COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 28/LM/Feb09
In the matter between:
PSG Konsult Ltd Acquiring Firm
and
Tlotlisa Securities (Pty) Ltd Target Firm
Panel : D Lewis (Presiding Member), Y Carrim (Tribunal
Member) and N Manoim (Tribunal Member)
Heard on : 29 April 2009
Order issued on : 29 April 2009
Reasons issued on : 3 June 2009
Reasons for Decision
Introduction
[1] On 29 April 2009 the Tribunal approved the acquisition by PSG Konsult Ltd of
the entire issued share capital in Tlotlisa Securities (Pty) Ltd. The reasons
follow below.
The transaction and parties
[2] PSG Konsult Financial Planning (Pty) Ltd and Online Securities Ltd , both
subsidiaries of PSG Konsult Ltd which is ultimately controlled by PSG Group
Ltd, intend to acquire the whole business of Tlotlisa Securities (Pty) Ltd
(“Tlotlisa Securities”) which is controlled by Tlotlisa Holdings. Upon
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completion of the transaction Tlolitsa Securities will be controlled by both
acquiring firms.1
Activities of the parties
[3] PSG Group is involved in a wide selection of financial services and products
such as stockbroking, long and short term insurance, property and asset
finance, retiring planning and advice on pension and provident funds etc.
[4] Tlotlisa Securities is a stockbroking company specialising in products and
services such as equity brokerage, safex brokerage and warrant commission.
Rationale for the transaction
[5] The Primary acquiring firm wishes to expand its client base in the financial
services market through this transaction. Tlotlisa Securities wishes to limit the
number of retrenchments envisaged due to the sharp decline in transactions
in the stock broking market and regards the transaction as an opportunity to
avoid this, to some extent, from happening.
Effect on Competition
[6] There is an overlap in the activities of the merging parties in respect of stock
broking services. The merged entity’s market share post the transaction will
be 3.5%. This is a highly fragmented market, according to the Commission,
with more than 50 players and the merging firms do not feature in the top 10
of trading service providers by value of instruments traded on the JSE Equity
Market and Central Order Book Trade. Other larger players in this market are
Credit Suisse Standard Securities, Merrill Lynch South Africa, Deutsche
Securities, JP Morgan Equities and Citigroup Global Markets.
[7] In light of the fact that the combined market share of the merging parties
remains low the Tribunal finds that the proposed transaction is unlikely to
substantially prevent or lessen competition.
1 Post the transaction Tlotlisa will cease to exist. Since Tlotlisa is a stock broking entity its
business lies in its client base and the trading it performs on behalf of those clients. PSG
business lies in its client base and the trading it performs on behalf of those clients. PSG
Konsult Financial Planning will therefore acquire the business accounts and clients linked to
specific advisors, whilst Online Securities will acquire the online trading accounts and clients
linked to the Cape Town operations of the Primary Target Firm.
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PUBLIC INTEREST
[8] The parties submitted that 22 of the 64 employees of Tlotlisa Securities will
be retrenched, all of which are skilled labour. A restructuring plan had been in
place prior to the transaction in order to neutralise the effect of losing more
than 40% of its business due to the economic downturn. If the transaction
had not been concluded 60 employees would have been retrenched
according to Mr Saaimon of Tlotlisa Securities.
[9] The loss of jobs remains a serious concern of the Tribunal. However, in light
of the fact that fewer employees will be retrenched as a result of the
transaction, we agree with the Commission that the transaction does not
raise substantial public interest concerns.
CONCLUSION
[10] The Tribunal finds that the proposed transaction i s unlikely to substantially
prevent or lessen competition and does not give rise to any public interest
concerns.
___________________ 3 June 2009
Y Carrim Date
D Lewis and Manoim concurring.
Tribunal Researcher: R Badenhorst
For the merging parties: Cliffe Dekker Hofmeyr
For the Commission: Thaba Mavhase
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