COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 19/LM/Feb06
In the large merger between:
BCE Foodservice Equipment (Pty) Ltd
and
Basfour 3018 (Pty) Ltd
Reasons for Decision
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Approval
1. On 22 March 2006 the Competition Tribunal issued a merger clearance
certificate approving the merger between BCE Foodservice Equipment
(Pty) Ltd and Basfour 3018 (Pty) Ltd. The reasons appear below.
The Parties
2. The acquiring firm is BCE Foodservice Equipment (Pty) Ltd (”BCE
Foodservice”). BCE Foodservice is owned by the following shareholders in
the percentages indicated:
Investec Bank Limited (“Investec”) (49%)
LM Nedstart (13%)
Mr Frank Boner (“Mr Boner”) (13%)
Cida BCE Investments (Pty) Ltd (25%)
Investec is owned by Investec Limited, a company listed on the JSE and is
not controlled by any single shareholder. The other companies controlled by
Investec Limited are not relevant for the purposes of this decision. 1
3. The primary target firm is Basfour 3018 (Pty) Ltd (“Basfour”). Basfour is
controlled by Mr Boner. Basfour controls Goldscene International Limited,
which operates or appears from one time to have operated only in China. 2
The Merger Transaction
4. BCE Foodservice will acquire 100% of the issued shares in Basfour from Mr
Boner.
Rationale for the Transaction
e. The proposed transaction is viewed as providing an
opportunity for BCE Foodservice to combine its business
with that of Consolidated Importers and Exporters (Pty) Ltd,
which was acquired by Basfour from ABSA. 3
f. The proposed merger is perceived by the parties as benefiting
them through the combined expertise and international networks
of the management teams of the two merging parties in the field
of importing products into South Africa.
1 The companies controlled by Investec Limited can be found on page 2 of the record. These include
Investec Property Group Holdings Limited, Investec Assurance Limited, Investec Employee Benefit
Holdings (Pty) Ltd and Investec Group Data (Pty) Ltd.
2 At the Tribunal hearing it was stated by the merging parties that Goldscene International Limited is a
dormant company and should be disregarded for the purposes of this transaction.
3 Prior to the acquisition by Basfour of the assets and business of Consolidated Importers and Exporters (Pty)
Ltd, Basfour was a shelf company and did not conduct any business. Thus the business currently conducted
by Basfour is as a result of purchasing the assets and business of Consolidated Importers and Exporters (Pty)
Ltd.
2
The relevant product markets
7. While the merging parties operate within a broadly defined
distribution market, their products do not overlap in a narrowly defined
market. In the latter, they operate within separate product markets and
serve different customers. BCE Foodservice is a specialist wholesaler that
supplies professional industrial, kitchen and catering equipment for use in
the hospitality industry and food service industry, while Basfour is a general
wholesaler of household goods and supplies a wide range of inexpensive
household items to retailers and other general wholesalers.
h. There is an overlap between some of the products distributed by
BCE Foodservice and Basfour. This overlap relates to
kitchenware and smaller utensils. However, the extent of the
overlap is minimal and it does not substantially prevent or lessen
competition.
Effect on Competition
i. In a broadly defined market 4 the combined market share of
the merging firms is estimated to be less than 15% post
merger. The market share post merger is considered small
and consequently, does not raise serious competition
concerns. Moreover, there are other companies which will
compete with the merging parties in the distribution of their
various products. BCE Foodservice competes with Hendler
& Hart, Steel King Centre, Capital Catering, Chef Master,
Catering and Trading Supplies. Basfour competes with Metro
Cash and Carry, Makro, Wechsler, Louis Schmidt, Tru Africa
and Africa Direct. These companies will continue to compete
with the merging parties postmerger.
Public Interest
x.There are no public interest issues that may raise serious
competition concerns.
Conclusion
11. We conclude that the merger will not lead to a substantial lessening or
prevention of competition.
4 The term ‘broadly defined market’ has been described on page 281 of the record, as a market which
includes the supply at wholesale level of kitchen and catering products (for both industrial and domestic use)
as well as other household hardware products.
3
07 April 2006
Y Carrim Date
Concurring: M Moerane and L Reyburn
For the merging parties: Desmond Rudman, Werksmans Attorneys
For the Commission: Seema Nunkoo, Mergers and Acquisitions
4