COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case no.: 85/LM/Sep05
In the large merger between:
Super Group Dealerships – A division of Super Group Trading (Pty) Ltd
and
LM Wolfsohn Motors (Pty) Ltd
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Reasons
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Introduction
On 29 September 2005 the Competition Tribunal approved the merger between
Super Group Dealerships, a division of Super Group Trading (Pty) Ltd, and LM
Wolfsohn Motors (Pty) Ltd. The reasons for the decision are set out below.
The transaction
Super Group Dealerships, a division of Super Group Trading (Pty) Ltd, is
acquiring the assets and goodwill of LM Wolfsohn (Pty) Ltd trading as Lionel
Motors Rustenburg.
Super Group Trading controls five divisions of which Super Group Dealerships is
one. Super Group Dealerships controls 17 Gautengbased commercial and
passenger vehicle dealerships that represent all the major South African brands
including Nissan SA passenger and commercial vehicles. .
Lionel Motors, situated in Rustenburg, is a dealer in Nissan, Nissan Diesel and
Renault passenger, light, medium and heavy commercial vehicles as well as pre
owned vehicles across all brands.
Rationale for the transaction
Super Group currently does not operate in the Rustenburg area and regards the
acquisition as an opportunity for growth. Lionel Motors claims that the transaction
will result in new avenues of business being available to it because of Super
Group’s empowered status.
Effect on Competition
The parties’ activities overlap in the sale of new passenger and commercial
Nissan vehicles as well as preowned vehicles. The market for passenger
vehicles consists of small, middle, large, luxury, speciality, utility cars and
minivans. The market for commercial vehicles consists of light, medium and
heavy commercial vehicles.
The Commission refrained from defining the geographic market because,
according to it, the transaction does not raise any competition concerns whether
the geographic market was defined as local or regional.
When the geographic market is defined as local there is no geographic overlap
between Super Group Dealerships’ various Gauteng dealers and the target
company’s Rustenburg business. 1 If the market is defined as regional to include
all the local markets the market shares may raise some prima facie concerns,
specifically in the markets for medium and heavy commercial vehicles where the
merged entity would have a market share of 60% and 37% respectively.
However, the high market shares are not as a result of the transaction but exists
premerger with Super Group Dealerships possessing a market share of 58%.
According to the Commission distribution of medium and heavy commercial
vehicles differs from passenger or small commercial vehicles in that the former
class of vehicles are readily sourced nationally as well as directly from the
manufacturers via tenders in cases where the clients require certain
manufacturers via tenders in cases where the clients require certain
specifications.2 Based on this the Commission argued that the geographic
market might indeed be defined even broader, as national, and the market share
of the merged entity would as a result be much lower. Some of the larger
regional competitors in the regional medium and heavy commercial markets are
1 Super Group has dealerships in Hydepark, Edenvale, Fourways, Boksburg, Benoni, Springs, Blackheath,
Johannesburg, Midrand, Randburg, Krugersdorp and Lyndhurst
2 Medium commercial vehicles are defined as vehicles with a weight of between 7.5 and 16 tons and heavy
commercial vehicles as vehicles with a weight of more than 16 tons.
2
Toit’s Hatfield, Menlyn Nissan, McCarthy Sandton, Bruma Nissan and Melrose
Nissan.
We found the Commission’s record to be incomplete with regard to information
on some of the product markets. However, in light of the above we do agree with
it that the transaction does not raise any competition concerns.
Employment
No jobs will be lost as a result of the transaction and no other significant public
interest issues are raised.
____________ 3 November 2005
D Lewis Date
Concurring: N Manoim, Y Carrim
3