COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 33/LM/Apr08
In the matter between:
Altron Finance (Pty) Ltd Acquiring Firm
And
Aeromaritime International Management Services Target Firm
Panel : D Lewis (Presiding Member), U Bhoola (Tribunal Member),
and M Mokuena (Tribunal Member)
Heard on : 4 June 2008
Order Issued : 4 2008
Reasons Issued: 14 July 2008
Reasons for Decision
Approval
1] On 4 June 2008, the Tribunal unconditionally approved the merger between
Altron Finance (Pty) Ltd and Aeromaritime International Management Services
(Pty) Ltd. The reasons for approving the transaction follow.
The parties
2] The primary acquiring firm is Altron Finance (Pty) Ltd (“Alfin”), a wholly owned
subsidiary of Allied Electronics Corporation Limited (“Altron”), a company listed
on the JSE Securities Exchange.
3] Altron is not controlled by any single shareholder. Its major shareholders are
Biltron (Pty) Ltd (with a 29.2% shareholding), Alfin (Pty) Ltd (with a 10%
shareholding), Public Investment Corporation (with a 9.8% shareholding), Old
Mutual Group (with a 7.6% shareholding), Liberty Group (with a 5.9%
shareholding), and Nedcor (with a 4.5% shareholding).
4] Alfin has in excess of 10 subsidiaries. 1 In addition it owns 50% shareholding in
Aeromaritime International Management Services (Pty) Ltd (“AIMS”), the
primary target firm in the instant transaction.
5] Altron has in excess of 20 subsidiaries in Southern Africa and these include
Allied Technologies Limited, Bytes Technologies Group Limited, and Power
Technologies (Pty) Ltd. 2
6] The primary target firm is Aeromaritime International Management Srvices (Pty)
Ltd (“AIMS”), a company incorporated under the laws of the Republic of South
Africa. AIMS does not control any firm. AIMS is jointly controlled by Renfreight
(Pty) Ltd (“Renfreight”), and Alfin, with each firm holding 50% of the issued
share capital. Renfreight is controlled by the Bidvest Group Limited (“Bidvest”),
a company listed on the JSE Securities Exchange.
Description of the transaction
7] In terms of this transaction, Alfin intends to increase its 50% shareholding in
AIMS to 100% by acquiring an additional 50% shareholding in AIMS. On
completion of the transaction, AIMS will be a wholly owned subsidiary of Alfin.
Rationale for the transaction
8] The acquiring firm views this transaction as an opportunity to create a centre
for excellence within the Altron Group to manage the Group’s supply chain. The
parties submitted that although the AIMS joint venture between Alfin and
Renfreight has been successful, AIMS services have been primarily directed
towards servicing companies within the Altron Group. With a competitor
(Renfreight) as one of the major shareholders, it has been difficult for AIMS to
expand.
9] Renfreight submitted that the joint venture was initially formed with Altron
bringing the client base and Bidvest bringing the expertise. However, over the
years, there has been a full skills transfer to AIMS. Therefore, Renfreight’s
1 See page 52 of the record.
2 See page 51 of the record for a complete list of firms controlled by Altron.
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involvement in AIMS has been reduced to oversight role with representation on
the board. They further submit that AIMS is a small part of the Bidvest Group’s
overall clearing business and accordingly it wishes to dispose of it.
The parties’ activities
Primary acquiring group
Alfin
10] Alfin is a group finance company and service provider to the Altron Group. It
holds funds on behalf of fellow subsidiaries and makes advances to fellow
subsidiary companies within Altron Group.
11] Alfin conducts a treasury function, oversees the administration of employee
benefits, manages insurance programs, conducts internal audits, employs
senior group executives, provides legal services and taxation consultancy
services and does limited amount of company secretarial work.
Altron
12] Altron is involved in the telecommunications, power electronics, multimedia
and information technology sectors.
The primary target firm
AIMS
13] The parties submitted that AIMS was formed in 1990 to provide clearing and
forwarding services to Altron Group of companies. AIMS is accredited to effect
customs clearing and, within the Altron Group, clears products/components of
an electronic nature used in the manufacture of various electronic products for
the power transformer and cable industries; finished products for the office
automation businesses and telecommunication convergence products.
Competition analysis
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14] The parties submitted that the Altron Group has no freight or logistics services
business apart from Alfin’s 50% stake in AIMS and that, as a result, there is no
horizontal overlap. The Commission, on the other hand, submitted that there is
an overlap in the activities of the merging firms in as far as the acquiring firm
has prior shareholding in the primary target firm. The Tribunal concludes that
this transaction will not result in an increase in market share or change in
market structure as AIMS has less than 1% market share. 3 As a result, this
transaction is not likely to lead to a substantial prevention or lessening of
competition.
15] Though the firms are vertically integrated in that AIMS provides freight
brokering services to companies within the Altron Group, such vertical
integration does not raise foreclosure concerns. The Commission and the
parties rightly stated that the vertical integration does not arise from the current
transaction. In addition, AIMS was formed specifically to render clearing and
forwarding services for companies within the Altron Group.
Public Interest
16] There are no public interest issues.
Conclusion
17] The merger is approved unconditionally.
________________ 14 July 2008
D Lewis DATE
Tribunal Member
U Bhoola and M Mokuena concur in the judgment of D Lewis
Tribunal Researcher : R Kariga
For the merging parties: Brink Cohen and Le Roux Attorneys.
3 See page 45 of record.
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For the Commission : K Mahlakona (Mergers and
Acquisitions)
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