COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 108/LM/Dec06
In the matter between:
CBW Holdings (Pty) Ltd Acquiring Firm
And
Kwambonambi Cash and Carry (Pty) Ltd Target Firm
______________________________________________________________
Panel : Y Carrim (Presiding) N Manoim (Tribunal Member)
and M Mokuena (Tribunal Member)
Heard on : 7 February 2007
Decided on : 7 February 2007
Reasons Issued : 14 February 2007
REASONS FOR DECISION
Approval
[1] On 7 February 2007 the Competition Tribunal issued a Merger
Clearance Certificate approving the merger between CBW Holdings (Pty) Ltd
and Kwambonambi Cash and Carry (Pty) Ltd unconditionally. The reasons
appear below.
Parties
[2] The acquiring firm is CBW Holdings (Pty) Ltd (“CBW”). CBW is
controlled by Massmart Holdings Ltd (“Massmart”), a company listed on the
JSE Securities Exchange Limited.
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[3] The target firms are Kwambonambi Cash and Carry (Pty) Ltd
(“Kwambonambi”); the business conducted by PH Besigheidstrust, namely
Thaba Botshabelo (“Thaba Botshabelo”); the business conducted by Praxos
199 CC, namely Thaba Ladybrand (“Thaba Ladybrand”); and the business
conducted by Thaba Trust, namely Thaba Wholesalers (“Thaba Wholesalers”)
Transaction
[4] The proposed transaction is composed of two parts. According to the
parties, Part A is in essence a mechanism aimed at consolidating the
businesses of Thaba Wholesalers, Thaba Botshabelo and Thaba Ladybrand
prior to the acquisition of control by CBW. Part B provides for the acquisition
by CBW of 51% controlling interest in Kwambonambi.
Rationale for the Transaction
[5] The proposed transaction will enable CBW to enter the retail grocery
market. The individuals controlling the target firms would like to partially exit
the businesses.
Activities of the Parties
[6] The acquiring firms fall under the Massmart Group. Massmart is a high
volume, low margin retailer and wholesaler of food, liquor and general
merchandise.1 Massmart’s various trading companies and legal entities are
1 The parties submit that the general merchandise comprise a wide and disparate array of
products including office equipment and stationary supplies; home improvement supplies,
tools and accessories; outdoor and garden furniture; pool equipment and supplies; audio
equipment, video equipment and computer electronics; large and small household
appliances;houseware; sport clothing, footwear and equipment; and outdoor and camping
clothing, footwear and equipment
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grouped into four divisions comprising Massdiscounters, 2 Masswarehouse,
3Massbuild 4 and Masscash. 5
[7] The target firms are engaged in the retail of grocery products in the
following product categories namely; food, beverage and tobacco and
pharmaceutical products, cosmetics and toiletries.
Relevant Market
[8] The Commission’s investigation revealed that both the acquiring firms
and the target firms are involved in retail grocery products. However the
Commission found that there was no geographic overlap between the
activities of the acquiring firms and the target firms insofar as the retail of
grocery products is concerned.
Competition Analysis
[9] An examination of the proposed transaction by the Commission
showed that there is a product overlap between the activities of the merging
parties in the retail of grocery products, but given that there is no geographic
overlap between the activities of the merging parties the Commission is of the
view that the proposed transaction is unlikely to substantially prevent or
lessen competition in the affected markets. We agree with the Commission
that given the absence of geographic overlap between the activities of the
merging parties the proposed transaction is unlikely to substantially or lessen
2 Massdiscounters comprises retail discount stores trading under the names “Game” and
“Dion”
3 Masswarehouse division comprises the Makro chain of large wholesale club outlets, which
market a broad range of food, liquor and general merchandise to commercially affiliated
resellers and upper income, end consumers predominantly in the LSM 610+ socio economic
Groups, through 12 stores located in Gauteng, Western Cape, Eastern Cape and KwaZulu
Natal and two stores in subSaharan Africa
4 Massbuild division comprises the Builders Warehouse, Delarey, Federated Timbers and
4 Massbuild division comprises the Builders Warehouse, Delarey, Federated Timbers and
Servistar chains, which sell building supplies, hardware and related products.
5 Masscash division comprises CBW, Jumbo and Shield
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competition in the affected markets.
Public Interest
[10] There are no public interest issues.
Conclusion
[11] Based on the above the transaction will not result in a substantial
lessening or prevention of competition in the identified markets and is
accordingly approved unconditionally.
___________________ 14 February 2007
Y Carrim Date
Tribunal Member
N Manoim and M Mokuena concurring.
Tribunal Researcher : J Ngobeni
For the merging parties : Mark Gardern (Edward Nathan Sonnenbergs.)
For the Commission : Kwena Mahlakoana (Mergers and Acquisitions)
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