COMPETITION TRIBUNAL OF SOUTH AFRICA
CASE NO: 106/LM/OCT08
In the matter between:
NEW CLICKS SOUTH AFRICA (PTY) LTD Acquiring Firm
and
SHARP MOVE TRADING 107 (PTY) LTD Target firms
______________________________________________________________________
Panel : D Lewis (Presiding Member), N Manoim (Tribunal Member), and Y Carrim
(Tribunal Member)
Heard on : 19 November 2008
Order issued on : 19 November 2008
Reasons issued on : 14 January 2009
REASONS FOR DECISION
APPROVAL
1. On 19 November 2008 the Tribunal approved the merger between New Clicks and
Sharp Move. The reasons for the decision follow:
THE PARTIES
2. The primary acquiring firm is New Clicks South Africa (Pty) Ltd (“New Clicks”), a
subsidiary of New Clicks Holdings Limited. The primary target firm is Sharp Move
Trading 107 (Pty) Ltd trading as Direct Medicine Pharmacy and Direct Patient Support
(Pty) Ltd (collectively referred to as Sharp Move Trading).
1
THE TRANSACTION AND RATIONALE
3. In terms of the proposed transaction New Clicks intends to acquire 60% of the issued
share capital in Sharp Move. The shareholding post merger will be held as follows:
New Clicks - 60%
Vuwa Healthcare - 26%
The Short Trust - 8%
The Ponter Trust - 4%
Mr Moeti Phil Mokoele - 2%.
4. New Clicks regards the proposed transaction as an opportunity to enter into the courier
pharmaceutical distribution market, thus optimizing and expanding its business. For
Sharp Move, the proposed transaction will strengthen its business and provide it with the
opportunity to offer a complete service to medical schemes.
RELEVANT PRODUCT MARKET
Horizontal analysis
5. The proposed merger results in horizontal integration in that both the merging parties are
involved in retailing pharmaceutical products. New Clicks Holdings through New Clicks
is active in the entire pharmaceutical supply chain ranging from wholesale distribution to
retail pharmacies. Sharp Move is active in direct medicine pharmacy and its focus is
courier distribution of chronic medication direct to patients who are supported by medical
aid.
6. Premerger New Clicks has 5.3% market share and Sharp Move has 1.1%. The merging
parties’ combined post merger market share is 6.4%. The parties face competition from
players such as Dischem, Pick ‘n Pay and many other private pharmacies.
2
Vertical analysis
7. The proposed merger also results in vertical integration in that New Clicks will post
merger, supply Sharp Move with all pharmaceutical products that it dispenses. However
the Commission’s investigation revealed that this does not raise any foreclosure
concerns post merger as the company which previously supplied Sharp Move, Home
and Hospital Dispensaries (“HHD”) is owned by shareholders of Sharp Move. In
addition, the representatives of HHD when interviewed by the Commission submitted
that they had no concerns as there are many alternative players in this market.
CONCLUSION
8. The Tribunal finds that this merger will not result in any substantial lessening or
prevention of competition in the relevant market due to the low market share accretion
post merger as well as the lack of foreclosure concerns. The merger is approved
without conditions.
9. There are no public interest issues.
_______________ 14 January 2009
N Manoim Date
Tribunal Member
D Lewis and Y Carrim concurring
For the merging parties : Cliffe Dekker Hofmeyr
For the Commission : K Mahlakoana
Tribunal Researcher: L Xaba
3