COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:15/LM/Feb12
(014019)
In the matter between:
Pepkor Capital (Pty) Ltd Acquiring Firm
And
Flash Mobile Cash (Pty) Ltd; Target Firms
SharedPhone International (Pty) Ltd; and
Take It Eezi Vending (Pty) Ltd
Panel : Andreas Wessels (Presiding Member)
MediMokuena (Tribunal Member)
TakalaniMadima (Tribunal Member)
Heard on : 11 April 2012
Order issued on : 11 April 2012
Reasons issued on : 18 April 2012
Reasons for Decision
Approval
1] On 11 April 2012 the Competition Tribunal(“Tribunal”)
unconditionallyapproved the acquisition by Pepkor Capital (Pty) Ltd of
Flash Mobile Cash (Pty) Ltd, SharedPhone International (Pty) Ltd and
Take It EeziVending (Pty) Ltd. The reasons for approving the proposed
transaction follow below.
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Parties to transaction
2] The primary acquiring firm is Pepkor Capital (Pty) Ltd (“Pepkor
Capital”), a private company incorporated in terms of the company laws
of the Republic of South Africa. Pepkor Capital is an indirectly wholly
owned subsidiary of Pepkor Holdings Limited. Below we shall
collectively refer to Pepkor Holdings Limited and its subsidiaries as “the
Pepkor Group”.
3] The Pepkor Group operates principally in the retail markets for clothing,
footwear and textiles. The retail outlets in the Pepkor stable include
Pep, Ackermans, Dunns, John Craig, Shoe City and Pep Clothing. The
Pepkor Group is also involved in the financial services and micro
lending markets.1Through a controlling stake in Future Cell (Pty) Ltd it
has recently also begun operating in the cellular business, with primary
focus on the wholesale of cellular starter packs (i.e. cellular SIM cards).
4] The primary target firms are(i) Flash Mobile Cash (Pty) Ltd (“Flash
Mobile”);(ii) SharedPhone International (Pty) Ltd (“SharedPhone”); and
(iii) Take It Eezi Vending (Pty) Ltd (“TIE”) (collectively referred to
hereinafter as “the target firms”).The target firms are all private
companies incorporated in terms of the company laws of the Republic
of South Africa.
5] The combined business model of the target firms is to supply their
products to the informal retail sector, mainly being small shops, street
vendors and spaza shops (collectively referred to hereinafter as
“vendors”).
6] TIE’s core business is the supply of payphones to vendors. As a value
added service TIE allows vendors to sell airtime and electricity to
people in their communities using SMS as a means of delivery.Flash
Mobile works on the same basis as TIE, however Flash Mobile
supplies the vendors with a simple, small printer which links up to the
handheld phones.
7] SharedPhone is a hardware supplier of printers and desktop and
handheld phones.
7] SharedPhone is a hardware supplier of printers and desktop and
handheld phones.SharedPhoneinter aliasupplies Flash Mobile and TIE
with hardware. It also supplies the Pepkor Group with hardware, which
then on-sells the hardware to customers.
Proposed transaction and rationale for transaction
1Tenacity, a financial services company, grants credit to holders of Ackermans and Dunns
cards.
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8] Pepkor Capital intends to acquire the businesses of the target
firms,and their business assets, as going concerns. Post-merger
Pepkor Capital will have sole control over the target firms.
9] The Pepkor Group wishes to expand its business operations to serve
the informal market and the shareholders of the target firms wish to
realise their investment.
Relevant markets and impact on competition
Horizontal analysis
10]The Commission concluded that there is a horizontal overlap in the
activities of the merging parties in relation to the supply of handheld
and desktop phones to vendors. The post-merger estimated national
market share of the merged entity in this market will be below 10%.
Therefore, from a horizontal perspective, the proposed transaction is
unlikely to lead to a substantial prevention or lessening of competition.
Vertical analysis
11]There is a vertical relationship between the merging parties since
SharedPhone supplies the Pepkor Group, Flash Mobile and TIE with
hardware (i.e. handheld and desktop telephones, functioning as
payphones, and pre-paid airtime and electricity vending terminals
consisting of a mobile phone, printer and a vending SIM card).
12]The Commission concluded that the proposed transaction is unlikely to
raise foreclosure concerns. The Commission found that post-merger
SharedPhone’s other customers (i.e. independent distributors) will
have the option of sourcing hardware from alternative suppliers such
as Blue Label Telecoms, ZTE Corporation, Smart Call and Onecell, or
directly from the hardware manufacturers. The Commission further
found that post-merger a large proportion of SharedPhone’s entire
hardware sales will remain with the merged entity for reselling to
vendors.
13]In light of the above, we find that the transaction is unlikely to raise
vertical competition concerns.
Public interest
14]The merging parties submitted that the proposed transaction will have
Public interest
14]The merging parties submitted that the proposed transaction will have
no adverse effects on employment or terms and conditions of
employment.2 No other public interest issues arise as a result of this
2See pages 15, 53 and 74 of the merger record.
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transaction.
CONCLUSION
15]Having regard to the facts above, we find that the proposed merger is
unlikely to substantially lessen or prevent competition in any relevant
market. Furthermore, the proposed transaction raises nopublic interest
concerns. Accordingly, we approve the merger unconditionally.
____________________ 18 April 2012
Andreas Wessels DATE
M Mokuena and T Madima concurring
Tribunal researcher: Elizabeth Preston-Whyte
For the merging parties: Irma-DaleneGouws of Werksmans Attorneys
For the Commission: LeratoMonareng and LindiweKhumalo
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