COMPETITION TRIBUNAL OF SOUTH AFRICA
In the matter between:
Case No: 64/LM/May08
Bytes Technology Group SA (Pty) Ltd Acquiring firm
And
Nor Stationary Wholesalers (Pty) Ltd
Nor Paper (Pty) Ltd Target firms
Panel : D Lewis (Presiding Member); U Bhoola (Tribunal Member) and N
Manoim (Tribunal Member)
Heard on : 9 July 2008
Decided : 9 July 2008
Reasons Issued : 28 July 2008
Reasons
Approval
[1] On 9 July 2008 the Competition Tribunal issued a Merger Clearance Certificate
approving the merger between Bytes Technology Group SA (Pty) Ltd and Nor Stationary
Wholesalers (Pty) Ltd and Nor Paper (Pty) Ltd unconditionally. The reasons appear below.
Parties
[2] The acquiring firm is Bytes Technology Group SA (Pty) Ltd (“BTG SA”), a company
incorporated under the laws of the Republic of South Africa. 1 BTG SA is controlled by Bytes
Technology Group Ltd (“BTG”), a company which was formerly listed on the JSE Securities
Exchange and is currently in the process of being converted to a private company. BTG is in
turn controlled by Allied Electronics Corporation Ltd (“Altron”).
[3] The primary target firms are NOR Stationary Wholesalers (Pty) Ltd (“NOR
1 BTG SA controls the following subsidiaries : Bytes Corporate Services (Pty)Ltd; Bytes Systems Integration
(Pty)Ltd; Bytes People Solutions (Pty)Ltd; Bytes Outsource Service (Pty)Ltd; Bytes Resource Service (Pty)Ltd;
Bytes Healthcare Solutions (Pty)Ltd; MedeMass (Pty)Ltd; Digital Healthcare Switch (Pty)Ltd and Bytes Software
(Pty)Ltd. BTG SA also consists of Bytes Communication Systems Division; Bytes Document Solutions Division
(“BDS”); Bytes Managed Solutions Division and Bytes Specialised Solutions Division.
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Stationary”)2 and NOR Paper (Pty) Ltd (“NOR Paper”) 3 companies incorporated under the
laws of the Republic of South Africa. The target firms are collectively referred to as the NOR
Business.
Transaction
[4] In terms of the proposed transaction BTG SA intends to purchase the entire business
operations of NOR Stationary and NOR Paper as going concern. The transaction will result
in BTG SA having control over NOR Business.
Rationale of transaction
[5] According to BTG SA this acquisition will assist in alleviating BDS’s dependency on
Xerox by enabling it to grow its noncore business.
[6] From the perspective of the target firms, the disposal presents an opportunity to
expand the NOR Business. 4 In addition the proposed transaction will enable NOR Business
to obtain Black Economic Empowerment (“BEE”) credentials. 5
Parties Activities
[7] The Bytes Group provides a broad range of products, technical skills and specialised
services to support enterprisewide IT infrastructure. 6 The relevant division of BTG SA for
the purposes of this transaction is the Bytes Document Solutions Division (“BDS”). BDS
provides a broad portfolio of products and services to the document industry. 7 BDS
production printing equipment provides commercial printers and document intensive
industries with high speed digital printing and services that enable ondemand personalised
printing.8
2 NOR Stationary is controlled by the Norsworthy Family Trust. Norsworthy Family Trust does
not control any other firm.
3 NOR Paper’s interests are held by the following shareholders who do not control any other firm: R Blake 25%
shareholding; A Norsworthy 25%; J.E Norsworthy 25% and SE Norsworthy 25% shareholding.
4 The parties submit that NOR Business will have benefits associated with forming part of the bigger group such
as having access to having capital injection into its business.
as having access to having capital injection into its business.
5 According to the parties NOR Business currently has no BEE shareholder whereas BTG SA brings to the
merged entity participation and involvement of one of the leading BEE firms, namely Kagiso Strategic
Investments (Pty) Ltd.
6 BTG SA is made up of the following divisions and subsidiaries: Bytes Communication Systems Division; Bytes
Document Solutions Division; Bytes Managed Services Division; Bytes People Solutions (Pty) Ltd; Bytes
Specialised Solutions Divisions; Bytes Systems Integration (Pty) Ltd; Bytes Outsource Service (Pty) Ltd; Bytes
Healthcare Solutions (Pty) Ltd; Bytes Corporate Services (Pty) Ltd; Bytes Resources Services (Pty) Ltd and
Bytes Software (Pty) Ltd.
7 The portfolio includes digital systems such as printing and publishing systems, digital
presses and “book factories”, multi-function devices, laser and solid ink network printers,
copiers and fax machines.
8 The parties submit that BDS also distributes A4 and A3 white 80gsm copy paper. It also offers service expertise
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[8] NOR Business offers comprehensive paper, board and sundry supplies and is a
“OneStop Shop” for all printing and allied trades, as well as stationers and small business. 9
NOR Business is also involved in the distribution of the following paper products: Coated art
paper which is available in three grades namely: matt, gloss and silk (semi gloss); uncoated
woodfree paper; copy paper and various boards.
Competition Analysis
[9] In its analysis of the proposed transaction the Commission found there is an overlap
in the activities of the merging parties with regard to copy paper. According to the
Commission, whilst BDS is classified as a supplier that supplies its copy paper under their
own brand names to large customers, NOR business is classified as a wholesaler that
distributes its copy paper to commercial printers, paper traders, stationers and small
businesses. The Commission found that the merging parties will have a 16.8% postmerger
market share. According to the Commission, premerger BDS had approximately 14%
market share and the NOR Business had approximately 2.8% market share. We therefore
agree with the Commission’s view that the proposed transaction is unlikely to raise any
serious competition concerns as the market share increments are insignificant. In addition
there are no public interest issues.
Conclusion
[10] Based on the above the transaction will not result in a substantial lessening or
prevention of competition and is accordingly approved unconditionally.
___________________ 28 July 2008
N Manoim Date
Tribunal Member
U Bhoola And D Lewis concurring
Tribunal Researcher : J Ngobeni
including assisting businesses to share inter office documents and acknowledge, operating inhouse print shops
and mailrooms, and offers customers associated software, support and supplies (including toner paper).
9 NOR Business is considered a supplier of specialty paper. The specialty paper is generally used for
commercial printing.
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For the merging parties : Bowman Gilfillan Inc
For the Commission : Thabelo Ravhugoni (Mergers and Acquisitions)
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