COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 40/LM/Jul10
In the matter between:
Imperial Holdings Ltd Acquiring Firm
And
Orcom Trading 35 (Pty) Ltd Target Firm
Panel : Andreas Wessels (Presiding Member)
Medi Mokuena (Tribunal Member)
Thandi Orleyn (Tribunal Member)
Heard on : 25 August 2010
Order issued on : 25 August 2010
Reasons issued on : 18 October 2010
Reasons for Decision
Approval
1] On 25 August 2010, the Competition Tribunal (“Tribunal”)
unconditionally approved the merger between Imperial Holdings Ltd
and Orcom Trading 35 (Pty) Ltd. The reasons for approving the
transaction follow.
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The merging parties and their activities
2] The primary acquiring firm is Imperial Holdings Ltd (“Imperial
Holdings”), a company incorporated under the company laws of the
Republic of South Africa and listed on the JSE. No individual
shareholder directly or indirectly controls it.
3] Imperial Holdings has a large number of subsidiaries 1 and conducts
a wide range of business activities 2 within the transportation, fleet
management and mobility sectors through three divisions, namely
the (i) logistics, transport and warehousing, (ii) car rental and
tourism, and (iii) vehicle dealerships divisions. The business
activities of the logistics division are carried out through three
operational divisions, namely the transporting and warehousing,
specialised freight and consumer products divisions.
4] The primary target firm is Orcom Trading 35 (Pty) Ltd (“Orcom”) t/a
Loubser Transport, a firm incorporated under the company laws of
the Republic of South Africa. Premerger Loubser Beleggingstrust
holds 100% of the issued share capital of Orcom.
5] Orcom is involved in the provision of transportation services of bulk
materials. These materials include agricultural lime, chrome,
manganese, coal, grains, animal feed, fertiliser, livestock, tyres,
glass, lubricant oil, cement, steel, paint and tiles for the mining
industry, agricultural market, motor industry and building industry. It
is also involved in the transportation of food stuffs, groceries and
perishables for the fast-moving consumer goods (FMGG) market.
1 See pages 26 and 27 of the record.
2 These activities include transport distribution services; aviation leasing; car rental and tourism
services; distributorship activities, particularly in respect of the distribution of motor vehicles; motor
vehicle dealerships; insurance business, focusing on motor and motor-related cover; and logistics and
supply chain services.
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The proposed transaction
6] In terms of the proposed transaction Imperial Holdings will acquire
65% of the issued share capital of Orcom from Loubser
Beleggingstrust.
The rationale for the proposed transaction
7] Imperial Holdings submits that the proposed transaction is within its
growth and profitability strategy and will inter alia enable the
Imperial Logistics Transport and Warehousing division to access
and improve its servicing of markets in numerous provinces. 3
Furthermore, according to the merging parties, the proposed
transaction is one that will enable its current shareholder to realise
a return on its investments and enable Orcom to increase its
business opportunities, utilise the organisational benefits of the
corporate structure of Imperial Holdings and to pursue the
objectives of black economic empowerment.
The potential relevant markets and impact on competition
8] The activities of the merging parties overlap in the road
transportation of bulk materials. There is however no reason for the
Tribunal to definitively conclude on the exact parameters of the
relevant market in this case since it does not affect our conclusion
regarding the impact on competition.
9] The merging parties have submitted that the narrowest market in
which their activities overlap is the road transportation market in
which the merged entity will have a post merger national market
share of less than 5%.
10] The Commission however was of the view that the transportation of
3 Namely Gauteng, North West, Northern Cape, Western Cape, Free State and KwaZulu-Natal.
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products differs mainly in terms of transportation requirements. The
Commission therefore concluded that the road transportation
market as defined by the merging parties can be further delineated
into narrower potential markets, namely the markets for the
transportation of:
i) fast moving consumer goods, beer and spirit,
bagged maize, tyres and parcels in respect
of courier services on trautliner/flatdeck-type
vehicles;
ii) bulk coal in tipper-type vehicles; and
iii) bulk cement and bulk lime in dry bulk tanker-
type vehicles.
11] The Commission’s market investigation however found that in the
potential markets in (i) and (iii) above the market share accretion of
the merged entity as a result of the proposed merger would be less
than 1% nationally. In the potential market for road transportation in
tipper-type vehicles the post merger national market share of the
merged entity would be less than 15%. We therefore find that the
proposed deal is unlikely to substantially prevent or lessen
competition in any potential market.
Public interest
12] The merging parties confirmed that the proposed deal will have no
effect on employment. 4 No other public interest issues arise from
the proposed transaction.
Conclusion
13] The proposed transaction does not lead to a likely substantial
prevention or lessening of competition in any market. Furthermore,
4 See page 13 of the record.
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no public interest issues arise from the proposed deal. We therefore
approve the proposed deal unconditionally.
____________________ 18 October 2010
Andreas Wessels DATE
Thandi Orleyn and Medi Mokuena concurring
Tribunal Researcher : Mahashane Shabangu
For the merging parties : De Vries Inc
For the Commission : Thabelo Ravhungoni of the Mergers &
Acquisitions Division
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