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[2010] ZACT 77
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Competition Commission v WBHO Construction (Pty) Ltd and Another (69/AM/Oct10) [2010] ZACT 77 (10 November 2010)
COMPETITION
TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No:69/AM/Oct10
In
the matter between:
The
Competition Commission
…......................................................................................
Applicant
and
WBHO
Construction (Pty) Ltd
…............................................................................
1
st
Respondent
Edwin
Construction (Pty) Ltd
….............................................................................
2
nd
Respondent
Panel
: N Manoim (Presiding Member), A Wessels (Tribunal Member) and Y
Carrim (Tribunal Member)
Heard
on 10 November 2010
Decided
on : 10 November 2010
Order
The Tribunal hereby confirms the
order as agreed to and proposed by the Competition Commission and the
respondents, annexed hereto
marked "A".
Presiding
Member
N
Manoim
Concurring:
A
Wessels and Y Carrim
IN
THE COMPETITION TRIBUNAL OF SOUTH AFRICA
In the matter between:
THE
COMPETITION COMMISSION
…...........................................................
APPLICANT
And
WBHO
CONSTRUCTION (PROPRIETARY) LIMITED
…...................
1
st
RESPONDENT
EDWIN
CONSTRUCTION (PROPRIETARY) LIMITED
…................
2
nd
RESPONDENT
CONSENT
AGREEMENT BETWEEN THE COMPETITION COMMISSION AND WBHO
CONSTRUCTION
(PROPRIETARY) LIMITED AND EDWIN CONSTRUCTION (PROPRIETARY) LIMITED
IN REGARD TO A CONTRAVENTION OF SECTION 13A OF
THE COMPETITION
ACT
89
OF
1998
(AS
AMENDED)
The Competition Commission and
WBHO Construction (Proprietary) Limited and Edwin Construction
(Proprietary) Limited hereby agree
that an application be made to
the Competition Tribunal for confirmation of the Consent Agreement
as an order of the Competition
Tribunal in terms of Sections 49D as
read with
Sections 58(1)(b)
and
59
(1)(d)(t) of the
Competition Act
89 of 1998
, as amended, on the terms set out below:
1.
Definitions
For the purposes of this
Consent Agreement the following definitions shall apply:
1.1
"Ac?
means
the Competition Act 89 of 1998 (as amended).
1.2.
"Commission"
means
the Competition Commission of South Africa, a statutory body
established in terms of Section 19 of the Act, with its principal
place of business at Building C, Mulayo Building, dti Campus, cnr
Meintjies & Esselen Streets, Pretoria, Gauteng.
1.3.
"Tribunaf
means
the Competition Tribunal of South Africa, a statutory body
established in terms of Section 26 of the Act with its principal
place of business at Building C, Muiayo Building, dti Campus, cnr
Meintjies & Esselen Streets, Pretoria, Gauteng.
1.4.
"Consent Agreement
means
this written consent agreement duly signed by the Commission, WBHO
and Edwin.
1.5. WBHO-
means-WBHO Constraotion (Proprietary) Limited a private company
which has its principal place of business at 53 Andries
Street,
Wynberg, Sandton. WBHO is ultimately controlled by Wilson Bayly
Holmes-Ovcon Limited, a public company listed on the
JSE Limited.
1.6.
"Edwin"
means
Edwin Construction (Proprietary) Limited a private company which has
its principal place of business at 53 Andries Street,
Wynberg,
Sandton. Edwin is as at the date of signature of this Consent
Agreement controlled by WBHO.
1.7.
"Respondents"
means
Edwin and WBHO collectively.
2. Background facts
2.1. The First Transaction
2.1.1. On 2
June 2005, a shareholders' agreement was entered into between WBHO
and Mr Edwin Maila (a shareholder of Edwin) to
regulate and govern
their relationship as shareholders of Edwin. The shareholders
agreement formed part of a transaction in terms
of which WBHO
acquired 49% of the issued share capital of Edwin for R49 ("the
First Transaction"). In terms of the
shareholders agreement,
WBHO obtained the right to appoint the majority of the directors of
Edwin and accordingly in terms of
Section 12(2)(c) of the Act
acquired sole,
de
jura
control
over Edwin as a result of the First Transaction.
2.1.2. The First Transaction
was not notified to the Commission as required by the provisions of
section 13A of the Act. The Respondents
implemented the First
Transaction immediately after the conclusion of the shareholders
agreement.
2.2. The Second Transaction
2.2.1.
During May
2008, WBHO and Mr Maila concluded heads of agreement for,
inter
alia,
the
transfer
of a further 8% of the shares in Edwin to WBHO, increasing WBHO
shareholding from 49% to 57% of the issued share capital
of Edwin
("the Second Transaction").
2.2.2.
The
Respondents implemented the Second Transaction after the conclusion
of heads of agreement
:
"
2.2.3. The First and Second
Transaction shall hereinafter be collectively referred to as the
"Transaction".
2.2.4 Failure to notify the
Transaction only came to the attention of the Respondents when the
auditors BDO Spencer Steward Inc
("BDO") were auditing
WBHO's financial statements for the financial year ending 30 June
2009. BDO raised the question
as to whether the acquisition of
control by WBHO over Edwin had been notified to the Commission.
2.2.5. WBHO advised the
Commission that immediately upon receiving the query from BDO it
contacted its legal advisors, Cliffe
Dekker Hofmeyr Inc ("CDH"),
to check whether the Transaction required compulsory notification to
the Commission. CDH
confirmed that the Transaction required
notification and was instructed by WBHO to bring this fact to the
attention of the Commission
and to resolve the issue as soon as
possible.
2.2.6. The Commission met with
CDH and a representative of WBHO on 28 July 2009, and advised the
parties to notify the Transaction
as soon as possible and to provide
factual background to the failure to notify.
2.2.7. The Transaction was
notified to the Commission on 18 August 2009 as an intermediate
merger, which was approved by the Commission
29 September 2009,
under case number: 2009Aug4617.
3.
Commission's
investigation and findings
3.1
The
Commission investigated the alleged contravention and found the
following:
3.1.1. The Transaction resulted
in the change of Edwin's control, which change of control
constituted a merger in terms of section
12(1) of the Act.
3.1.2.
Further, the Commission found that the threshold for an intermediate
merger as defined in section 11 (5)(b) as read with
section 11 (1)
of the Act and Notice 253 of 2001 was met in respect of the
Transaction.
3.1.3.
Further, the Commission found that the merging parties implemented
the merger prior to the notification of and approval
by the
Commission in contravention of section 13A(3) of the Act.
4.
Admissions
4.1. The Respondents admit that
the Transaction constituted a notifiable intermediate merger as
defined in Section 11(5)(b) of
the Act
4.2. The Respondents further
admit that the merger was implemented prior to notification and
approval of the Commission in contravention
of Section 13A(3) of the
Act.
4.3.
The Respondents further admit that both WBHO and Edwin were
responsible for notifying the Commission of the Transaction.
5.
Compliance
with the Act
The Respondents agree and
undertake to:
5.1. refrain from engaging in
prior implementation of notifiable mergers in contravention of
section 13A(3) of the Act; and
5.2
continue to
implement the existing compliance programme already adopted by the
Respondents.
6. Administrative penalty
The Respondents admit that
they are each liable to pay an administrative penalty in terms of
section 58(1)(a)(iii) read with
section 59(1)(d)(iv), 59(2) and (3)
of the Act
WBHO agrees to pay an
administrative penalty of R1 000 000 (One Million Rand), and Edwin
agrees to pay an administrative penalty
of R100 000 (One Hundred
Thousand Rand).
Each penalty shall be payable
within 7 (seven) days of the confirmation of this Consent Agreement
as an order of the Tribunal.
The administrative penalty is
payable into the bank account of the Commission whose, banking
details are:
Bank:
ABSA Bank
Name of
account:
Competition
Commission
Account
Number
4050778576
Branch Code:
323345
6.5.
Proof of
payment of the administrative penalty amounts will emailed to the
Commission marked for the attention of the Manager
of Mergers &
Acquisitions.
6.6.
The
Commission will pay over the penalty amount to the National Revenue
Fund referred to in section 59(4) of the Act.
7. Full and final settlement
This Consent Agreement, upon
confirmation thereof as a consent order by the Tribunal, concludes
al! proceedings between the Commission
and the Respondents in
relation to the contravention of section 13A(3) of the Act,
investigated under the Commission's case number:
2009Aug4617.
Date
and
signed
at
Sandton
on
this
the
18
th
day
of
October
2010
WHBO Construction
(Prorietary) Limited
Date
and
signed
at
Sandton
on
this
the
19
th
day
of
October
2010
Edwin
Construction (Prorietary) Limited
Date
and
signed
at
Pretoria
on
this
the
26
th
day
of
October
2010
Competition
Commission