COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 81/LM/Sep11
In the matter between:
Venfin Media Investments (Pty) Ltd Acquiring Firms
Main Street 754 (Pty) Ltd
And
Marc Group Ltd Target Firm
Panel : Andreas Wessels (Presiding Member)
Andiswa Ndoni (Tribunal Member)
Medi Mokuena (Tribunal Member)
Heard on : 16 November 2011
Order issued on : 16 November 2011
Reasons issued on : 01 February 2012
Reasons for Decision
Approval
[1] On 16 November 2011 the Competition Tribunal (“Tribunal”) approved the
acquisition by Venfin Media Investments (Pty) Ltd and Main Street 754
(Pty) Ltd of Marc Group Ltd. The Tribunal’s reasons for approving this
transaction are set out below.
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Parties to the transaction
[2] The primary acquiring firms are Venfin Media Investments (Pty) Ltd
(“Venfin Media”) and Main Street 754 (Pty) Ltd (“Main Street”). These firms
are incorporated in terms of the laws of the Republic of South Africa.
Venfin Media is controlled by Venfin Ltd, which is in turn controlled by
Remgro Ltd. The Remgro group controls numerous firms. 1 Main Street is
an investment holding company with a shareholding in Marc Group Ltd.
[3] Remgro is an investment holding company with interests in various firms
involved in inter alia financial services, medical services, mining, media,
petroleum products, food, wine and spirits. For purposes of the instant
transaction, Remgro’s indirect non-controlling interest in Mobil Alliance
Media and Technology (Pty) Ltd (“Mobil Alliance”) is of relevance. Mobil
Alliance is involved in the provision of digital advertising screens.
[4] The primary target firm is Marc Group Ltd (“Marc”), a firm incorporated in
terms of the laws of the Republic of South Africa. Venfin Media currently
holds 34.55% of the ordinary shares and all of the no par value preference
shares in Marc and Main Street holds 34.5% of the ordinary shares in
Marc. Marc holds investments in various sport brand companies, conducts
sport sponsorship activities and is also involved in the provision of digital
advertising screens.
Description and rationale for transaction
[5] In this transaction Venfin Media is converting all of its currently held
preferential shares in Marc into ordinary shares. Pursuant to the proposed
transaction Venfin Media will hold 54.74% of the issued share capital in
Marc. Main Street’s shareholding in Marc will dilute to 24.45% as a result
of this conversion. However, Venfin Media and Main Street will have joint
control over Marc given certain minority protections conferred on Main
Street in terms of the concluded Marc shareholders agreement.
Street in terms of the concluded Marc shareholders agreement.
1 See Form CC4(2) for a complete list of the firms in the Remgro group.
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[6] Remgro is positive about the growth prospects of Marc and the rationale
for Marc is that this transaction will enable it to enhance its capital
structure and debt raising capacity.
Competition analysis
[7] As indicated above, both Mobil Alliance and Marc are involved in the
provision of digital advertising screens at sporting stadiums.
[8] The Commission in defining the relevant product market identified two
types of advertising screens, namely:
(i) perimeter sporting screens; and
Perimeter sporting screens are advertising screens installed at sports
stadiums. They ring the perimeter of a pitch and are targeted at large
crowds such as found at rugby and soccer matches. The screen
provider is responsible for screen logistics (arranging that the screens
are at the relevant matches) and the sequencing and display of
screen content. The customers are the owners of the “pitch-side”
advertising rights at the sporting events. These customers include
sports bodies such as the South African Soccer League or SA Rugby,
as well as various individual clubs.
(ii)small display screens
Small digital advertising screens are normally placed at retail stores,
supermarkets checking points and are targeted at people who enter
and buy at those shopping stores.
[9] The Commission concluded that there is limited demand- and supply-side
substitutability between the above-mentioned two types of screens and
that they therefore constitute separate relevant product markets.
[10] In respect of the scope of the relevant geographic market, the
Commission found that the market is global since competitors of the
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merging parties consist of overseas based companies that participate in
tender bids for the major local sport tournaments.
[11] The merging parties’ combined post-merger market shares in the
provision of perimeter sporting screens in (a) South Africa and (b)
internationally, based either on the number of systems that they have or
their number of contracts/events, are relatively low. The Commission
further found that the contracts in this market are awarded on the basis of
tenders, which usually have multiple rounds of negotiations. Competitors
of the merging parties in this market include firms such as TGI Systems,
Stella Vista, Megaview and ADI TV.
[12] Furthermore, the Commission, as part of its market investigation,
contacted customers in the relevant market and these customers indicated
that they have no concerns in relation to the proposed transaction.
Public interest
[13] The merging parties submitted that the proposed transaction will not
result in any retrenchments and will have no adverse effect on
employment.2 Furthermore, the proposed transaction does not raise any
other public interest concerns.
Conclusion
[14] In light of the above, we conclude that the proposed transaction is
unlikely to substantially prevent or lessen competition. Furthermore, the
proposed transaction raises no public interest concerns. Accordingly we
approve the proposed transaction unconditionally.
____________________ 01 February 2012
A Wessels Date
A Ndoni and M Mokuena concurring
2 See Schedule 2 to form CC4(1) filed by the merging parties – page 20 of the record.
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Tribunal researcher: Ipeleng Selaledi
For the merging parties: Webber Wentzel Attorneys
For the Commission: Dineo Mashego
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