COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 43/LM/Apr12
In the matter between:
Land and Agricultural Development
Bank of South Africa Acquiring Firm
And
The performing corporate lending book of
Gro Capital Financial Services (Pty) Ltd Target Firm
Panel : Andreas Wessels (Presiding Member)
Medi Mokuena (Tribunal Member)
Taki Madima (Tribunal Member)
Heard on : 30 May 2012
Order issued on : 30 May 2012
Reasons issued on : 10 July 2012
Reasons for Decision
Approval
[1] On 30 May 2012 the Competition Tribunal (“Tribunal”) unconditionally
approved the merger between Land and Agricultural Development
Bank of South Africa and the performing corporate lending book of Gro
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Capital Financial Services (Pty) Ltd. The reasons for approval are set
out below.
Parties to transaction
[2] The primary acquiring firm is the Land and Agricultural Development
Bank of South Africa (“Land Bank”), a firm incorporated in terms of the
laws of the Republic of South Africa. The Land Bank is regulated by the
Land and Agricultural Development Bank Act, No. 15 of 2002 (“the
Land Bank Act”) and as such is not controlled by any firm. The Land
Bank has only one subsidiary namely Land Bank Insurance Company
(Pty) Ltd.
[3] The primary target firm is the performing corporate lending book
(“Corporate Lending Book”) of Gro Capital Financial Services (Pty) Ltd
(“Gro Cap”), a firm incorporated in terms of the laws of the Republic of
South Africa.
Proposed transaction and rationale for transaction
[4] The Land Bank intends to acquire Gro Cap’s Corporate Lending Book
which consists of Sale Book Debts.
[5] The Land Bank wishes to acquire the Corporate Lending Book of Gro
Capital and grow it further. The Corporate Lending Book will allow the
Land Bank to increase its capacity and better fulfil its developmental
mandate as set out in the Land Bank Act.
[6] Gro Capital wishes to remove both the Corporate Lending Book and
the funding structures relating to the Corporate Lending Book from its
balance sheet, thereby enabling Gro Capital to pursue other
opportunities with the capital that is released from the sale.
Relevant markets and impact on competition
[7] This transaction presents a horizontal as well as a vertical overlap
between the activities of the merging parties. The horizontal overlap
relates to the provision of retail financing to agro-processing clients. In
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terms of the vertical relationship, the Land Bank provides the Corporate
Lending Book with wholesale agricultural financing to on-lend to
agricultural clients.
[8] The Commission defined a national upstream market for the provision
of wholesale financing to the agricultural sector and a downstream
national market for the provision of retail financing to the agricultural
sector. There however is no need for us to determine the exact
parameters of the relevant markets in question since it does not alter
our decision in this case.
[9] Following its investigation the Commission concluded that the proposed
transaction is unlikely to substantially prevent or lessen competition in
the downstream market for the provision of retail financing to the
agricultural sector since the merging parties’ post-merger market share
remains below 30%. Furthermore, customers indicated that there are
alternative suppliers of retail financing. There are also a number of
alternative suppliers of wholesale financing to the agricultural sector
and therefore it is unlikely that the proposed transaction will raise any
foreclosure concerns.
[10] Furthermore, no significant public interest issues arise from this
transaction.
CONCLUSION
[11] We approve the transaction unconditionally.
____________________ 10 July 2012
A Wessels DATE
M Mokuena and Taki Madima concurring
Tribunal researcher: Thabo Ngilande
For the merging parties: Edward Nathan Sonnenbergs
For the Commission: Mogau Aphane
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