COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 49/LM/Aug10
In the matter between:
Imperial Holdings Ltd Acquiring Firm
And
CIC Holdings Ltd Target Firm
Panel : Norman Manoim (Presiding Member)
Yasmin Carrim (Tribunal Member)
Andreas Wessels (Tribunal Member)
Heard on : 20 October 2010
Order issued on : 20 October 2010
Reasons issued on : 29 October 2010
Reasons for Decision
APPROVAL
1] On 20 October 2010, the Competition Tribunal (“Tribunal”) unconditionally
approved the transaction involving Imperial Holdings Ltd and CIC Holdings
Ltd. The reasons for the approval follow below.
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PARTIES TO THE TRANSACTION
2] The primary acquiring firm is Imperial Holdings Ltd (“Imperial”), a public
company listed on the JSE. Imperial’s largest shareholders are as follows:
• Public Investment Corporation 10.6%
• Ukhamba Holdings 10.3%
• Lereko Mobility and 6.6%
• Directors and Employees 1.8%
3] The primary target firm is CIC Holdings (“CIC”), a Namibian company listed
on the JSE. CIC’s largest shareholders are:
• Paladin Capital 48.96%
• Namibian Investment Trust and 6.91%
• CIC Executive Share Incentive Trust 5.59%
DESCRIPTION OF THE TRANSACTION
4] Imperial has proposed, in terms on a scheme of arrangement, to acquire the
entire issued share capital of CIC. On completion of the proposed
transaction, CIC will be controlled by Imperial and will de-list from the JSE.
RATIONALE FOR THE TRANSACTION
5] The merging parties indicated that there are synergies between their
operations in that they have some common customers who would benefit
from the parties complementary services. In addition, CIC indicated that it will
also benefit from forming part of the larger Imperial Group as it will be able to
expand more rapidly.
ACTIVITIES OF THE MERGING PARTIES
6] Imperial is a diversified industrial services and retail group which conducts a
wide range of activities including integrated logistics solutions, car rental and
vehicle retailing, aviation operations, motor vehicle importation, sales and
after sales services, tourism and financial services.
7] CIC is the Namibian parent company of a group of businesses that operate in
Southern Africa. The elements of CIC’s business model include
distributorship, merchandising, staffing solutions and internal services.
COMPETITION ANALYSIS
8] Both merging parties are involved in the provision of merchandising and
sales services. Merchandising services are described as those services
which are provided to ensure that products are efficiently promoted at retail
level. This entails ensuring that there is sufficient stock of the relevant
product on the shelves of clients and that the product is presented in a
manner that will maximise sales as well as executing promotional activities
within the retail outlet such as demonstrations and point of sale adverts. The
product ranges merchandised by Imperial are frozen and chilled products
(cold chain) whilst CIC focuses on merchandising ambient products, i.e.
products which do not require a cold chain such as toiletries, canned foods
and household cleaning products.
9] According to the merging parties, merchandising and logistics 1 do not fall
under the same market. In this regard, the merging parties submitted that
while on occasion merchandising may be provided to a customer as part of a
logistics solution, merchandising and sales is regarded by Fast Moving
Consumer Goods (“FMCG”) companies (who are customers of the merging
parties), as a functionally separate activity from logistics and is generally
1 Logistics entails the provision of warehousing, transportation and distribution services.
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intended to complement the core service offering of a logistics service
provider. Merchandising services do not entail the transportation of the goods
but rather involve the rendering of stock management and rotation services.
10]The merging parties further submitted that most sales and merchandising
companies do not provide logistics as their core business activity is sales and
merchandising. In this respect, the parties submitted that the core business of
CIC is sales and merchandising and that CIC is not involved in logistics.
11]According to the Commission, there may be a further division of the market
into cold chain and ambient products (although there were some
disagreements between competitors as some see these as distinct areas of
skill). The Commission did not conclude on the market definition as the
merging parties’ post-merger market shares are low.
12]In respect of the geographic market, the merging parties submitted that the
majority of their customers supply their products on a national basis to large
retailers such as Pick ‘n Pay or Shoprite Checkers which have retail outlets
located throughout the country. The Commission therefore assessed the
impact of the transaction on a national level.
13]The combined post-merger market shares of the merging parties for the
provision of merchandising and sales services is approximately 12%.
Competitors in this market include firms such as Smollan Group (40%), Pack
‘n Stack (8%), GP Harding (8%), 3D Marketing (8%) and others.
CONCLUSION
14]The proposed transaction is unlikely to substantially lessen or prevent
competition in the market for merchandising and sales services as the
combined post-merger market shares of the parties are low. Further, the
merging parties would still face competition from other players in the
market. In addition, no public interest issues arise from the transaction.
market. In addition, no public interest issues arise from the transaction.
Accordingly we approve the proposed transaction unconditionally.
____________________ 29 October 2010
Yasmin Carrim Date
Norman Manoim and Andreas Wessels concurring
Tribunal Researcher: Ipeleng Selaledi
For the merging parties: Nortons Inc.
For the Commission: Fergus Reid
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