COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 58/LM/Sept10
In the matter between:
Clidet No 1003 (Pty) Ltd Acquiring Firm
And
ICC Mayibuye (Pty) Ltd Target Firm
Panel : Yasmin Carrim (Presiding Member)
Medi Mokuena (Tribunal Member)
Andreas Wessels (Tribunal Member)
Heard on : 3 November 2010
Order issued on : 3 November 2010
Reasons issued on : 25 November 2010
Reasons for Decision
Approval
1] On 3 November 2010, the Competition Tribunal (“Tribunal”)
unconditionally approved the acquisition of ICC Mayibuye (Pty) Ltd t/a
Savemoor Cash and Carry (“Savemoor”) by Clidet No 1003 (Pty) Ltd.
The reasons for the approval of the transaction follow.
The parties and their activities
2] The primary acquiring firm is Clidet No 1003 (Pty) Ltd (Pty) Ltd (“Newco”)
a subsidiary of Masscash (Pty) Ltd (“Masscash”), a company part of the
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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; Massdiscounters, 1 Masswarehouse, 2 Massbuild 3 and
Masscash.4
4] The primary target firm is ICC Mayibuye (Pty) Ltd trading as Savemoor
Cash and Carry (“Savemoor”). Savemoor conducts business as a retailer
of grocery products to customers in the LSM 2 to 6 markets through its
store located in Thembisa, Gauteng. Savemoor is primarily a retailer of
grocery products but a small portion of its revenue constitutes sales at a
wholesale level.
The proposed transaction
5] Masscash, through its subsidiary Newco, will acquire a 51% interest in
Savemoor, the remaining 49% of the shareholding in Savemoor will be
retained by one of the existing shareholders, a Mr Manual Eduardo
Gouveia Ferreira.
Rationale for the proposed transaction
6] Massmart seeks to expand its current limited presence in the retail
grocery market, and perceives Savemoor as a successful hybrid retail
store through which it can promote Masscash’s Food Hybrid Strategy.
1 Comprises of Game stores, which offers merchandise and non-perishable groceries to end
consumers in 5-10 socio-economic groups and 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 Comprises of Builders Warehouse, Builders Express and Builders Trade Depot who 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 and CBW which trades in basic grocery
for sale to lower to middle income urban customer and 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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7] From Savemoor’s perspective this transaction provides the existing
shareholders with on the one hand, an attractive opportunity to realise a
return on their investment to date, whilst on the other retaining a
significant stake and involvement in the business.
Relevant markets and impact on competition
8] The proposed merger affects two markets, namely the wholesale grocery
market, within a 40-50km radius of the Savemoor store in Tembisa and
the retail grocery market within a 10km radius of the Savemoor store in
Tembisa.
Horizontal analysis
9] Although there is an overlap between the activities of the merging firms
we find the overlap to be insignificant. In the retail grocery market as
defined above Savemoor’s market share is approximately 20% and
Massmart’s, through their CBW Olifant’s store, is only 1%. In the
wholesale market Savemoor’s market share is 1% and Massmart’s is
approximately 30%.5
10] Given the low level of market share accretion, and the high number of
effective competitors active in these markets, it is unlikely that the
proposed merger will result in a substantial lessening or prevention of
competition or would lead to any price escalations.
Vertical analysis
11] There is a vertical relationship between the merging parties because
Savemoor has made ad hoc purchases from the primary acquiring firm in
the previous financial year. However these purchase have been
infrequent and of low value. Accordingly the vertical overlap raises no
5 This figure includes the market shares of all Makro, CBW and Jumbo stores in this area.
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foreclosure concerns.
12] We find that the proposed merger is unlikely to substantially prevent or
lessen competition in the markets for wholesale or retail grocery markets
in Tembisa as defined above.
Conclusion
13] There are no significant public interest issues and we accordingly
approve the transaction.
____________________ 25 November 2010
Yasmin Carrim DATE
Medi Mokuena and Andreas Wessels concurring
Tribunal Researcher : Thandi Lamprecht
For the merging parties : Cliffe Dekker Hofmeyr Attorneys
For the Commission : Thabelo Ravhugoni
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