COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 59/LM/Jul05
In the large merger between:
Theta Investments (Pty) Ltd
and
Teba Credit (Pty) Ltd
Reasons for Decision
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APPROVAL
On 20 September 2005 the Competition Tribunal issued a Merger Clearance
Certificate approving the merger between the Theta Investments (Pty) Ltd and
Teba Credit (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 Theta Investments (Pty) Ltd. (“Theta”). Theta is
controlled by African Bank Ltd (“ABL”), in turn controlled by African Bank
Investments Limited (“ABIL”). ABIL has a specific business unit focussed on
microfinancing, which is African Bank Miners Credit (p202). Theta has a
number of subsidiaries, but none are involved in the relevant market,
namely microfinancing.
2. ABIL is a JSElisted entity and its shareholders comprise a variety of
institutions and individuals.
3. The primary target firm is Teba Credit (Pty) Ltd (“TC”), a joint venture
company controlled jointly by Teba Bank Ltd and Miners Credit Guarantee
(Pty) Ltd (“MCG”). The latter is an operating company controlled by Theta.
The Merger Transaction
4. Theta is acquiring 50% of the shareholding in Teba Credit from Teba Bank
Ltd. Therefore postmerger, Theta Investments will control TC and the joint
venture will fall away.
Rationale for the Transaction
5. The joint venture company is experiencing problems between its
shareholders due to allegations of breach of contract. This results in many
deadlocks in decisionmaking at board level, where both ABIL and Teba
Bank have board representation. Therefore sale of its share by Teba Bank
is a means to terminate the existing relationship.
The relevant product market
6. TC was established as a joint venture company to provide
unsecured personal loans to mineworkers. Theta is an investment
holding company that provides microfinancing to various lowincome
customer segments. Within ABIL, it operates as the private equity and
new business incubator vehicle and is a standalone entity with an
investment portfolio. MCG provides unsecured loans (micro
financing) to mineworkers. The product overlap between the activities
of the acquiring and target firms is in the area of provision of micro
finance to mineworkers/lowincome consumers 1.
7. The Commission did not express a view as to whether the relevant market
was that for providing personal loans to lowincome consumers (broad
market), or low income mine workers (narrower market), since no
competition concerns arise on either definition. We agree with this
approach.
The relevant geographic market
8. Since mineworkers approach lending institutions in close proximity to them,
the market for the provision of personal loans to lowincome earners is
local. The Commission identified 12 areas where such services are
provided by both parties, but did not conclude on the precise parameters of
the relevant geographic market.
the relevant geographic market.
1 Microfinancing is described as a form of financing whereby small amounts of loans are made on a short
term basis. Currently, the Micro Finance Regulatory Council lists there being 1334 registered microfinance
institutions with 5051 branches around the country.
Effect on Competition
9. The transaction will not change the competitive state of play of the market
since TC’s market shares are already captured in that of ABIL’s.
10. The merging parties assert that Teba Bank will, through this transaction, be
released to compete with existing players in the market for microfinancing
and it has fixed plans to do so. It owns some of the infrastructure and
facilities through which microfinancing is conducted. In terms of the current
structure and its fiduciary duty to the joint venture Teba Bank is prohibited
from offering microfinance services. Therefore this transaction is at worst
competitionneutral and if the plans Teba Bank has to enter the market on
its own, which the parties informed about us at the hearing come to fruition,
might enhance competition.
11. Though market shares are high in some geographic areas, as high as 72%,
the merger does not further concentration. 2
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.
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20 September 2005
D. Lewis Date
Concurring: M. Mokoena, N. Manoim
For the merging parties: J Campbell instructed by Levitt D'arcy Hermann on
instructions of KPMG
For the Commission: Odie Strydom (Mergers and Acquisitions )
2 See record pages 220222