COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 30/LM/Jun10
In the matter between:
Imperial Group (Pty) Ltd Acquiring Firm
And
Imperial McCarthy (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 : 20 October 2010
Reasons for Decision
APPROVAL
1] On 25 August 2010, the Competition Tribunal (“Tribunal”) unconditionally
approved the transaction involving Imperial Group (Pty) Ltd and Imperial
McCarthy (Pty) Ltd. The reasons for the approval follow below.
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PARTIES TO THE TRANSACTION
2] The primary acquiring firm is Imperial Group (Pty) Ltd (“Imperial”). Imperial is
a 100% subsidiary of Imperial Holdings Ltd (“Imperial Holdings”). Imperial
Holdings is a South African based public company listed on the JSE and
since the shares therein are widely dispersed it does not have any controlling
shareholders. Imperial has a large number of subsidiaries.
3] The primary target firm is Imperial McCarthy (Pty) Ltd t/a Schus Nissan and
Schus Fiat and Alfa (“IMC”). IMC is a joint venture between Imperial Holdings
and McCarthy Ltd, each of them holding 50% of the issued share capital of
IMC.
DESCRIPTION OF THE TRANSACTION
4] According to the merging parties Imperial premerger has management
control of IMC with its 50% shareholding since it attends to the strategic
business decisions and the day to day running of IMC. 1 In terms of the
proposed transaction Imperial will acquire sole control over IMC.
RATIONALE FOR THE TRANSACTION
5] According to Imperial it no longer wishes to have joint ventures in motor
dealerships.
ACTIVITIES OF THE MERGING PARTIES
6] Imperial Holdings is involved in the wider transportation and mobility markets
in Southern Africa, Europe and the United Kingdom. Its divisions include
Imperial logistics Southern Africa, Imperial logistics International, car rental
and tourism, parts distributorships, vehicle dealerships and insurance. Of
relevance to this transaction is its network of motor dealerships in South
Africa.
1 See affidavits of respectively Philip Michaux, CEO of Imperial Motor Dealerships, and Geoff Jooste,
the Managing Director of IMC.
7] IMC has three motor vehicle dealerships located at Parow in the Western
Cape consisting of two Nissan dealerships and one Fiat/Alfa 2 dealership.
These dealerships provide services in the retail motor sector specifically in
new and used motor vehicles, motor vehicle parts as well as providing
workshop facilities.
POTENTIAL MARKETS AND COMPETITION ANALYSIS
8] The activities of the merging parties overlap in the markets for the retail
sale of (i) new and (ii) used vehicles, specifically in the retail sale of (a)
passenger vehicles and (b) light commercial vehicles in the broader Cape
Town area. Imperial’s only association with Fiat/Alpha dealerships in the
Western Cape is through IMC. Imperial however has one Nissan franchise
located at Claremont; one Toyota dealership in Brackenfell; and four Ford
and Mazda dealerships in Paarden Eiland, the Cape Town CBD, Diep
Rivier and George.3
9] The Commission analysed the effects of the proposed deal in the markets
for the retail sale of new and used passenger vehicles as well as light
commercial vehicles.
10]According to the Commission the combined market share of Imperial and
IMC in the retail sale of new passenger vehicles in 2009 in the broader
Cape Town area is less than 10%; for the retail sale of new light
commercial vehicles in the same geographic area this market share is
below 20%. 4 The Commission submitted that the market shares of the
merged entity for used vehicles would be lower than that stated above.
11]From a narrower (i.e. localised) geographic market perspective, the
merging parties submitted details of the number of motor vehicle
dealerships in the area surrounding Parow that sell respectively passenger
vehicles and light commercial vehicles. From this data we are satisfied that
2 Nissan and Fiat/Alfa are two separate franchises and have separate dealerships. The merging
parties have indicated that Alpha motor vehicles fall within the Fiat Group.
parties have indicated that Alpha motor vehicles fall within the Fiat Group.
3 See page 113 of the record.
4 Source: NAAMSA, 2009 sales in broader Cape Town area.
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sufficient competition remains post merger from other dealerships at a local
geographic level. The Commission at the hearing also indicated that the
Parow area has a number of dealerships which deal specifically only in
used passenger vehicles.
12]In addition to the above, Imperial premerger already materially controlled
the direction of IMC.
13]Based on the above, we conclude that the proposed deal is unlikely to
substantially prevent or lessen competition in any relevant market.
PUBLIC INTEREST
14]The merging parties have confirmed that the proposed deal will have no
effect on employment.5 No other public interest issues arise from the
proposed transaction.
CONCLUSION
15]In light of the above the Tribunal finds that the proposed transaction is
unlikely to substantially lessen or prevent competition in the affected
markets. In addition, no public interest issues arise from the proposed
transaction. Accordingly we approve the proposed transaction
unconditionally.
____________________ 20 October 2010
Andreas Wessels Date
Medi Mokuena and Thandi Orleyn concurring
Tribunal Researcher: Ipeleng Selaledi
For the merging parties: Prinsloo, Tindle & Andropoulos Inc.
For the Commission: Nazeera Ramroop
5 See page 7 of the record.