IN THE COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 118 /LM/Nov07
In the matter between:
WBHO CONSTRUCTION (PTY) LIMITED Acquiring
Firm
and
SIMBITHI ECOESTATE (PTY) LIMITED Target
Firm
_______________________________________________________________
Panel : Y Carrim; D Lewis; and M Mokoena
Heard on : 12 December 2007
Decided on : 12 December 2007
Reasons issued on : 18 December 2007
REASONS FOR DECISION
INTRODUCTION
[1] On 12 December 2007, the Tribunal unconditionally approved the merger between
WBHO Construction (Pty) Limited and Simbithi EcoEstate (Pty) Limited.
THE TRANSACTION
[2] The primary acquiring firm is WBHO Construction (Pty) Limited (“ WBHO“). WBHO
controls in excess of twenty subsidiaries worldwide, including South Africa. It is
controlled by Wilson Bayly Holmes Ovcon Ltd (“ Wilson Bayly Holmes ”). Wilson Bayly
Holmes is not controlled by any firm and controls in excess of thirty five subsidiaries
worldwide. In South Africa, the acquiring firm, among others, has interests in the
following firms: Simbithi EcoEstate (Pty) Limited (the primary target firm); and St
Francis Link Golf Estate.
[3] The primary target firm is Simbithi EcoEstate (Pty) Limited (“ Simbithi”). Simbithi
does not control any firm. It is jointly controlled by the acquiring Group (50%) and JBR
Trust ( “JBR”) (50%). WBHO seeks to acquire sole control of the target firm through
the purchase of JBR’s 50% shares in Simbithi.
RATIONALE FOR THE TRANSACTION
[4] WBHO believes that Simbithi is a strategically good investment and requires
further funding from shareholders in order to complete the development of the Simbithi
EcoEstate. JBR wishes to realise its investment.
THE PARTIES’ ACTIVITIES
[5] WBHO operates as a constructer in the civil engineering industry. It builds roads,
earth platforms, railway lines, bridges, mining infrastructure, airports, sewage works,
water purification works, dams, pipelines and other infrastructural works. It also
develops and owns residential property estates to a limited extent, Simbithi in KwaZulu
Natal being one, and the St Frances Link Golf Estate in the Eastern Cape being the
other.
THE RELEVANT MARKET
[6] The acquiring firm’s and target firm’s activities overlap in the market for the
development of residential properties.
[7] The Commission, however, submitted that the geographic market for property
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development is regional since property developers are reluctant to move their
equipment from one region to another due to the high costs involved. As a result the
Commission submitted that there is no geographic overlap in the activities of the
parties.
COMPETITION ANALYSIS
[8] In our view this transaction does not give rise to any horizontal effects, as there is
no geographic overlap in the activities of the parties. The transaction will also not alter
the market structure in the KwazuluNatal region as the acquiring firm is simply
increasing its stake in the target firm.
[9] The Commission noted that there is a minimal vertical dimension to the transaction
as the acquiring firm rendered certain services to the target firm in the previous
financial year. 1 However, the parties submitted that such vertical integration is unlikely
to result in any foreclosure as these services constituted an insignificant contribution to
the acquiring firm’s turn over.
[10] Given the above, we are of the view that the transaction is unlikely to lead
to a substantial prevention or lessening of competition in the affected markets.
CONCLUSION
[11] We find that the transaction does not raise any significant public interest issues
and accordingly approve the merger without conditions.
_______________ 18 December 2007
Y Carrim Date
1 These include Earthworks; civils; installed services; and building of the gate house and
community centre, at Simbithi Eco Estate.
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D Lewis and M Mokuena concurring.
Tribunal Researcher : P S Munyai
For the merging parties : Garlicke & Bousfield Inc
For the competition commission : M Mohlala and D Masilela
(Mergers & Acquisitions)
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