COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 72/LM/Jul12
015354
In the Large Merger Between:
Blue Falcon 188 Proprietary Limited Acquiring Firm
And
Studio 88 Clothing (Pty) Ltd, Crystal Way Trade & Target Firms
Invest 1003 CC trading as Side Step and Frisbee Trade
and Invest 1161 CC
Panel : Yasmin Carrim (Presiding Member)
Andreas Wessels (Tribunal Member)
Andiswa Ndoni (Tribunal Member)
Heard on : 15 August 2012
Order issued on : 15 August 2012
Reasons issued on : 05 September 2012
Reasons for Decision
Approval
1] On 15 August 2012 the Competition Tribunal (“Tribunal”) unconditionally
approved the merger between Blue Falcon 188 Proprietary Limited and
Studio 88 Clothing (Pty) Ltd, Crystal Way Trade & Invest 1003 CC trading as
Side Step and Frisbee Trade and Invest 1161 CC. Our reasons for approving
the transaction are set out below.
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The parties to the transaction
2] The acquiring firm is Blue Falcon Trading 188 Proprietary Limited (“Newco”),
a company registered in accordance with the laws of the Republic of South
Africa, formed specifically for this transaction and as such supplies no
products or services. The shareholding in Newco is held by RMB Ventures
Six Proprietary Limited (“RMBV) 1 and various management members who
also include the founding shareholders of the Studio 88 group of companies.
3] The primary target firms are the businesses of Studio 88 Clothing (Pty) Ltd,
Crystal Way Trade & Invest 1003 CC trading as Side Step (“Side Step”) and
Frisbee Trade and Invest 1161 CC (“Frisbee”), the target firms will collectively
be referred to as Studio 88. The shareholding in Studio 88 is currently held by
4 (four) private individuals.
4] Studio 88 is an apparel and footwear retailer operating shops throughout
South Africa which sells sports branded fashion products complimented by
unbranded fashion products and a wide variety of high fashion footwear,
accessories as well as formal apparel and branded casual wear.
The transaction
5] The transaction entails the acquisition by Newco of the businesses of Studio
88, Side Step and Frisbee, as going concerns. The acquisitions are inter-
conditional and indivisible from each other forming part of the present
transaction.
1 RMBV is ultimately controlled by FirstRand Limited which is involved in the provision of banking and
financial services.
6] This transaction therefore introduces RMBV as a new shareholder and joint
controller in the Studio 88 businesses.
7] RMBV’s rationale for entering into the proposed transaction is in its normal
course of business which is to undertake private equity investment in lieu of
potentially attractive returns.
8] The target group submitted that its rationale in taking part in the transaction
was prompted by the exit of one of its shareholders and the desire to secure
a credible financial partner to assist with the continued growth and
corporatisation of the Studio 88 group.
9] Post merger, the Studio 88 Group will be jointly controlled by an individual
shareholder and RMBV.
Competition Analysis
10]The Competition Commission (“the Commission”) found that none of the
products and/or services offered by the acquiring group overlap with the
products and/or services provided by Studio 88. RMBV or FirstRand Limited
currently has no other interests in any businesses which overlap with the
target group’s businesses.
11]Further, the Commission found that there are a number of large retailers 2
who compete with the merged entity in the sport/lifestyle apparel and
footwear market throughout South Africa and that it is a small player in the
market. The competitors contacted by the Commission did not regard this
2 Woolworths Holdings Limited, Edcon Proprietary Limited, Mr Price Group Limited, Pepkor Holdings
Limited Truworths Limited, Foschini Retail Group Proprietary Limited.
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transaction as a major concern. 3
12]The Commission therefore concluded that the proposed merger is unlikely to
lead to a substantial lessening or prevention of competition and recommends
unconditional approval thereof.
Public Interest
13]The proposed transaction will not have any negative effects on employment
as the target businesses are being acquired as going concerns. The merging
parties submit that their strategy is to expand and that this could likely have
positive effects on employment.
Conclusion
14]We accept the Commission’s conclusions and that there is no overlap in the
activities of the merging parties and we therefore conclude that the above
transaction is not likely to lead to a substantial lessening or prevention of
competition in the relevant market.
15]The above merger is therefore approved without conditions.
____________________ 05 September 2012
Yasmin Carrim Date
Andreas Wessels and Andiswa Ndoni concurring.
3 Commission’s Merger Report page 11.
Tribunal Researcher: Songezo Ralarala
For the merging parties: Lerisha Naidoo and Natalie von Ey of DLA Cliffe Dekker
Hofmeyr
For the Commission: Thelani Luthuli, Grace Mohamed
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