COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No.: 54/LM/Jun06
In the matter between :
MediLiberty Star Consumer Holdings (Pty) Ltd Acquiring Firm
And
Chet Industries Ltd Target Firm
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Panel : N Manoim (Presiding Member), L Reyburn (Tribunal
Member), and M Mokuena (Tribunal Member)
Heard on : 2 August 2006
Decided on : 2 August 2006
Reasons issued: 25 August 2006
REASONS FOR DECISION
Approval
[1]. On 2 August 2006, the Competition Tribunal unconditionally approved
the proposed merger between the abovementioned parties. The reasons for
the decision follow.
Parties
[2]. The primary acquiring firm is Liberty Star Consumer Holdings (Pty) Ltd
(“Libstar”). Abrina 2382(Pty) Ltd (“Abrina”) controls Libstar. Abrina is a wholly
owned subsidiary of the Royal Bafokeng Finance (“Pty”) Ltd (“RBF”), which is
in turn a wholly owned subsidiary of the Royal Bafokeng Nation (“RBN”). The
primary target firm is Chet Industries Ltd (“Chet Industries”). The shareholders
in Chet Industries are Chester Industries Ltd 82.71% (Chester Industries);
Kessler family Trust 14.66% and The Chet Share Incentive Share Trust
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2.43%1. Milton Levine who is the managing director of Chester Industries
controls Chester Industries.
Transaction
[3]. This transaction involves the acquisition of the entire issued share
capital of the Chet Industries and its subsidiaries by Libstar. Subsequently, a
newly formed subsidiary of Libstar will acquire the business assets of Chet
Industries from Libstar. The newly formed subsidiary referred to above is
Calshelf Investment 125 (Pty) Ltd to be renamed Chet Chemicals (Pty) Ltd
(“Newco”). Libstar will hold 70% of the issued shares in Newco, and the
Kessler Family Trust holds the remaining 30%. Other than Newco Libstar
controls Dickon Hall Foods (Pty) Ltd (“Dickon Hall”) and will also control
retailer Brands (Pty) Ltd (“Retailer Brands”)
Reasons for the transaction
[5]. For Libstar the transaction was motivated by its desire to enter the
market for the manufacture, sale, marketing and distribution of household
products such as laundry detergents, fabric conditioners, dishwashing
systems, all purpose cleaners, bath and shower additives, liquid and bar
soaps, prewash soap/soakers and bleach, and perceives this proposed
transaction as an opportunity to do so. Chet Industries believes that the
growth of its business will depend on its ability to improve its black economic
empowerment credentials and to generally reinvent itself by becoming more
relevant to the South African commercial landscape.
The merging parties activities
[6]. Royal Bafokeng Nation through its wholly owned subsidiary Bafokeng
1 For a list of Chet Industries subsidiaries see table 6 on page 4 of the Commission’s Report
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Finance controls Libstar. Bafokeng Finance is an investment holding vehicle
for the Royal Bafokeng Nation’s nonmining interests and does not sell any
products nor provide any services for its own account. Libstar is an
investment holding company, which holds interests in companies within the
food industry. Abrina holds 76% of the issued shares in Libstar. Abrina is a
wholly owned subsidiary of the Royal Bafokeng Finance. Retailer Brands is
active in the business of manufacturing and distribution of dry food products
such as soups, jellies, spices, sauces, baking powder, colourants, essences
and cornflour, both under its own brand names, as well as for retailers and
wholesalers house brands. Dickon Hall manufactures and packages branded
“wet” food products, such as sauces and condiments. Through some of its
subsidiaries, the Bafokeng group are active in the following industries namely,
mining, consruction, packaging, insurance, finance and information
Technology.
[7]. Chet Industries is a manufacturer, distributor and marketer of
households and laundry detergents products, both under its own brand name
as well as under retailers and wholesalers house brands.
Relevant Market
[8]. According to the Commission neither the acquiring nor the target firm
supply products that can be regarded as substitutes, and accordingly no
overlap occurs with regard to the activities of the parties. The Commission is
also of the view that no vertical integration issues arise from the transaction
since there is no horizontal overlap between the activities of the merging
parties. We agree with the Commission’s assessment.
Effect on Competition
[9]. The transaction will not substantially prevent or lessen competition, as
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there are no overlaps or vertical integration issues arising from the
transaction.
Public Interest
[10]. No public interest issues arise from this merger
Conclusion
[11]. Having regard to the above, we conclude that the merger will not lead
to a substantial lessening of competition. Accordingly we agree with the
Commission’s recommendation that the transaction be approved
unconditionally.
_______________ 25 August 2006
N Manoim Date
Concurring: L Reyburn and M Mokuena
Tribunal Researcher : J Ngobeni
For the merging parties : Portia Twala and Andile Nikani, Fluxmans
Attorneys
For the Commission : Maarten Van Hoven, Mergers and Acquisitions
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