COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 63/LM/OCT10
In the matter between:
Business Venture Investments No 1347 (Pty) Ltd Acquiring Firm
And
DD’s Cash and Carry (Pty) Ltd Target Firm
Panel : Norman Manoim (Presiding Member)
Yasmin Carrim (Tribunal Member)
Andreas Wessels (Tribunal Member)
Heard on : 13 October 2010
Order issued on : 13 October 2010
Reasons issued on : 17 November 2010
Reasons for Decision
Approval
1] On 13 October 2010, the Competition Tribunal (“Tribunal”)
unconditionally approved the acquisition of DD’s Cash and Carry (Pty)
Ltd by Business Venture Investments No 1347 (Pty) Ltd. The reasons for
approving the transaction follow.
The parties and their activities
2] The primary acquiring firm is Business Venture Investments No 1347
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(Pty) Ltd (“Newco”) a subsidiary of Masscash (Pty) Ltd (“Masscash”), a
company part of the Massmart Group, Massmart Holdings Limited
(“Massmart”).
3] Newco is a shelf company and has not previously traded. Massmart
trades through various companies that fall under its four divisions namely
Massdiscounters1, Masswarehouse2, Massbuild3 and Masscash4.
4] The primary target firm is DD’s Cash and Carry (Pty) Ltd trading as JD’s
Cash and Carry (Pty) Ltd (“JD’s”). JD’s conducts business as a retailer
and wholesaler of grocery products to customers in the LSM 2 to 6
market through its store located in Vosloorus, Gauteng. In this store,
JD’s has a butchery, bakery, take-away counter and sale of fresh
produce and other perishables.
The proposed transaction
5] Masscash, through its subsidiary Newco, is to acquire a 51% interest in
JD’s. The existing shareholders of JD’s will retain 49% of the interest in
the business. Minority protections are afforded to these shareholders.
Rationale for the proposed transaction
6] Massmart through Masscash wants to expand its presence in the retail
grocery segment. More particularly to grow its mass-market in the urban
and peri-urban areas where large incumbents are consolidating their
respective market shares, and where Massmart currently has no
1 Comprises of the Game stores, which offers merchandise and non perishable groceries to end
consumers in 5-10 socio-economic groups. Dion Wired which offers a more upmarket range of mainly
electrical and electronic merchandise to the upper end consumer.
2 Comprises of Makro which trades in range of food, liquor and general merchandise to commercially
affiliated sellers and upper income end consumers in the 6-10 socio economic groups.
3 Builders Warehouse, Builders Express and Builders Trade Depot which sell hardware and home
improvement products and building materials.
4 Comprises of Jumbo Cash and Carry which distributes cosmetic, toiletries and hair products for sale
to lower to middle income urban customer. Also comprises of CBW which trades in basic grocery
products and limited range of general merchandise . In this list there is also Shield which is as
voluntary buying group serving independently owned food wholesale and retail outlet servicing
customers in the LSM 2-6 socio-economic groups.
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presence. Masscash’s food retail hybrid strategy is intended to provide a
combined retail/wholesale format that will cater for the needs of LSM 2-6
customers and small independent trades.
7] The rationale for this transaction for the target firm, is that Spirydon
Yiannopoulus, a trustee and beneficiary in the SY Trust that currently
owns 50% interest in JD’s, wants to realise his interest. Further, it is
expected that Massmart, as a result of this transaction, will bring
additional resources which will allow JD’s business to expand.
Relevant markets and impact on competition
Horizontal analysis
8] There is a horizontal overlap in respect of wholesale trade in grocery
products to the customers in the LSM 2-6 socio-economic groups in the
Gauteng province. The geographic overlap occurs with the acquiring
firm’s nearest wholesale store being the Springs Cash and Carry.
However, it was found that this market has the presence of sufficient
effective competitors5 to curb any anti competitive behaviour by the
merged entity.
Vertical analysis
9] Additionally, there exists a vertical relationship between the merging
parties. This is because JD’s has previously made ad hoc purchases
from the primary acquiring firm. The figures concerning such purchases
are however too insignificant to raise any foreclosure concerns or issues.
10] The customers of the merging parties were contacted and indicated no
objection to the merger provided that the merger does not change the
5 Such as Shoprite, Spar, OK, Pick ‘n Pay and Boxer.
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present buying conditions situating to the worst.
Public interest
11] No public interest concerns arise as a result of this proposed transaction.
Conclusion
12] The proposed transaction is approved without conditions since it is
unlikely to substantially prevent or lessen competition in any potential
relevant market.
____________________ 17 November 2010
Norman Manoim DATE
Yasmin Carrim and Andreas Wessels concurring
Tribunal Researcher : Mahashane Shabangu
For the merging parties : Chris Charter and Pia Harvey from Cliffe
Dekker Hofmeyr
For the Commission : Mogalane Matsimela of the Mergers and
Acquisitions Division
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