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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:
86/LM/Sep12
015636
In the matter between:
Unitrans Automotive (Pty) Ltd
Acquiring Firm
And
Reeds Motor Group (Pty) Ltd
Reeds Motors Tableview (Pty) Ltd Target Firms
Panel : Andreas Wessels (Presiding Member)
Takalani Madima (Tribunal Member)
Medi Mokuena (Tribunal Member)
Heard on : 17 October 2012
Order issued on : 17 October 2012
Reasons issued on : 29 October 2012
Reasons for Decision
Approval
[1] On 17 October 2012 the Competition Tribunal (“T ribunal”) approved the
merger between Unitrans Automotive (Pty) Ltd (“Unit rans”), the primary
acquiring firm, and Reeds Motor Group (Pty) Ltd (“R MG”) and Reeds
Motors Tableview (Pty) Ltd (“RM Tableview”), the primary target firms.
[2] The reasons for approving the proposed transaction follow below.
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Parties to transaction
[3] The primary acquiring firm is Unitrans, a compa ny incorporated in
accordance with the company laws of the Republic of South Africa.
Unitrans is a wholly-owned subsidiary of the JD Group Limited.
[4] Of relevance to the competition assessment of t his transaction is that
Unitrans sells new and pre-owned light commercial a nd passenger
vehicles, parts and accessories and further provide s related aftermarket
services. It represents a number of international m otoring brands such as
Toyota/Lexus, General Motors South Africa (“GMSA”), Volkswagen, Audi,
Nissan, Renault, Mercedes-Benz, BMW and MAN. It ser vices its
customers from a network of 81 dealerships located throughout South
Africa. With regards to the geographic area of overlap with the target firms,
Unitrans operates seven dealerships in the Western Cape.
[5] The primary target firms are RMG and RM Tablevi ew. Both these firms are
private companies incorporated in accordance with t he company laws of
the Republic of South Africa. RMG is ultimately con trolled by Zizap
Investments (Pty) Ltd (“Zizap”), which holds 80% of the shares therein.
RMG has the following interests: (i) RM Tableview ( 70%); (ii) Reeds Car
Rental (Pty) Ltd (100%); and (iii) Reeds Contract C ar Rental (Pty) Ltd
(70%).
[6] The target firms sell new and pre-owned light c ommercial and passenger
vehicles, parts, accessories and provide aftermarke t services within the
GMSA stable, which includes Opel and Chevrolet pass enger cars, Opel
half ton bakkies, Isuzu LDV’s and Isuzu trucks. RMG also sells a selection
of used and demonstration vehicles. It operates thr ee full dealerships
(inclusive of workshops) and one boutique dealership that does not have a
workshop. These dealerships are located in the West ern Cape, namely
Reeds N1 City, Tygervalley, Reeds Cape Town and Ree ds Tableview
(trading as Isuzu Truck Centre).
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Proposed transaction and rationale
[7] According to the merging parties the proposed t ransaction envisages the
acquisition of (i) a business which includes motor vehicle dealerships that
include workshops, and a boutique vehicle dealershi p, conducted by RMG
and its subsidiaries, Reeds Car Rental (Pty) Ltd an d Reeds Contract Car
Rental (Pty) Ltd (also see paragraph 5 above); and (ii) 70% 1 of the total
issued shares in RM Tableview.
[8] According to Unitrans the proposed acquisition will compliment the
Unitrans’ business model and strategy and afford it more of a presence in
the Western Cape.
[9] From the target firms’ perspective, the main m otivation for the transaction
is to enable the shareholders of Zizap to realise t heir investments in the
businesses. In addition, the major shareholder of Z izap is nearing
retirement and therefore wishes to exit the vehicle dealership market.
Relevant markets and impact on competition
[10] There is a horizontal overlap in the activitie s of the merging parties in
respect of the sale of new and pre-owned light comm ercial and passenger
vehicles, as well as the sale of spare parts and th e provision of
maintenance and repair services. Geographically the se activities overlap
in the broader Western Cape area and, more specific ally, in the Cape
Town/Bellville area. There is, however, no need for us in this case to take
a definitive view on the exact parameters of the re levant product and
geographic markets since this does not alter our ul timate conclusion with
regards to the competitive effect of this transaction.
[11] According to the Commission’s assessment the m erged entity will have
a post-merger market share of below 20% in the West ern Cape in respect
of each of the following markets: the sale of (i) n ew light commercial
1 According to the merging parties the balance of the shares in RM Tableview will be retained
1 According to the merging parties the balance of the shares in RM Tableview will be retained
by the current shareholder, Melanie Jacobs, in keeping with the firm’s black economic
empowerment strategy.
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vehicles; (ii) new small passenger cars; (iii) new medium passenger cars;
(iv) new multipurpose passenger vehicles; and (v) new sport utility cars.
[12] Furthermore, the Tribunal at the hearing reque sted the merging parties
to submit a list of motor vehicle dealerships in th e (narrower) Cape
Town/Bellville geographic area. The merging parties subsequently
submitted this information 2 and we were satisfied that the merged entity,
from a narrow geographic market perspective, faces sufficient competition
post-merger.
[13] With regards to the sale of pre-owned vehicle s and after sale service,
the Commission found that no likely competition con cerns arise as a result
of the proposed transaction given the existence of sufficient competition to
the merged entity. We have no reason to doubt this finding.
[14] We therefore conclude that that the proposed t ransaction is unlikely to
substantially prevent or lessen competition in any relevant market.
Public interest
[15] The merging parties confirmed that there will be no job losses or
retrenchments as a result of the proposed transacti on.
3 No o ther public
interest issues arise as a result of this transaction.
CONCLUSION
[16] We approve the proposed merger unconditionally .
____________________ 29 October 2012
Andreas Wessels DATE
Takalani Madima and Medi Mokuena concurring
2 See the merging parties’ additional submission dated 17 October 2012 following the
Tribunal’s request.
3 See merger record pages 7, 36 and 62.
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Tribunal researcher: Caroline Sserufusa
For the merging parties:
Andile Nikani of Fluxmans Attorneys
For the Commission: Zanele Hadebe