Bytes Technology Group South Africa (Pty) Ltd and Digital Health Solutions (Pty) Ltd (13/LM/Mar05) [2005] ZACT 26 (26 April 2005)

70 Reportability
Competition Law

Brief Summary

Competition Law — Merger Approval — Bytes Technology Group South Africa (Pty) Ltd and Digital Health Solutions (Pty) Ltd — The Competition Tribunal approved the merger between Bytes Technology Group South Africa (Pty) Ltd and Digital Health Solutions (Pty) Ltd, where BTG SA acquired a 39.13% stake from Business Connexion and an additional 39.13% from BTG, resulting in BTG SA holding 78.26% of DHS. The Tribunal found no overlaps in the products and services of the merging parties, concluding that the merger would not substantially lessen or prevent competition, and thus approved the transaction unconditionally.

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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