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COMPETITION TRIBUNAL SOUTH AFRICA
Case No: 91/LM/Aug08
In the matter between:
Masscash Holdings (Pty) Ltd Acquiring firm
And
Brett Four (Pty) Ltd t/a
Cambridge Food Target firm
Panel : N Manoim (Presiding Member), Y Carrim (Tribunal Member) and M
Moerane (Tribunal Member)
Heard on : 07 November 2008
Decided on : 07 November 2008
Reasons Issued : 03 December 2008
Reasons for Decision
Approval
[1] On 07 November 2008 the Competition Tribunal issued a Merger Clearance
Certificate unconditionally approving the merger between Masscash Holdings (Pty) Ltd and
Brett Four (Pty) Ltd trading as Cambridge Food . The reasons appear below.
Parties
[2] The primary acquiring firm is Masscash Holdings (Pty) Ltd (“Masscash”) a firm
incorporated under the laws of the Republic of South Africa. Masscash is a wholly owned
subsidiary of Massmart Holdings Ltd (Massmart”).
[3] The primary target firm is Brett Four (Pty) Ltd trading as Cambridge Food
(“Cambridge”) a company incorporated in accordance with the laws of the Republic of South
Africa.1
1 Brett Four is solely controlled by Brett Andrew Latimer.
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Transaction
[4] In terms of a sale of shares agreement, Masscash intends to acquire 51% of the
issued share capital in Brett Four while Brett Latimer will retain 49% of the issued shares.
Rationale
[5] The parties submitted that Massmart through Masscash would like to compete more
strongly in the retail grocery market, particularly in the growing mass market in the urban and
peri-urban areas where large incumbents such as Shoprite, Pick n Pay and Spar are
consolidating their respective market shares. In addition the parties submit that Massmart
sees the proposed transaction as an opportunity to acquire an interest in a successful
business in a growing market where Massmart is underrepresented.
[6] Brett Latimer who is the sole sharehol der of the target firm views the proposed
transaction as an attractive opportunity to realise a return on his investment, while retaining
a significant stake in his business.
Parties’ Activities
[7] Massmart is a retailer and wholesaler of grocery products, liquor and general
merchandise throughout South Africa. It is divided into four divisions, namely
Massdiscounters
2, Masswarehouse3, Massbuild4 and Masscash5.
[8] Cambridge is a retailer of groceries with six stores situated in Durban, Pinetown and
Isipingo. Its activities include butchery, bakery, groceries (including perishable and non
perishable item) fresh produce and liquor products.
Relevant Market
[9] According to the Commission the activities of the merging parties overlap in the
grocery retail market targeting consumers in the LSM 2-6 category (lower- income
2 This division comprises retail stores around South Africa trading under Game and Dion Wired. Whilst Game
offers a wide range of general merchandise and non-perishable groceries, Dion Wired offers a wide range of Hi-
Tech appliances and audio and digital products.
3 This division comprises wholesale Makro stores located in Gauteng, Western Cape, Eastern Cape and Kwa-
Zulu Natal. Makro stores offer a broad range of food, liquor and general merchandise.
4 This division trades under three focused and complementary chains namely: Builders Warehouse, Builders
Express and Builders Trade Depot stores. These stores focus on home improvement and decorative hardware
products, tools, sanitary ware, builders’ hardware, tiles and garden services.
5 Masscash is a primary supplier of essential grocery items to a broad base of consumers from individuals to
small traders, entrepreneurs and feeding schemes in public and private sector. This division comprises of CWB
and Jumbo stores which are primarily engaged in the wholesale distribution of grocery products, cosmetics,
toiletries and hair care products. Masscash owns Shield, a voluntary buying association serving independently
owned food wholesale and retail outlets.
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customers), mainly catered for by independent supermarkets. The Commission therefore
limited its assessment of the market to the retail segment rather than argue that the
wholesale and retail stores may compete.
6 According to the Commission Cambridge has
four retail supermarket stores located in Durban, Pinetown and Isipingo whilst the acquiring
firm has two grocery retail stores in the greater Durban, namely CBW store located in
Durban and Jumbo store located in Durban. We agree with the Commission’s geographic
market definition that the relevant geographic markets are Durban and Pinetown. This is in
line with our previous finding in Pick ‘n Pay Retailers (Pty)Ltd and Boxer Holdings (Pty)Ltd
where we determined that the geographic market for retail groceries is local, more
specifically the “ area surrounding the stores of the parties”.
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Competition Analysis
[10] There is an overlap in the activities of the merging firms on retail sales of grocery
products targeted at lower-end customers in Durban and Pinetown. Pre merger Cambridge’s
market share is 6.5% and CBW Jumbo’s market share is 0.29%. Post merger the combined
market share is 6.8% with an insignificant market share accretion of 0.29% in the market
grocery retail in the greater Durban. We agree with the Commission’s conclusion that the
combined market share of the merged entity will be low to lead to a substantial prevention or
lessening of competition in the market grocery retail targeted at lower-end consumers in the
greater Durban. The Commission further submits that in the Durban CBD and Pinetown, the
merging parties will have a low post merger market share in the market for grocery retail
targeted at lower end consumers. In additi on there are other independent supermarkets in
the Durban CBD and Pinetown targeted at lower-end consumers such as Datova, Pick n
Buy, Jwayelani and Star Hyper.
[11] The Commission also analysed the vertical relationship between the merging firms
[11] The Commission also analysed the vertical relationship between the merging firms
as Cambridge purchased products from Shield, a voluntary group owned by Masscash. The
Commission’s analysis revealed that if Shield were to opt to exclude other independent
supermarkets in competition with Cambridge, there are other buying groups that serve
independent traders in Durban and Pinetown including but not limited to, Unitrade
Management Services and Independent Cash and Carry. We therefore agree with the
Commission’s conclusion that the proposed transac tion is unlikely to give rise to any input
foreclosure concerns.
6 This is in line with our previous decision in Massmart Holdings Ltd and Jumbo Cash and Carry (Pty) Ltd
Tribunal case No: 47/LM/Aug01.
7 See our decision in case number
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Conclusion
[12] There are no public interest issues. Accordingly the transaction is unconditionally
approved.
___________________ 3 December 2008
Y C a r r i m D a t e
Tribunal Member
M Moerane and N Manoim concurring
Tribunal Researcher : J Ngobeni
For the merging parties : Cliffe Dekker Hofmeyr
For the Commission : Thabelo Ravhugoni (Mergers and Acquisitions)