COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 04/LM/FEB10
In the matter between:
SANLAM LIFE INSURANCE LIMITED Acquiring Firm
And
CORIS CAPITAL HOLDINGS (PTY) LTD Target Firm
Panel : Yasmin Carrim (Presiding Member),
Norman Manoim (Tribunal Member)
and Andreas Wessels (Tribunal Member)
Heard on : 03 March 2010
Order issued on : 03 March 2010
Reasons issued on : 10 March 2010
Reasons for Decision
Approval
[1] On 3 March 2010 the Competition Tribunal (“Tribunal”) approved the
acquisition by Sanlam Life Limited of Coris Holdings (Pty) Ltd. The
reasons for approval follow below.
The Transaction
[2] The primary acquiring firm is Sanlam Life Insurance Limited (Sanlam
Life), a wholly owned subsidiary of Sanlam Limited (“Sanlam”).
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[3] The primary target firm is Coris Capital Holdings (Pty) Ltd (“Coris
Holdings”).
[4] Sanlam currently exercises joint control over Coris Holdings through its
shareholding in Sanlam Independent Financial Services Limited
(“SIFS”). The proposed transaction entails the acquisition by Sanlam
Life of an additional 37.82% of the issued share capital in Coris
Holdings, as well as the transfer of 62.18% currently held by SIFS to
Sanlam Life. The implementation of the proposed transaction would
therefore entail that Sanlam Life shall hold the entire share capital of,
and exercise sole control of Coris Holdings.
The Rationale
[5] The proposed transaction represents an opportunity for the remaining
shareholders of Coris Holdings to recoup their investments in the firms
by selling their shareholding to Sanlam.
The parties and their activities
[6] Both Sanlam and Coris Holdings are involved in the broader financial
services industry, both are licensed financial service providers that
offer a wide variety of financial service products and services to their
clients.
[7] The Sanlam group conducts its business through the following four
business clusters; the retail cluster, the short term insurance cluster,
the institutional cluster and the corporate cluster.
[8] The activities of Coris Holdings include the following; retirement fund
products and retirement fund administration (Coris Capital), Financial
advisory (Fin-Q), collective investment scheme management (CCIM
and Coris Capital), Pension backed home loans (iKasa)
The relevant market and the impact on competition
[9] There is a significant horizontal overlap between the activities of the
merging parties as both are active in the provision of financial advisory
services, collective investment scheme management services, the
provision of retirement fund products to consumers and the provision of
home loans in South Africa.
home loans in South Africa.
[10] Market shares held by Sanlam and Coris Holdings in their
respective markets:
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Market For: Sanlam Coris Holdings Total
The provision of
financial services in
South Africa
5.4% <1% >6.4%
The Supply of
collective investment
scheme management
services
6.7% 0.3% 7%
The provision of
retirement fund
products (based on
long term insurance
activities )
10% N/A 10%
The supply of
retirement fund
products
N/A N/A N/A
Provision of
retirement fund
administration
services
N/A 6.8% 6.8%
(Source: Merging parties best estimate)
[11] Although a significant overlap exists the merging parties both
have relatively small market shares in respect of all sectors in which
their businesses overlap. This low market share coupled with the highly
fragmented nature of the industry as well as the presence of sufficient
alternative provider’s means that such a merger is unlikely to present
adverse competition effects.
[12] In respect of the question whether dominance may arise either
up or down stream after the proposed merger, it appears that the post
merger position will not result in increased market power, and the
transaction does not bring about any foreclosure concerns.
[13] In light of the above, we find that the transaction is unlikely to
substantially prevent or lessen competition the relevant markets.
CONCLUSION
[14] There are no public interest issues and we accordingly approve
the transaction.
____________________ 09 March 2010
Yasmin Carrim DATE
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Norman Manoim and Andreas Wessels concurring.
Tribunal Researcher: Thandi Lamprecht
For the merging parties: Edward Nathan Sonnenbergs
For the Commission: Nazeera Ramroop
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