Imperial Holdings Ltd and TFD Network Africa (Pty) Ltd (104/LM/Oct05) [2006] ZACT 5 (19 January 2006)

COMPETITION TRIBUNAL 
REPUBLIC OF SOUTH AFRICA
       Case no.:  104/LM/Oct05 
In the large merger between: 
Imperial Holdings Ltd 
and 
TFD Network Africa (Pty) Ltd  
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Reasons
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Introduction
1. On 22 December 2005 the Competition Tribunal approved the merger  
between Imperial Holdings Ltd and TFD Network Africa (Pty) Ltd. The  
reasons are set out below.
The transaction
2. CIC Holdings will sell 100% of its share capital in TFD Network Africa  
(Pty) Ltd (“TFD”) to Imperial Holdings Ltd (“Imperial”).
3. Imperial  is  listed  on the  JSE Stock Exchange Ltd. Imperial  Holdings  
controls in excess of 50 subsidiaries and does not have any controlling  
shareholders. 
4. TFD   is   controlled   by   CIC   Holdings   Ltd,   a   company   listed   on   the  
Namibian   Stock   Exchange.   Although   TDF   controls   various   firms   in  
Namibia and Botswana it does not directly or indirectly control any firm  
in South Africa.  
Rationale for the transaction

5. The rationale for the transaction is that TFD has not been performing  
financially since 2002 due to,   inter alia , the loss of one of its principal  
customers in 2004. It has therefore struggled to establish itself as a  
viable and sustainable private entity. 
6. The   acquisition   will   enable   Imperial   to   provide   additional   and   more  
extensive   services,   focussing   also   on   ambient   products,   in   the   fast  
moving consumer goods market (“FMCG market”).
Effect on competition
7. The   Commission   found   that   the   parties’   activities   overlapped   with  
regard to the provision of logistics services for FMCG by road. Logistics  
services   comprises   of   various   activities   which   include   demand  
forecasting,   inventory   management,   logistics   communication,   order  
processing,   packaging,   warehouse   management,   parts   and   service  
support,   procurement,   reverse   logistics,   debtor   management   and  
transportation. Since the parties’ market share would be less than 5%  
post the transaction, Imperial’s market share is approximately 0.98%  
and that of TFD approximately 0.8%, the Commission found that the  
transaction would not substantially lessen or prevent competition.
8. We agree with the Commission that the merger would not substantially  
lessen   or   prevent   competition,   however,   we   do   not   agree   with   its  
definition of the relevant market. 
9. The   parties   informed   the   Tribunal   during   the   hearing   that   although  
Imperial and TFD both provide logistics services to the FMCG industry,  
Imperial   only   provides   logistics   services   for   temperature­controlled  
FMCG while TFD offers its services only to the ambient FMCG market.  
Since one needs different kinds of warehouses and trucks for each of  
these   sub­markets   the   logistics   services   for   temperature­controlled  
goods and those for ambient goods are not substitutable. 1   There is  
thus no horizontal overlap.
Public interest

thus no horizontal overlap.
Public interest
10. Imperial will retain the TFD business as a separate entity. Accordingly,  
there will be no job losses as a result of the transaction.
1  See transcript dated 22 December 2005, page 3.
2

19 January 2006
N Manoim Date
Concurring: L Reyburn and M Mokuena   
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