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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:80/LM/Aug12
[015511 ]
In the matter between:
Super Group Trading (Pty) Ltd
Acquiring Firm
And
Digistics (Pty) Ltd
Target Firm
Panel : Norman Manoim (Presiding Member)
Andreas Wessels (Tribunal Member)
Medi Mokuena (Tribunal Member)
Heard on : 20 September 2012
Order issued on : 20 September 2012
Reasons issued on : 23 November 2012
Reasons for Decision
Approval
[1] On 20 September 2012 the Competition Tribunal ( the “Tribunal”)
unconditionally approved the acquisition by Super G roup Trading (Pty) Ltd
of Digistics (Pty) Ltd. The reasons for the approval follow below.
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Parties and their activities
[2] The primary acquiring firm is Super Group Tradi ng (Pty) Ltd (“Super
Group”), a company incorporated under the laws of t he Republic of South
Africa. Super Group is controlled by Super Group Ho ldings (Pty) Ltd
(“SGH”). Super Group controls the following firms: Super Group Solutions
(Pty) Ltd, Extreme Lifestyle Centre (Pty) Ltd, Chat aprop Holdings 98 (Pty)
Ltd, Lexshell 280 Investments (Pty) Ltd and Micor Freight (Pty) Ltd.
[3] Super Group is a supply chain management business which offers logistics
and warehousing services. These services relate to the transportation of
dry bulk goods (e.g. cement, coal and ready mixed c oncrete products) as
well as food products (including frozen, chilled an d dry food products).
Super Group also offers fleet solutions services (v ehicle leasing and rental
services) and owns passenger and commercial vehicle dealerships.
[4] The primary target firm is Digistics (Pty) Ltd (“Digistics”), a company
incorporated under the laws of the Republic of Sout h Africa. Digistics’
shareholding is held as follows: Mr. N.J Marcel (2 7.42%), Mr. A.P Nel
(25.59%), Mr. M.S Bohata (20.37%), Mr R. Du Preez (15.74%) and Mr. J.K
Scott (10.88%). Digistics does not control any firm.
[5] Digistics operates distribution centres which s pecialise in distributing
frozen and chilled food products to franchisee fast food outlets.
Description of the transaction
[6] Super Group intends to acquire 50.1% of the sha res in Digistics. On
completion of the transaction, Super Group will hav e sole control over
Digistics.
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Rationale for the transaction
[7] Super Group submitted that the proposed transac tion represents an
opportunity for it to expand and enhance its logist ics services into the
temperature controlled space where it currently does not have a significant
presence. From the perspective of Digistics this tr ansaction represents an
opportunity for it to gain market efficiencies thro ugh the synergies created
in the form of a bigger balance sheet that will lead to further growth.
Competition Analysis
[8] There is an overlap between the activities of t he merging parties in respect
of the national market for the provision of logisti cs services (specifically for
the transportation of dry, chilled and frozen food products). The merging
parties’ combined post-merger market share in this market is
approximately 5.4%. The merging parties compete wit h firms such as
Bidvest, Imperial, Barloworld, Vector Logistics and others.
[9] There is also a vertical relationship in the ac tivities of the merging parties
as Digistics has hired trucks from Super Group, whi ch accounted for
approximately 0.7% of Super Group’s overall turnove r in the previous
financial year. Super Group’s market share in the m arket for vehicle hire is
minimal (approximately 4%).
Public interest
[10] The merging parties submitted to the Commissio n that the proposed
transaction will not have any significant effect on employment.
Conclusion
[11] The proposed transaction is unlikely to substa ntially prevent or lessen
competition in the market for the provision of logi stics services (specifically
for the transportation of dry, chilled and frozen f ood products) as the post-
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merger market share of the merging parties is low. The vertical overlap in
the activities of the parties is also unlikely to l ead to any foreclosure
concerns as Super Group’s market share in the marke t for vehicle hire is
minimal. Further, Digistics has been using Super Gr oup for the majority of
its truck hire requirements. In addition, the propo sed transaction raises no
public interest concerns. Accordingly, we approve t he transaction
unconditionally.
____________________ 23 November 2012
Norman Manoim Date
Andreas Wessels and Medi Mokuena concurring.
Tribunal researcher: Ipeleng Selaledi
For the merging parties: Andile Nikani of Fluxmans Attorneys
For the Commission: Dineo Mashego