COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 57/LM/Jul11
In the matter between:
Old Mutual Life Assurance Company (South Africa) Acquiring Firm
And
Liberty Star Consumer Holdings (Pty) Ltd Target Firm
Panel : Norman Manoim (Presiding Member)
Andreas Wessels (Tribunal Member)
Yasmin Carrim (Tribunal Member)
Heard on : 24/08/2011
Order issued on : 24/08/2011
Reasons issued on : 05/09/2011
Reasons for Decision
APPROVAL
1] On 24 August 2011 the Competition Tribunal (“Tribunal”) unconditionally
approved the proposed transaction involving Old Mutual Life Assurance
Company of South Africa (“OMLACSA”) and Liberty Star Consumer Holdings
(“Libstar”). The reasons for approval of the proposed transaction follows below.
THE TRANSACTION AND RATIONALE
2] In terms of the proposed transaction Old Mutual which currently already has
9.38%1 indirect shareholding in Libstar intends to acquire 14.952% direct
shareholding in Libstar from Absa Bank. Post transaction, OMLACSA will
control Libstar, and will be entitled to exercise veto rights in Libstar through the
negative control obtained consequent to this transaction.
1 This is held through Lereko Metier Capital Growth Fund (“LMCGF”).
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3] OMLACSA views the proposed transaction as an attractive investment
opportunity which will expand its investment footprint in the food manufacturing
sector in South Africa. For Libstar, the transaction will give it access to finance,
and for ABSA, the seller, this is an opportunity to realise its investment.
4] OMLACSA is active in the insurance industry and provides different products
such as life policy, assistance policies, disability policies, health policies,
reclassified retrenchment cover as well as sinking fund policies to individuals
and groups. Libstar is an investment holding company with various subsidiaries
active in the South African fast moving consumer goods market, 2 with specific
focus on companies active in the contact manufacturing and private label
industries.
COMPETITION ASSESSMENT
5] There is no overlap in the activities of the merging parties as OMLACSA does not
control any firms which compete with Libstar in the fast moving consumer goods
market.
6] During the hearing, the question was raised whether there could potentially be any
vertical concerns arising from this deal given that Old Mutual group has underlying
business interests in the food manufacturing sector in South Africa, as it has a non-
controlling effective 42.56% interest in Metaf Investment Holdings, which in turn
owns 100% of the share capital of Metcash Trading Africa. Further, Old Mutual also
holds 9.7% of the shares in Metcash.
7] The merging parties submitted that there is no prospect of vertical foreclosure as
Old Mutual’s stake in Metcash does not give it the ability to dictate Metcash’s
purchasing strategy. It was also said that Metcash’s policy does not allow it to stock
particular brands to the exclusion of other brands, and that Libstar has no incentive
to foreclose in favour of Metcash as it has no shares in Metcash. Furthermore that
Old Mutual’s interest in Libstar merely gives it negative control and not the ability to
Old Mutual’s interest in Libstar merely gives it negative control and not the ability to
dictate the operations of the underlying investee companies.
PUBLIC INTEREST
2 This includes goods such as wet condiments, sauces, salad dressing, toiletries, confectionery, cereal, herbs and spices and cheese.
8] This deal does not give rise to any public interest issues.
CONCLUSION
9] Having regard to these considerations, we find that the proposed transaction is
unlikely to substantially prevent or lessen competition in any market. It also will
not change the structure of any market given that there is no overlap in the
activities of the merging parties. The transaction is therefore approved without
conditions.
____________________ 05/09/2011
N Manoim Date
Y Carrim and A Wessels concurring
Tribunal Researcher: Londiwe Senona
For the merging parties: Cliffe Dekker Hofmeyr
For the Commission: Noma Tsego and Lindiwe Khumalo
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