COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:05/AM/Jan12
In the matter between:
Tedelex Trading (Pty) Ltd First Applicant
Sammeg Satellite (Pty) Ltd Second Applicant
Sammeg Cape (Pty) Ltd Third Applicant
Sammeg KZN (Pty) Ltd Fourth Applicant
and
The Competition Commission Respondent
In re: the intermediate merger between:
Tedelex Trading (Pty) Ltd Acquiring Firm
and
Sammeg Satellite (Pty) Ltd
Sammeg Cape (Pty) Ltd
Sammeg KZN (Pty) Ltd Target Firms
Panel : Yasmin Carrim (Presiding Member)
Medi Mokuena (Tribunal Member)
Andreas Wessels (Tribunal Member)
Heard on : 02 April 2012
Order issued on : 02 April 2012
Reasons issued on : 18 July 2012
Reasons for Decision
Approval
[1] On 02 April 2012, the Competition Tribunal approved the intermediate
merger between Tedelex (Pty) Ltd and Sammeg Satellite (Pty) Ltd,
Sammeg Cape (Pty) Ltd, Sammeg KZN (Pty) Ltd subject to conditions.
The reasons for conditionally approving the proposed transaction follow
below.
Parties to the transaction
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[2] The primary acquiring firm is Tedelex Trading (Pty) Ltd (“Tedelex”).
Tedelex is a wholly-owned subsidiary of listed company Amalgamated
Appliance Holdings Limited. Tedelex is involved in the marketing and
supply of household appliances and electrical accessories, such as
heaters, kettles, microwaves, extension cables and plugs.
[3] The primary target firms are Sammeg Satellite (Pty) Ltd, Sammeg
Cape (Pty) Ltd and Sammeg KZN (Pty) Ltd (collectively the “target
firms”). The target firms are involved in the supply of electrical
accessories and television reception equipment, such as aerials,
satellite dishes and decoders.
Proposed transaction
[4] The proposed transaction involves the acquisition by Tedelex of the
business of the target firms as going concerns.
Rationale for the transaction
[5] The merging parties submitted that the rationale for the proposed
transaction is that this merger will enhance efficiency through an
increase in distribution channels and product offerings, as well as
enable the target firms to make use of Tedelex’s established marketing
and IT networks.
Background
[6] On 11 October 2011, the merging parties notified the Competition
Commission (“Commission”) of their intermediate merger in terms of
section 13A(1) of the Competition Act 89 of 1998 (“the Act”).
[7] On 20 December 2011, the Commission approved such merger subject
to the condition that no retrenchments should take place for a period of
two years after the Approval Date.
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[8] On 09 January 2012, the merging parties filed a request for
consideration in terms of section 16(1)(a) of the Act to have the
Tribunal consider the condition, contending that the merger be
unconditionally approved as the Commission’s condition is too broad. It
was common cause between the parties that the proposed merger was
unlikely to have an adverse impact on competition.
[9] Following the request for consideration, the Commission revised its
condition to which the merging parties agreed. The agreed upon
revision included that if any retrenchments are made within the two
year period, such retrenchments may not be merger-specific and the
merged entity must motivate that these retrenchments are not related
to the merger.
Relevant markets and impact on competition
[10] There is no vertical overlap present in this proposed transaction. The
Commission found that most of the products supplied by the merging
parties are non-competing and complementary products. However,
there is a horizontal relationship between the parties regarding
electrical accessories as the involved parties supply such. Once the
Commission concluded its investigation on the relevant market
pertaining to electrical accessories, it was confirmed that as it is such a
broad market with many different sub-markets, it found there would be
no competition issues in this regard. Further, there are various
competitors in the market for electrical accessories.
[11] Due to the lack of industry studies relating to the market shares of
electrical accessories, the Commission relied on market share
estimates supplied by the merging parties as well as those supplied by
the competitors of the merging parties. The merged entity’s market
share is 9% based on the merging parties’ estimates and 25% based
on their competitors’ estimates. The Tribunal will accept that the
on their competitors’ estimates. The Tribunal will accept that the
merged entity’s market share will not be significantly high.
Public interest
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[12] The merging parties submitted that there will be an effect on
employment as a result of the proposed transaction in the form of
possible job losses1. These job losses might arise due to various
warehouses becoming integrated; resulting in certain duplicate
positions becoming redundant. This would lead to the retrenchment of
one semi-skilled employee and fifteen semi-skilled employees of the
target firms, the names of which were provided by the merging parties.
Pre-merger, Tedelex has a staff of 304 employees and the target firms
have 113 employees.
[13] In order to address the abovementioned public interest issue, the
Commission approved the merger subject to the following condition:
1. No employees of either Tedelex or the target firms should be
retrenched for a period of two years after the Approval Date.
[14] The merging parties, however, deemed the condition prohibiting any
employees to be retrenched as a result of this transaction to be too
broad. The merging parties and the Commission reached an
agreement as to the revision of the condition, by making the prohibition
of retrenchments merger-specific. If the merging parties do wish to
make retrenchments within the two year period, the merged entity will
need to motivate such. The Tribunal has ordered the imposition of the
agreed upon revised conditions, attached as “Annexure 1”.
[15] No other public interest issues arise as a result of this transaction.
1 See page 261 of the record.
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CONCLUSION
[16] We conclude that the proposed transaction does not raise any
competition issues and is unlikely to substantially prevent or lessen
competition in any relevant market. The revised conditions imposed
address the public interest concerns. The proposed transaction raises
no further public interest concerns. Accordingly, we approve the
proposed merger subject to the attached conditions.
____________________ 18 July 2012
YASMIN CARRIM DATE
Medi Mokuena and Andreas Wessels concurring.
Tribunal Researcher: Nicola Ilgner
For the merging parties: Fluxmans
For the Commission: Lebohang Molefe
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