COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case no: 03/LM/Jan05
In The Large Merger Between:
Sanlam Limited
And
Safrican Insurance Company and Newshelf 503 (Pty) Ltd
Reasons for Decision
Approval
On 10 March 2005 the Competition Tribunal issued a Merger Clearance Certificate approving
the transaction between Sanlam Ltd and Safrican Insurance Company and Newshelf 503 (Pty) .
The reasons for this decision follow.
The Transaction
The parties to the transaction are Sanlam Life Insurance Limited (“Sanlam Life”), Sanlam
Independent Financial Services Limited (“IFS”), Thebe Investment Corporation (Pty) Ltd
(“Thebe”), Safrican Insurance Company Limited (“Safrican”) and Newshelf 503 (Pty) Ltd (to be
named Thebe Community Financial Services (“TCFS”). Sanlam Life and IFS are wholly owned
subsidiaries of Sanlam Limited (“Sanlam”). Thebe 1 controls Safrican and TCFS.
The merger transaction involves the restructuring of certain of the financial services entities
within the Thebe Group and thereby introduces Sanlam (through Sanlam Life and IFS) as a
strategic partner. According to the parties, two indivisible transactions are contemplated. Firstly,
Sanlam Life is acquiring 55% of the issued share capital of Safrican. Secondly, IFS is
subscribing for 30% of the issued share capital of TCFS. 2
1 Thebe’s is held by BathoBatho Trust (74%), Sanlam Life (8,67%), Investec Employee Benefits Limited
(8,67%) and Old Mutual Life Assurance Company Limited (8,67%).
2 Through the first transaction, Sanlam Life wishes to enter the entrylevel segment of the long term
insurance market, and has identified Thebe as a strategic partner for this purpose. For Thebe, the
transaction enables it to obtain the funding and support in order to expand its current financial services
proposition. The second leg of the transaction will give IFS minority shareholding in TCFS, which will
similarly enable TCFS to obtain the necessary funding, backoffice support and the relevant skills and
expertise from IFS.
Impact on Competition
The Sanlam Group has five operational clusters involved in life insurance (through Sanlam Life),
short term insurance, investment, banking and independent financial services (through IFS).
Sanlam Life is a registered longterm insurer, which covers individual products 3 and group
products.4 IFS is an investment holding company and has minority in a number of entities. 5
Safrican is also a registered longterm insurer offering long term insurance products to
individuals6 and to groups. 7 Thebe is a broadbased black empowerment investment holding
company.
With regard to the first transaction, the Commission found an overlap in the activities of the
merging parties in respect of the provision of group and individual life insurance policies. The
Commission however, defined a broad market for the provision of long term insurance based on
the fact that an insurer, which is issued with a license to render longterm insurance, has a
choice to either provide group cover and/or individual cover. Therefore, according to the
Commission, from a supply side substitution point of view, an insurer which is rendering group
cover can render individual cover and visa versa. 8
In the second transaction, the Commission identified the following relevant markets:
1. the provision of administration, consultancy and brokerage services; and
2. the provision of electronic money transfer services.
The Commission based their finding on the following:
1. Sanlam Life and Total Care Strategy (Pty) Ltd (subsidiaries of Sanlam) as well
as Simeka Employee Benefit Holdings (Pty) Ltd (which IFS has a minority
shareholding in) operate as administrators, consultants and brokers to groups.
Thebe Employee Benefits, a wholly owned subsidiary of Thebe, also operates in
this market.
2. MultiData (Pty) Ltd, a wholly owned subsidiary of Sanlam Life and Thebe
Investment Trasactiv, a wholly owned subsidiary of Thebe both provide electronic
money transfer services.
According to the Commission, the increment in market shares in all the above markets
3 These are assurance and investment products offered to individuals. The assurance products include
life, disability, sinking fund, fund and health policies and the investment products include endowment
policies and annuities.
4 These are and investment products offered to retirement funds and other groups, including insurance
policies issued to retirement funds as an integrated product (i.e. as a packaged solution). Additional
services and products offered by Sanlam Life can be found from page 686 of the record.
5 A list of these entities and their activities can be found on pages 689691.
6 Being funeral policies and credit life policies.
7 Being funeral policies (assistance polices) and life policies offered to companies, retirement funds and
other groups.
8 At page 4 of the Commission’s report.
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will be less than 1% and therefore does not raise any competition concerns.
Furthermore, the Commission is of the view that in all the relevant markets identified,
the merged entity faces competition from other players with larger market shares.
We do not find it necessary to make a definitive finding on the relevant markets, as we
are of the view that the merger will not result in a substantial lessening of competition.
We have no other concerns and are satisfied that there are no significant public interest
issues, which arise, and we accordingly approve this transaction unconditionally.
19 April 2005
N Manoim Date
Concurring: Y Carrim and L Reyburn.
For the Acquiring firm: I Gaigher (Jowell Glyn & Marais)
For the Target firm: J.Katz (Webber Wentzel Bowens)
For the Commission: M Mohlala and E Mtantato (Mergers and Acquisitions)
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