COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case no: 13/LM/Mar05
In The Large Merger Between:
Bytes Technology Group South Africa (Pty) Ltd
And
Digital Health Solutions (Pty) Ltd
Reasons for Decision
Approval
On 26 April 2005 the Competition Tribunal issued a Merger Clearance Certificate approving the
transaction between Bytes Technology Group South Africa (Pty) Ltd and Digital Health
Solutions (Pty) Ltd. The reasons for this decision follow.
The transaction
The parties to the transaction are Bytes Technology Group South Africa (Pty) Ltd (“BTG SA”)
and Digital Health Solutions (Pty) Ltd (“DHS”). Bytes Technology Group Limited (“BTG”) holds
73% of the shares in BTG SA. BTG 1 is, in turn, controlled by Allied Electronics Corporation
Limited (“Altron”). 2 The shareholding in DHS is held by BTG (39,13%), Business Connexion
Group Limited (“Business Connexion”) (39,13%), Network Healthcare Holdings Limited
(19,14%) and United South African Pharmacies (2,6%). DHS controls Digital Healthcare Switch
(Pty) (“Switch”) and MedeMass (Pty) Ltd (“MedeMass”).
The transaction involves Business Connexion selling its 39,13% stake in DHS to BTG SA. BTG
SA will also acquire the 39,13% interest belonging to BTG. Post merger, BTG SA will hold
78,26% of DHS.
According to the parties, Business Connexion wants to exit certain businesses in which it does
not own 100% of the issued shares and which it considers to be noncore businesses. BTG
wishes to ensure that the group’s shares in DHS are held by one company, namely BTG SA
and through the transaction would like to increase its exposure to the ecommerce and software
business of DHS.
Effect on Competition
1 For a list of BTG’s subsidiaries, see page 16 of the Record and page 2 of the Commission’s Report.
2 For a list of Altron’s divisions, see page 72 of the Record and page 45 of the Commission’s Report.
According to the Commission, while both parties are involved in the broad information
technology sector, there are no overlaps in the products and services offered by them. 3
Through its two operating companies, namely, Switch and MedeMass, DHS provides
transaction switching services, practice management and informatics solutions to the healthcare
industry. The BTG group, on the other hand, provide a broad range of products, technical skills
and specialized services to support enterprisewide IT infrastructure. 4 Therefore, according to
the Commission, the parties do not compete with each other as they offer different products and
related services to their respective clients.
In the preceding financial year, BTG SA provided DHS with network support and desktop
maintenance services (through BTG), switchboard maintenance services (through Bytes
Communication Systems), and Xerox copier consumables and rentals (through Bytes
Documents Solutions). According to the Commission these relationships existed between BTG
SA and DHS prior to the merger and are not created as a result of the merger. In addition, the
value of the services provided to DHS is minor in comparison to other customers of BTG.
Since the merger creates no overlaps nor leads to any significant vertical integration we are
satisfied that it raises no competition issues.
Conclusion
According to the merging parties the transaction would not affect the operations of either of the
merging parties' businesses nor result in any job losses.
We agree with the Commission's recommendation that this transaction is unlikely to result in the
substantial lessening or prevention of competition. We accordingly approve this merger
unconditionally.
26 April 2004
D Lewis Date
Concurring: N Manoim and Y Carrim
For the Merging parties: D Rudman and P Naggan (Werksmans)
Concurring: N Manoim and Y Carrim
For the Merging parties: D Rudman and P Naggan (Werksmans)
For the Commission: S Nunkoo (Mergers and Acquisitions)
3 A detailed description of the parties’ and their subsidiaries’ activities can be found in the Commission’s
Report (page 35).
4 At page 230 of the record (Report on Competitive and Public Interest Aspects).
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