COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 111/LM/Oct08
In the matter between:
JDG Trading (Pty) Ltd Acquiring Firm
and
Maravedi Group (Pty) Ltd Target Firm
Panel : D Lewis (Presiding Member), Y Carrim (Tribunal
Member) and N Manoim (Tribunal Member)
Heard on : 3 December 2008
Order issued on : 3 December 2008
Reasons issued on : 11 December 2008
Reasons for Decision
Introduction
[1] On 3 December 2008 the Tribunal approved the acquisition by JDG Trading
(Pty) Ltd of Maravedi Group (Pty) Ltd. The reasons follow below.
The transaction and parties
[2] The primary acquiring firm is JDG Trading (Pty) Ltd (“JDG Trading”), a
subsidiary of JD Group Limited (“JD Group”). JDG Trading has joint control in
Maravedi Group (Pty) Ltd, the primary target firm in the proposed transaction,
in which it holds 42.65%, along with Absa Group which also holds 42.65%,
and Thebe Investment Corporation (Pty) Ltd which is the minority shareholder
with 9.48%.
[3] In terms of the propo sed transaction JDG Trading will increase its
shareholding in Maravedi Group from 42.65% to 90.52% by buying ABSA
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Group’s and Maravedi Management’s shares, thus moving from joint to sole
control, with Thebe Investment Corporation remaining as the minority
shareholder.
Rationale for the transaction
[4] The rationale for JDG Trading is to form a separate financial division. Absa,
which used to fund Maravedi Group, is no longer prepared to provide funding,
whereas JDG Trading is prepared to fund Maravedi Group.
Effect on Competition
[5] JDG Trading is active in the sale of household durable goods such as
furniture and electronic appliances on cash and credit, and collects its own
book debts, though in certain instances it outsources to third parties.
Maravedi Group through its subsidiaries is active in the business of
acquisition and collection of delinquent debtors’ book, and originating and
advancing of credit through the mechanism of various financial products such
as unsecured personal loans and credit card facilities.
[6] There is a horizontal overlap between the activities of the merging parties in
the market for the provision of unsecured credit in South Africa, in which JDG
has 6% market share pre merger, and Maravedi Financial Solutions has 0.1%
premerger.
[7] Post merger, the merging parties will have a market share of 6.1% which is
relatively low compared to major players in the relevant market such as
SBSA - 20%, ABSA - 19%, FNB - 15%, Nedbank - 11% and ABIL/Ellerines -
10%.1
[8] The proposed transaction also results in vertical integration in that Maravedi
Group collects debt on behalf of JDG Trading from JDG Trading’s debtors in
respect of household durable goods. According to the Commission’s
investigation, for the financial year ended 31 August 2007, Maravedi Group
collected debts totalling approximately 5.88% of Maravedi Group’s annual
1 These market share figures take into account the market share figures in another merger
between JDG Trading and Blake and Associates Holdings (Pty) Ltd Case No.: 110/LM/Oct08,
between JDG Trading and Blake and Associates Holdings (Pty) Ltd Case No.: 110/LM/Oct08,
which was decided by this Tribunal on 27 November 2008.
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turnover in the business of collecting debts and approximately 0.03% of JDG
Trading’s annual turnover in the business of selling household durable goods.
These figures are insignificant to raise any foreclosure concerns.
[9] The Tribunal finds that the proposed transaction is unlikely to substantially
prevent or lessen competition due to low market share accretion post merger
and the lack of foreclosure concerns.
Public Interest
[10] The transaction does not raise any significant public interest concerns.
___________________ 11 December 2008
Y Carrim Date
D Lewis and N Manoim concurring.
Tribunal Researcher: L. Xaba
For the merging parties: Levy, Feinsteins & Associates Incorporated
For the Commission: X. Nokele
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