COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 33/LM/May05
In the large merger between:
AVI Limited
and
A&D Spitz (Pty) Ltd
Reasons for Decision
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APPROVAL
On 16 May 2005 the Competition Tribunal issued a Merger Clearance Certificate
approving the merger between AVI Limited and A&D Spitz (Pty) Ltd in terms of
section 16(2)(a). The reasons for the approval of the merger appear below.
The Parties
1. The acquiring firm is AVI Ltd (“AVI”). Its shareholding is held by pension
funds as to 34.41% and by mutual funds as to 24.77%. It is listed on the
JSE and has no controlling shareholder.
2. The primary target firm is A&D Spitz (Pty) Ltd (“Spitz”). It is a privately
owned company and does not control any other firms in South Africa.
The Merger Transaction
3. In this transaction, AVI is acquiring 60% of the issued share capital In
addition, one of the provisions of the Shareholders’ Agreement states that
the Spitz shareholders have granted AVI an option to purchase the
remaining 40% stake in Spitz. Postmerger AVI will be in sole control of the
company.
Rationale for the Transaction
4. AVI seeks to add Spitz to its stable of brands. AVI accounts for
various leading branded consumer goods. They view this acquisition
as being in line with their strategy to own strong brands in new
consumer segments, such as branded semidurables like this one.
They are attracted to Spitz’s strong portfolio of owned and licensed
brands. In turn, AVI provides financial security for Spitz.
The relevant product market
5. AVI is an investment management company with interests in the
manufacture and sale of various branded consumer goods. These range
from fresh and frozen seafood to nonperishables to hot and cold
beverages and canned goods and cosmetics.
6. Spitz has 22 retail stores throughout the country through which it sells
footwear, accessories and men’s clothing.
7. The parties therefore operate in fundamentally different product
markets.
Competition Analysis
7. Since there is no product overlap there is no need to define any relevant
market, as no market share accretion will result.
Conclusion
We conclude that the merger will not lead to a substantial lessening or prevention
of competition.
The Tribunal therefore approves the transaction unconditionally. There are no
public interest concerns which would alter this conclusion.
_____________ 20 May 2005
N. Manoim Date
Concurring: Y. Carrim, M. Mokoena
For the merging parties: J. Balkin, Edward Nathan Corporate Law Advisors
For the Commission: S. Nunkoo, Competition Commission