COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 48/LM/May07
In the matter between:
Newshelf 871 (Pty) Ltd Primary Acquiring Firm
And
Britehouse Holdings (Pty) Ltd Primary Target Firm
Panel : D Lewis (Presiding Member), N Manoim (Tribunal
Member) and Y Carrim (Tribunal Member)
Heard on : 19 June 2007
Order issued on : 19 June 2007
Reasons issued on : 17 July 2007
Reasons for Decision
Approval
1]On 19 June 2007 , the Tribunal conditionally approved the merger between
Newshelf 871 (Pty) Ltd and Britehouse Holdings (Pty) Ltd. The reasons follow
below.
The Transaction
2]The primary acquiring firm (Newshelf) intends to acquire 60% of the ordinary
share capital and 36.9% of the preference share capital in Britehouse from
Dimension Data Holdings South Africa (Pty) Ltd (“DDSA”). On completion of the
transaction Newshelf will own 60% of the ordinary share capital and 36.9% of
the preference share capital in Britehouse and DDSA will own the remaining
40% ordinary shares and 63.1% preference shares in Britehouse. Newshelf and
DDSA will have joint control over Britehouse.
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3]The merging parties have indicated that the proposed transaction will provide
Britehouse with BEE credentials.
The parties and their activities
4]The primary acquiring firm is Newshelf 871 (Pty) Ltd a special purpose vehicle
established for the purposes of implementing the proposed merger. The issued
share capital of Newshelf will be held as follows:
• Industrial Electronic Investments (Pty) Ltd (“Venfin”) will hold 49.98%
of the ordinary shares and 100% of the preference shares in
Newshelf. In terms of its shareholding Venfin will have sole control of
Newshelf.
• Safika Holdings (Pty) Ltd (“Safika”) will hold 25.01% of the ordinary
shares of Newshelf, and
• Convergence Partners Investments (Pty) Ltd (“Convergence”) will
hold 25.01% of the ordinary shares of Newshelf.
5]The primary target firm is Britehouse Holdings (Pty) Ltd (“Britehouse”) which was
prior to this transaction a wholly owned subsidiary of DDSA. It is an investment
holding company which will holds the following assets:
• 75% of the issued share capital in Pebbletree Consulting (Pty) Ltd
• 57.6% of the issued share capital of 3Fifteen Technology Solutions
(Pty) Ltd
• 28.07% of the issued share capital of Paracon Holdings Ltd
6]The acquiring group provides tracking systems, cellular telecommunication, ATM
and other related IT value added services including copiers, faxes, scanners and
similar equipment. The target firm is a supplier of IT consulting and business
solution services.
The relevant market and the impact on competition
7]Both merging parties provide Enterprise Application Software (“EAS”). This is IT
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software that helps to facilitate the effective management and control of an
organization by supporting the major business functions within the organization.
Some of the main categories that EAS addresses are Enterprise Resource
Planning, Customer Relationship Management and Supply Chain Management.
8]The acquiring firm develops and provides its own EAS solution called Fraxion
Advanced Spend Management Suite which allows companies to control,
manage and analyse their spending behaviour in real time. It deals only with
spend management. It also provides the software support and installation for its
product.
9]The target firm does not develop its own EAS product but sells already existing
EAS packages as supplied by SAP and Microsoft in providing complete
business solutions for companies.
10]The difference between those services provided by the acquiring party and
those of the target is that the acquiring party’s EAS application focuses on spend
management only while the target firm provides a complete EAS business
solution to its clients by making use of existing SAP and Microsoft applications.
We were advised at the hearing that because of their functional differences, the
products are complementary not competitive.
11]In light of the above we agree with the Commission that there is no overlap
between the activities of the merging parties. The transaction would therefore
not substantially prevent or lessen competition the relevant markets.
Public interest issues
12]The transaction raises no significant public interest issues.
____________________ 17 July 2007
N Manoim Date
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D Lewis and Y Carrim concurring.
Tribunal Researcher: R Badenhorst
For the merging parties: Paul Cleland of Routledge Modise
For the Commission: Marlon Dasarath and Makgale Mohlala
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