COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 114/LM/Dec05
In the large merger between:
Combined Motor Holdings (Pty) Ltd
and
Craig Park Motors (Pty) Ltd
Reasons for Decision
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APPROVAL
On 18 January 2006 the Competition Tribunal issued a Merger Clearance
Certificate approving the merger between Combined Motor Holdings (Pty) Ltd and
Craig Park 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 Combined Motor Holdings (Pty) Ltd (“CMH”). It
controls 13 subsidiaries, listed on the Commission’s Recommendation at
page 3. CMH is not controlled by any firm.
2. The primary target firm is Craig Park Motors (Pty) Ltd (“CPM”), trading as
Normans Toyota. It is controlled by NL Welthagen Family Holdings (Pty) Ltd
as to 75% and is a listed company.
The Merger Transaction and Rationale
3. The acquiring firm is acquiring all the share capital in Normans Toyota.
CMH seeks to expand its dealer representation and range of products.
The relevant product and geographic markets
4. CMH is active in vehicle dealership and sells passenger vehicles and
light, medium and heavy commercial vehicles through its subsidiaries CMH
Luxury Motors, Datcentre Motors, Kempster Sedgwick and Whitehouse
Motors. It has 49 dealerships which businesses are situate at various
locations in Durban (16 dealerships), Cape Town (9 dealerships),
Johannesburg and environs (11), Pretoria (11) and Pietermaritzburg (2)
5. CMH further operates in the motor vehicle rental industry. Its services are
offered in Bloemfontein, Johannesburg, Kimberly, Mpumalanga, Pretoria,
Rustenburg, Plettenberg Bay, Port Elizabeth and various other locations
around the country.
6. CMH is further engaged in the business of motor vehicle panel and repair
shops, located in Umhlanga and Johannesburg.
7. Finally, CMG, through CMH Marine and Leisure, also sells marine
equipments, such as motorboats, jet ski’s, motorized quad bikes, etc.
8. Normans Toyota operates in the motor vehicle dealership market and sells
passenger and light commercial vehicles in a suburb of Johannesburg. It
trades in new Toyota passenger and light commercial vehicles and used
motor vehicles.
9. The target firm has no involvement in marine equipment, motor vehicle
rentals, or panel shops. The only area of overlap between the merging
parties is that of the sale of new and used passenger vehicles and light
commercial vehicles in the Johannesburg local area.
Impact on Competition
10. The relevant markets could be defined as the market for new passenger
vehicles and the market for light commercial vehicles. This was the
broad market definition.
11. A narrower (segmented) market definition of passenger vehicles was
also considered.
12. A third area of overlap was that of used passenger vehicles and light
also considered.
12. A third area of overlap was that of used passenger vehicles and light
commercial vehicles.
13. Premerger the market shares for the acquiring firm were 7% in the new
passenger vehicle market and 5% in the light commercial vehicle
market.
14. The combined postmerger market share of the broader market for
passenger vehicles will be 9% and 7% in respect of light commercial
vehicles respectively.
15. The combined postmerger market shares for a segmented (narrower)
new passenger vehicle market are as follows:
a. Small cars 3%
b. Middle cars 6%
c. Luxury cars 13%
d. Speciality cars 3%
e. Utility cars 3%
16. Whether the relevant market is defined in a broader or narrower
manner, the merger would result in a small accretion in market share for
the acquiring firm.
17. Insofar as both the acquiring and target firms sell used vehicles, there is
an overlap in the Johannesburg area. Although neither the Commission
nor the merging parties were able to give us used car market shares,
the Tribunal was advised by the parties at the hearing that used cars
are sourced primarily as tradein vehicles. Moreover, used car sales
comprise a small portion of the target firm’s total car sales. We have
found in previous mergers that the used car market is very competitive
in that all brands of used cars can be sourced from a variety of dealers
and private entities. Therefore we do not foresee any competitive impact
on the used car market as a result of this merger.
Conclusion
We conclude that there will be no substantial effect on competition. The merger
will not lead to a substantial lessening or prevention of competition in any market.
There are no public interest concerns which would alter this conclusion.
The Tribunal therefore approves the transaction unconditionally.
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18 January 2006
Y. Carrim Date
Concurring: T. Orleyn, N. Manoim
For the merging parties: Mr J. Young, Combined Motor Holdings
For the Commission: L. Khumalo, Mergers and Acquisitions