COMPETITION TRIBUNAL SOUTH AFRICA
Case No: 96/LM/Aug08
In the matter between:
Toyota Tsusho Corporation and
Toyota Tsusho Africa (Pty) Ltd Acquiring firm
And
Subaru Southern Africa (Pty) Ltd Target firm
Panel : D Lewis (Presiding Member); M Mokuena (Tribunal Member); N
Manoim (Tribunal Member)
Heard on : 15 October 2008
Decided on : 15 October 2008
Reasons Issued : 30 October 2008
Reasons for Decision
Approval
[1] On 15 October 2008 the Competition Tribunal issued a Merger Clearance Certificate
unconditionally approving the merger between Toyota Tsusho Corporation, Toyota Tsusho
Africa (Pty) Ltd and Subaru Southern Africa (Pty) Ltd. The reasons appear below.
Parties
[2] The primary acquiring firms is Toyota Tsusho Corporation (“Toyota Tsusho
Corporation”) and Toyota Tsusho Africa (Pty) Ltd (“Toyota Tsusho Africa”). 1 Toyota Tsusho
Corporation is a public company incorporated in accordance with the laws of Japan and
Toyota Tsusho Africa is a company incorporated in accordance with the laws of the Republic
of South Africa.
[3] At the hearing Mr Hylton Bannon from Toyota Tsusho Africa submitted that Toyota
South Africa is 100% owned by Toyota Motor Corporation. Toyota Motor Corporation only
has 21% shareholding in the acquiring firm (Toyota Tsusho Africa). He also submitted that
Toyota South Africa and Toyota Tsushi Africa operate independently from each other and
that these companies are owned by two different parent companies in Japan. He further
1 Toyota Tsusho Corporation major shareholders are Toyota Motor Corporation with 21.57%; Toyota Industries
Corporation holds 11.12% and Japan Trustee Services Bank Ltd holds 5.58% shares. Toyota Tsusho Africa is a
wholly owned subsidiary of Toyota Tsusho Corporation. Toyota Tsusho Corporation has a number of subsidiaries
worldwide. In South Africa, it only controls Toyota Tsusho Africa. Toyota Tsusho Africa does not control any firm.
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submitted that the acquiring firm’s parent company in Japan is Toyota Tsusho Corporation
and Toyota South Africa’s parent company is Toyota Motor Corporation.2
[4] The primary target firm is Subaru Southern Africa (Pty) Ltd (“Subaru SA”) a company
incorporated in accordance with the laws of the Republic of South Africa. Subaru SA is a
wholly owned subsidiary of Barloworld Motor (Pty) Ltd (“Barloworld Motor”). Barloworld
Motors is controlled by Barloworld Ltd (Barloworld”), a public company listed on the JSE
Securities Exchange in South Africa and has a secondary listing in London, Brussels and
Namibia.3
Transaction
[5] In terms of the proposed transaction, Toyota Tsusho Corporation intends to acquire
30% of the ordinary shares in Subaru SA from Barloworld Motor, while Toyota Tsusho Africa
will acquire 20% from Barloworld Motor. Post merger Subaru SA will be jointly controlled by
Toyota Tsusho Corporation, Toyota Tsusho Africa and Barloworld Motors.
Rationale
[6] From the perspective of the acquiring firms, the transaction provides Toyota Tsusho
Corporation with the opportunity to enter the local wholesale vehicle market in which it is
currently not present.
[7] From Subaru SA’s perspective, the partnership with Toyota Tsusho Corporation will
provide the business with both the required capital and expertise in the form of intellectual
capital, to more effectively deal with both the South African market as well as the Japanese
Principal, to ensure long term sustainability.
Parties’ Activities
2 See page 15 of the transcript.
3 Barloworld is not controlled by any single shareholder. The following are its major shareholders: Public
Investment Corporation 15.65%; Sanlam 6.52% and Liberty Group 4.74%. Subaru SA does not control any firm.
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[8] Toyota Tsusho Corporation has six business divisions namely: metals 4, machinery
and electronics 5, automotive 6, energy and chemicals 7, produce and foodstuffs 8, consumer
products, services and materials. 9
[9] Toyota Tsusho Africa offers intermediary support function between Toyota Tsusho
Corporation in Japan and Toyota Group companies. Toyota Tsusho Africa business service
entails the supply of products used for the manufacture of various automotive components to
original equipment manufactures in South Africa which supply Toyota with motor vehicle
components. Toyota Tsusho Africa trades through the following divisions: Automotive
Division10; Metals Division11; Machinery Division12; Wheel and Tyre Assembly 13; Global
Autoparts Division14 and Logistics Division.15
[10] Through an exclusive distributorship with Fiju Heavy Industries Ltd (“FHI”), Subaru
SA has the exclusive right to distribute and sell Subaru parts and motor vehicles in South
Africa.
Competition Analysis
4 Through its metals division Toyota Tsusho Corporation is involved in the production of ferrous and no-ferrous
metal products.5 In the machinery and related field Toyota Tsusho Corporation handles equipment for every industry, offering a
comprehensive engineering service that covers planning to post operation follow-up. In the field of electronics
Toyota Tsusho Corporation develops superior technologies and semiconductors, communications and data
processing and processing technologies in addition to quality control and delivery management.6 It Automotive Division exports vehicles and parts produced in Japan by the Toyota Group to 120 countries. It
also re-exports vehicles produced in overseas plants to third countries and conducts retail sales activities
overseas. Toyota Tsusho Corporation offers sales, spare parts and services to car dealers in each country. In
addition to coaching in sales and marketing, it provides a full range of support services.7 Toyota Tsusho Corporation procures and supplies synthetic resins, chemical products and basic energy
resources such as petroleum and coal from around the world to meet the specific needs of customers from both
downstream and upstream industries.8 This division handles a broad range of food products such as food ingredients and prepared frozen food, as well
as products including livestock feeds, oils/fats, rice, wheat, raw sugar and products processed from such
materials. Toyota Tsusho Corporation’s main strength is its grain processing facilities. Toyota Tsusho
Corporation is also an importer of bean sprouts, sesame seeds and buckwheat.9 Toyota Tsusho Corporation’s consumer products include textile materials/products, housing materials,
condominium and emerging growth areas such as nursing care and insurance. In the textile field its activities
cover development, sales and delivery of materials for car interiors, together with clothing.10 This division is responsible for managing Toyota Tsusho’s distributor network in Africa. Toyota Tsusho uses
South Africa as a hub for motor vehicles destined for Toyota dealerships situated in other African countries. 11 Toyota Tsusho Africa’s metals division includes a scrap metal recycling plant, and the sourcing and supply of
special coated steels for the production of Toyota motor vehicles.12 The machinery division is responsible for sourcing equipment and equipment spares for automotive
manufacture.13 This division assembles wheels and tyres for Toyota South Africa manufacturers.
14 This division is involved for the procurement of components for automotive vendors, as well as the
procurement of chemicals and fabrics for the automotive and non automotive industry and for OEMs.15 This division is involved in warehousing and storage in respect of an array of goods including automotive parts,
chemicals and resins. It is also involved in clearing and forwarding operations which entail clearing the product
through customs, transportation, packing and unpacking, shipping and delivery.
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[11] There is no overlap in the activities of the merging firms as the primary acquiring
firms are not active in the wholesale of new and used passenger vehicles in South Africa.
Furthermore the primary acquiring firms are not active in the sale of Subaru parts. The
Commission however found that there is a vertical relationship between the merging firms in
that Toyota Tsusho Corporation acts as an intermediary between FHI and Subaru SA. FHI is
a Japanese manufacturer of Subaru motor vehicles and Subaru SA is an exclusive supplier
of Subaru motor vehicles in South Africa, and Toyota Tsusho Corporation acts as an
intermediary between FHI and Subaru SA. The Commission’s assessment of the vertical
relationship revealed that the proposed transaction will not result in input foreclosure, as
Toyota Tsusho Corporation does not act as an intermediary for any other Subaru motor
vehicle dealership in South Africa. With regard to customer foreclosure, the Commission
found that the proposed transaction would not give rise to any customer foreclosure as
Subaru SA is only distributing Subaru motor vehicles in South Africa. Furthermore the
Commission found that Subaru SA is a smaller player in the market for wholesale of
passenger vehicles with only 0.5%. We agree with the Commission’s conclusion that the
proposed transaction is unlikely to substantially prevent or lessen completion.
Conclusion
[12] There are no public interest issues. Accordingly the transaction is unconditionally
approved.
___________________ 30 October 2008
N Manoim Date
Tribunal Member
M Mokuena and D Lewis concurring
Tribunal Researcher : Jabulani Ngobeni
For the merging parties : Bowman Gilfillan Attorneys
For the Commission : Themba Mahlangu (Mergers and Acquisitions)
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