COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 132/LM/Dec07
In the matter between:
Lithotech Holdings Ltd Acquiring Firm
And
Rotolabel (Transvaal) (Pty) Ltd Target Firm
Panel : Y Carrim (Presiding Member), N Manoim (Tribunal Member) and U
Bhoola (Tribunal Member)
Heard On : 06 February 2008
Decided on : 06 February 2008
Reasons Issued on : 20 February 2008
Reasons for Decision
Approval
[1] On 05 February 2008 the Competition Tribunal issued a Merger Clearance Certificate
approving the merger between Lithotech Holdings Ltd and Rotolabel (Transvaal) (Pty) Ltd
unconditionally. The reasons appear below.
Parties
[2] The acquiring firm is Lithotech Holdings Ltd (“Lithotech”) 1 a company incorporated
under the laws of South Africa. Lithotech is a wholly owned subsidiary of Bidvest Group Ltd
(“Bidvest Group”) and forms part of the Bidvest Bidpaper Plus division. 2
[3] The target firm is Rotolabel (Transvaal) (Pty) (“Rotolabel”), a company incorporated
under the laws of South Africa. Rotolabel is jointly controlled by Richard Simon Gilbert and
the Zagsy Cat Trust (“the Trust”), who together own 65% of the shares in Rotolabel. 3
1 Lithotech controls the following firms: Lithotech (Pty)Ltd; Lithotech Afric Mail (Cape)(Pty) Ltd; Lithotech
Corporate (Pty)Ltd and Lithotech Solutions (Pty)Ltd
2 Bidvest is a company incorporated in accordance with the laws of South Africa. It has a
number of subsidiaries in South Africa and abroad.
3 The rest of the shareholders of Rotolabel are as follows: Anthony Roy William Clarke,
with 13.5%; Ronald Harry Dyer, with 13.5% shares; Jacobus Lodewicus Maritz, with 4%
shares and Grant Watson with 4% shares. Rotolabel does not directly or indirectly control
1
Transaction
[4] In terms of the proposed transaction Lithotech will acquire 100% of the share capital
in Rotolabel.
Rationale
[5] Lithotech considers the transaction as part of a broader diversification plan of its
Bidpaper Plus division. It is anticipated that having a facility such as Rotolabel would elevate
Bidpaper Plus division’s position in the market, while also bringing additional skills and
equipment. The target firm’s shareholders are selling their shares because the majority
shareholders are approaching retirement and have identified this transaction as the best way
to realise their investment.
Parties’ Activities
[6] Lithotech conducts the print and paper conversion services of the Bidvest Group. 4 It
offers a range of products and services which include labels and labelling systems, the
manufacturer sales and distribution of customer communications, business forms, document
management and other commercial products. The parties submitted that with regard to the
labelling products business, the Bidpaper Plus division has two label operations, namely,
Lithotech Labels (which manufactures decorative selfadhesive labels) and Lithotech
Manufacturing Spartan (which manufactures blank or limited colour self adhesive labels).
[7] Rotolabel produces decorative selfadhesive labels which are largely applied to Fast
Moving Consumer Goods(“FMCG”) and supplies mainly to Woolworth’s packaging labels
and the wine and pharmaceutical sectors.
Relevant Market
[8] In its analysis of the proposed transaction the Commission found that there is an
overlap in the activities of the merging firms in respect of the manufacture and supply of self
adhesive labels, specifically in the decorative selfadhesive product label. The Commission
defines the market as the market for the manufacture and supply of selfadhesive labels.
any other firm.
any other firm.
4 Bidvest Group operates through Bidpaper Plus, Bidfreight, Bidserve, BidFood, Bid
Industrial and Commercial Services, Bid Auto and Bid Corporate Services and its activities
are: catering supplies, food and allied products; travel, financial and related services;
freight-forwarding, clearing, distribution, warehousing and allied activities; stationary,
office furniture, supplies and related products;linen,rental,laundry, cleaning and other
services; electrical supplies, security and related products; motor retail and related
services; and printing and stationary products which are conducted by Bidpaper Plus
2
The parties argued that the market could be defined further into the market for decorative
selfadhesive labels and the market for plain selfadhesive labels. At the hearing Mr Neil
Bircht, Chief Executive Officer of Lithotech Holdings, submitted that the manufacturing of
decorative selfadhesive labels required additional colours and varnishes which were not
required in the plain selfadhesive labels. 5 The merging parties relied on this Tribunal’s
approach to the labels market in Nampak Ltd/Malbak Ltd. In that case the Tribunal
distinguished between selfadhesive and wet glued labels. 6 In our view the processes for
the manufacture of decorative labels, while requiring more colour and varnish, did not seem
significantly different from that of selfadhesive blank labels. Accordingly we define the
relevant market as the market for the manufacture and supply of selfadhesive labels. 7
Competition Analysis
[9] According to the Commission the merging parties would have a 9% combined post
merger market share for the manufacture and supply of self adhesive labels nationally. Pre
merger, Lithotech and Rotolabel have small market shares, estimated at 2% and 7%
respectively. The accretion in the market share would thus be only 5%. The Commission
further submitted that this market share is insignificant to raise any competition concerns. In
addition, the transaction does not raise any public interest issues.
Conclusion
[10] Based on the above, we find that the transaction will not result in a substantial
lessening or prevention of competition in the relevant market and is accordingly approved
unconditionally.
___________________ 20 February 2008
Y Carrim Date
Tribunal Member
N Manoim and U Bhoola concurring.
5 See page 3 of the transcript.
6 See Tribunal case number 29/LM/May02.
5 See page 3 of the transcript.
6 See Tribunal case number 29/LM/May02.
7 This is supported to some extent by the fact that both the Commission and the merging parties rely on turnover
figures of selfadhesive labels as a whole to estimate the merged entities market share. See page 50 of the
record.
3
Tribunal Researcher : J Ngobeni
For the merging parties : Bowman Gilfillan
For the Commission : Mahale Mohlala
4