COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:71/LM/Jul12
[015347]
In the matter between:
PSG Konsult Ltd Acquiring Firm
And
Western Group Holdings Ltd Target Firm
Panel : Yasmin Carrim (Presiding Member)
Andreas Wessels (Tribunal Member)
Andiswa Ndoni (Tribunal Member)
Heard on : 25 July 2012
Order issued on : 25 July 2012
Reasons issued on : 28 August 2012
Reasons for Decision
Approval
1] On 25 July 2012 the Competition Tribunal (“Tribunal”) unconditionally
approved the acquisition by PSG Konsult Ltd of Western Group Holdings
Ltd. The reasons for the approval follow below.
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Parties and their activities
2] The primary acquiring firm is PSG Konsult Ltd (“PSG Konsult”), a company
incorporated under the laws of the Republic of South Africa. PSG Konsult
is controlled by PSG Financial Services Ltd (“PSG Financial Services”), a
wholly owned subsidiary of PSG Group Ltd (“PSG Group”). PSG Financial
Services controls the following firms: Zeder Investments, Curro Holdings,
Paladin Capital and Capitec Bank Holdings. PSG Konsult does not control
any firm.
3] PSG Group is an investment holding company and does not sell any
products or provide any services. It holds a number of strategic and
controlling stakes in a range of private and public companies that operate
across a broad spectrum of industries including financial services,
banking, private equity, agriculture and education. PSG Financial Services
is the primary investment company for the PSG Group and does not sell
any products or provide any services.
4] PSG Konsult provides a wide range of financial services including asset
management, commodity trading, stock broking, short term insurance
broking, hedge fund services, electronic financial services and healthcare
brokerage and administration.
5] The primary target firm is Western Group Holdings Ltd (“Western Group”),
a company incorporated under the laws of Namibia. The shareholders in
Western Group are Management (54%), PSG Konsult (24%), SAAD
Financial Holdings (Pty) Ltd (20%) and BEE Shareholder (2%). Western
Group controls insurance On Call (Pty) Ltd and Western National
Insurance Company Ltd.
6] Western Group is a licensed short term insurer and provides short term
insurance services to clients in South Africa.
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Description of the transaction
7] PSG Konsult intends to increase its shareholding in Western Group from
24% to 75%. On completion, PSG Konsult will have sole control of
Western Group.
Rationale for the transaction
8] From PSG Konsult’s perspective, the proposed transaction will allow it to
increase its exposure to commercial insurance. Western Group submitted
that its management and underwriting expertise, coupled with the
distribution channel and capital base of PSG Konsult, will allow it to
continue to grow whilst having access to additional capital.
Competition Analysis
9] The Commission found that the only overlap that arises in the market for
short term insurance is with respect to PSG Konsult’s interest in Western
Group.1 However, this does not result in any market share accretion or
change in the market structure as the acquiring firm is simply increasing its
stake in the target firm.
Public interest
10]The merging parties submitted to the Commission that the proposed
transaction will not have any significant effect on employment.2
1 The parties indicated that Western Group does not provide short term insurance broking to
third parties and only provides these services in-house.
2 See form CC4(1) - schedule 2 filed by the merging parties.
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Conclusion
11]We agree with the Commission that the proposed transaction is unlikely to
substantially prevent or lessen competition in the market for short term
insurance as there is no market share accretion or change in the market
structure resulting from the merger. Furthermore, the proposed transaction
raises no public interest concerns. Accordingly, we approve the
transaction unconditionally.
____________________ 28 August 2012
Yasmin Carrim Date
Andreas Wessels and Andiswa Ndoni concurring.
Tribunal researcher: Ipeleng Selaledi
For the merging parties: Susan Meyer of Cliffe Dekker Hofmeyr Inc.
For the Commission: Mogalane Matsimela
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