COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 29/LM/Apr11
In the matter between:
Business Venture Investments No. 1473 (Pty) Ltd Acquiring Firm
And
McDonald’s (S.A.) (Pty) Ltd Target Firm
Panel : Andreas Wessels (Presiding Member)
Medi Mokuena (Tribunal Member)
Andiswa Ndoni (Tribunal Member)
Heard on : 25 May 2011
Order issued on : 26 May 2011
Reasons issued on : 08 June 2011
Reasons for Decision
Approval
1] On 26 May 2011 the Competition Tribunal (“Tribunal”) approved the
proposed transaction involving Business Venture Investments No. 1473
(Pty) Ltd and McDonald’s (S.A.) (Pty) Ltd. The Tribunal’s reasons for
approving the transaction are set out below.
Parties to the proposed transaction
2] The acquiring firm is Business Venture Investments No. 1473 (Pty) Ltd
which is to be renamed Shanduka Restaurants Company (Pty) Ltd
(“Shanduka Restaurants”), a private company duly incorporated in
accordance with the laws of the Republic of South Africa, and controlled
by Shanduka Group (Pty) Ltd (“Shanduka”), the parent company of the
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Shanduka group of companies.1
3] The target firm is McDonald’s (S.A.) (Pty) Ltd (“McDonald’s”), a private
company registered in accordance with the laws of the Republic of South
Africa, which is ultimately controlled by the New York Stock Exchange
listed McDonald’s Corporation.2
4] In terms of the proposed transaction, Shanduka Restaurants intends to
acquire the entire issued share capital of McDonald’s. The transaction also
involves the conclusion of a Master Franchise Agreement between the
parties to the merger which will grant Shanduka Restaurants the right to
own, operate and license others to operate McDonald’s branded
restaurants in South Africa.
Rationale for the proposed transaction
5] Shanduka Restaurants submitted that the proposed transaction will enable
the Shanduka group to broaden its investment portfolio through
diversification into a growing market and further raise the group’s global
profile.
6] McDonald’s Corporation stated that it is part of their global strategy to seek
operational growth for their operations, through local ownership, in line
with its Developmental Licensee model, which has been successfully
implemented worldwide. It further held the view that the Shanduka group
can drive its business in South Africa, developing and realizing the long
term growth potential that exists for the McDonald’s brand in the country.
Activities of the merging parties and product overlap
7] Shanduka is a private investment holding company with an investment
portfolio comprising of investments in the resources, financial services,
property, energy, telecommunications, beverages and industrial sectors.
8] McDonald’s Corporation operates 32 000 restaurants globally in over 117
countries. The target firm, being the South African part of this global
restaurant group, is in the fast food industry and operates and franchises
McDonald’s branded restaurants in the informal eating out sector. The
McDonald’s branded restaurants in the informal eating out sector. The
Shanduka group premerger does not operate in the informal eating out
sector.
9] As is clear from the above description of the merging parties’ activities,
they do not sell or provide any products or services in South Africa that
can be considered reasonably interchangeable or substitutable.
Furthermore, no vertical relationships exist between the merging parties.
Public interest
1 http://www.shanduka.co.za/
2 http://www.mcdonalds.co.za/
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10]The merging parties confirmed that no job losses or retrenchments are
anticipated as a result of the proposed transaction and no other public
interest issues arise from this transaction.
Conclusion
11]Given that there is no horizontal product/service overlap in the merging
parties’ activities and that there are also no vertical relationships between
the merging parties, the proposed merger is approved without conditions.
____________________ 08 June 2011
A Wessels Date
M Mokuena and A Ndoni concurring
Tribunal Researcher: Songezo Ralarala
For the merging parties: For the target firm: Tamara Dini and Ineke Bosman
from Bowman Gilfillan Attorneys
For the acquiring firm: Mondo Nthla and Lerisha
Naidoo from Cliffe Dekker Hofmeyr Attorneys
For the Commission: Zanele Hadebe
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