COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 77/LM/Aug05
In the large merger between:
Unitrans Motors (Pty) Ltd
and
Weiss Motors (Pty) Ltd
Reasons for Decision
________________________________________________________________
APPROVAL
On 21 October 2005 the Competition Tribunal issued a Merger Clearance
Certificate approving the merger between Unitrans Motors (Pty) Ltd and Weiss
Motors (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 Unitrans Motors (Pty) Ltd (“Unitrans”). It is controlled
by Unitrans Motor Enterprises (Pty) Ltd, which is a whollyowned subsidiary
of Unitrans Limited. Steinhoff Africa Holdings (Pty) Ltd, a 100% subsidiary
of the listed entity, Steinhoff International Holdings Ltd, has a 60% stake in
Unitrans Limited. Unitrans operates a motor dealership in Kings Park,
Durban.
2. The primary target firm is Weiss Motors (Pty) Ltd (“Weiss”). It owns two
motor dealerships in Durban and Amanzimtoti. Weiss’ sole shareholder is
Mr A Hartley.
The Merger Transaction
3. Unitrans is acquiring sole ownership of the Weiss dealerships in Durban
and Amanzimtoti. This transaction involves the sale of the dealerships as
going concerns.
Rationale for the Transaction
4. Unitrans wants to consolidate its existing dealership with Weiss’ operations.
Weiss’ owner is emigrating and selling his dealership business.
5. The parties contend that the greater Durban area is becoming overtraded ,
with the result that it is becoming difficult for motor dealerships to remain
viable on the numbers of vehicles they are servicing. They allege that their
daily dealership costs, as well as workshop and “tooling up” costs, are very
high and add to their burdens. While the parties are not contending that the
target firm is a failing firm, they state that economies of scale and cost
savings will be achieved by the combination of dealerships. 1
The relevant product and geographic markets
f. Both parties are involved in various aspects of motor vehicle
retailing. Unitrans sells new and preowned motor vehicles,
parts and accessories and provides aftersales services as well
as associated services such as transport, logistics, distribution
and warehousing. Weiss Motors also sells new and preowned
vehicles, parts and accessories and provides aftersales
service. The Commission identified the overlap between them
as extending to the sale of new Volkswagen motor vehicles as
well as various brands of preowned motor vehicles.
7. Based on this overlap, the identified relevant markets are firstly, the sale of
Volkswagen's new small, medium and luxury cars and light commercial
vehicles, and secondly, the sale of preowned passenger vehicles of all
brands.
8. We have previously defined the passenger vehicle market as comprising
different segments or submarkets. 2 The Commission did not analyse the
different segments or submarkets. 2 The Commission did not analyse the
1 We note that an assertion of overtrading, when made by a participant in the market, could merely signify
healthy competition.
2 We have held that the passenger vehicle submarkets may include entry level cars; small cars; lower middle
cars; upper middle cars; large cars; lower luxury cars; upper luxury cars; lower specialty cars; upper
speciality cars; small utility; lower middle utility; upper middle utility; small minivans; and minivans. The
market for commercial vehicles can be subdivided into: light; medium and heavy commercial vehicles; as
well as buses and coaches over ten tons. See DaimlerChrysler South Africa (Pty) Ltd and Sandown Motor
Holdings (Pty) Ltd 44/LM/Jul01, Combined Motor Holdings Limited and Forza (Pty) Ltd – 64/LM/Jul05
market for parts and servicing, and we find it unnecessary to consider
whether this is a separate relevant market. As we mention below, there
seem to be other Volkswagen dealers in Durban and nearby areas from
which Volkswagen parts are readily accessible.
9. For present purposes we accept that the second relevant market, that for
the sale of preowned vehicles, includes aftersales servicing.
10. t is not disputed that in the market for the sale of preowned passenger
vehicles, competition is lively. A market share quantification for that market
has not been provided and we are satisfied that it would not have been
necessary for the purposes of the Tribunal's adjudication of this merger.
11. We have previously held that the market for preowned motor vehicles is
characterised by low entry barriers, as evidenced by the many sources of
supply of preowned vehicles. 3 We do not need to analyse this market any
further.
12. As far as the first market is concerned, the Commission has applied the
approach which we have adopted in previous cases and has identified the
combined market shares of the merging parties (based on new Volkswagen
sales) in the overlapping submarkets or segments of both the broader
geographic market, namely the greater Durban area, and also and more
narrowly, Durban itself:
Table 1: Market Shares in Durban (new Volkswagen vehicles)
Firm Small Medium Luxury Light
Commercial
Unitrans 4.6% 2.8% 0.2% 0.1%
Weiss 4.3% 2.4% 0.5% 0.06%
Combined post
merger
8.9% 5.2% 0.7% 0.16%
Source: Merging parties’ data derived from Naamsa Figures
Table 2: Market Shares in GreaterDurban 4 (new Volkswagen vehicles)
Firm Small Medium Luxury Light
Commercial
Unitrans 3.4% 2.0% 0.2% 0.08%
Weiss 4.7% 2.4% 0.4% 0.1%
Combined post
merger
8.1% 4.4% 0.6% 0.18%
3 See DaimlerChrysler South Africa (Pty) Ltd and Sandown Motor Holdings (Pty) Ltd 44/LM/Jul01
4 According to Naamsa data, greater Durban entails Durban, Durban City Council, Ndwedwe, Pinetown,
Pinetown City Council, Umhlanga, Umlazi/Amanzimtoi, Verulam/Tongaat, Westville. Record page 388
Source: Merging parties’ data derived from Naamsa Figures
13. It is clear that in each submarket, the merger will bring about
minimal market share accretion.
14. Furthermore, the parties listed at least five rival Volkswagen dealerships
competing in both Durban and the greater Durban region.
Conclusion
We conclude that there is no effect on competition. The merger will not lead to a
substantial lessening or prevention of competition in any market.
No vertical issues arise which call for discussion, and similarly there are no public
interest concerns. The merging parties have given an assurance that the merger
will not affect employment.
The Tribunal therefore approves the transaction unconditionally.
__________
31 October 2005
L. Reyburn Date
Concurring: M. Mokoena, T. Orleyn
For the merging parties: N. Browne, Cliffe Dekker Attorneys
For the Commission: O. Strydom, Mergers and Acquisitions