transaction might
have on the transportation of forest material, the transportation of sawn
timber and particleboard and the transportation and logistics of furniture.
Transportation of forest material
9. The transporting of forest material is awarded through tender procedures
for periods of three years. In each of the local markets identified, namely
Knysna/George, KwaZuluNatal and Mpumalanga, there are large
transport contractors that compete with Unitrans. 4
10. Steinhoff Africa is a small customer in relation to Unitrans’ forestry
transport operations, comprising approximately 6% of Unitrans’ turnover
for 2004. Unitrans informed the Tribunal that it would not be economically
viable for Unitrans to only transport Steinhoff goods since it would have to
change the nature of almost all facets of its business. Unitrans has long
term contracts with hundreds of customers, each of them having different
transport requirements for which Unitrans supplies dedicated specialized
equipment and which is not readily interchangeable.
Sawn timber and particleboard
11. Many contractors and subcontractors operate in the local market for sawn
timber, which makes input and customer foreclosure highly unlikely.
12. Steinhoff owns PG Bison, a particleboard manufacturer. Although Unitrans
12. Steinhoff owns PG Bison, a particleboard manufacturer. Although Unitrans
transports woodchips, pulpwood and saw logs it does not supply PG Bison
4 According to the parties there are approximately 250 contractors providing transport and harvesting
services within the forestry sector of which the largest are: Imperial, Gaskells and Marathon Transport..
3
with input nor does it currently have spare capacity to do so – PG Bison
has recently awarded a contract to an independent transport company, LT
Plant, for the delivery of woodchips, sawdust and lumber offcuts.
Customer foreclosure would not be likely since two large competitors and
several third party distributors remain in this market. Board merchants also
import particleboard.
Furniture
13. Roadway Logistics, which is responsible for the major portion of Steinhoff
Africa’s finished goods distribution and logistics requirements, transports
approximately 55% of Steinhoff Africa’s furniture production to retailers.
Neither Roadway Logistics nor Unitrans currently provides transport
services to Steinhoff‘s competitors in the furniture retail sector. Steinhoff
also uses various third party contractors to transport its furniture, foam and
textile products such as CDC Transport, Zul Transport Pivot Transporters,
etc.
14. The transportation of Steinhoff Africa’s goods via Roadway Logistics
constitutes less than 1% of Unitrans’ total turnover for 2004. According to
Steinhoff the majority of new furniture manufacturers have their own in
house fleets for distribution of their products to retailers. Roadway
Logistic’s other competitors in this market are, inter alia, Imperial via
Conree Transport, Bolt Transport and Lush Transport.
Conclusion
15. In light of the above we therefore find that the transaction would not
substantially prevent or lessen competition in any of the relevant markets
identified above.
16. No public interest concerns have been raised in this transaction.
____________ 15 February 2005
N Manoim Date
4
Concurring: D Lewis, M R Madlanga
5