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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 016436
In the matter between:
The Bidvest Group Limited Acquiring Firm
And
Amalgamated Appliance Holdings Limited Target Firm
Panel : Norman Manoim (Presiding Member),
Takalani Madima (Tribunal Member)
and Andiswa Ndoni (Tribunal Member)
Heard on : 12 June 2013
Order issued on : 12 June 2013
Reasons issued on : 25 June 2013
Reasons for Decision
Approval
[1] On 12 June 2013, the Competition Tribunal (“Tri bunal”) approved the
merger between the Bidvest Group Limited (“Bidvest” ) and Amalgamated
Appliance Holdings Limited (“Amap”), in terms of wh ich Bidvest intends to
acquire 71.7% of the entire issued share capital of Amap, which is the
remaining issued share capital not already held by Bidvest. Our reasons
for this decision follow below.
Parties to the Transaction
[1] The primary acquiring firm is Bidvest, which is active in a diverse
portfolio of businesses and is listed on the Johann esburg Stock
Exchange Limited (“JSE”). Of relevance to this merg er are the following
Bidvest subsidiaries whose activities overlap with those of Amap. They
are:
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• Voltex , a stockist and distributor of electrical and related materials.
• Afcom , a manufacturer and distributor of packaging and f astening
products.
• Buffalo , a self-adhesive tape company.
• Berzack , a supplier of industrial machinery, household and personal care
appliances, upholstery material amongst others.
• Yamaha , a supplier of motor, audio visual, music and othe r leisure
products.
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[2] The target firm is Amap, a firm that imports, a nd distributes domestic
appliances. These include sewing and embroidery eq uipment, audio
and video products, electrical accessories, housewa re and personal
care appliances. Amap sells these products to retai lers whose
customers are generally domestic users. Amap is not only a distributor
of other firms’ brands but it also manufactures cer tain products itself
including the following well-known brands of house hold appliances;
Salton, Russel Hobbs, Pineware as well as bake ware.
The relevant market and the impact on competition
Horizontal issues
[3] Bidvest through several of its subsidiaries is active in the distribution of
some products that compete with those offered by Am ap. The
Commission identified several overlaps but conclude d after its
investigation that the increment in market share in each category was
too small to raise concerns. We set out these overl aps and market
shares indicating the extent of the increments below:
• Small household appliances, Bidvest - 0.24%, Amap - 26.28%; Merged
entity - 26.52%
• Personal care appliances, Bidvest - 0.4.%, Amap - 15.1%; Merged
entity -15.5%
• House wares, Bidvest - 6%, Amap - 8.4%; Merged e ntity - 14.4%
• Electrical accessories, Bidvest -18%, Amap - 3.3% ; Merged entity -
21.3%
• General lightings fittings and fixtures, Bidvest - 9.80%, Amap - 0.45%;
Merged entity - 10.3%
1 For a more detailed submission on the subsidiaries and activities of the Bidvest Group, see merger
record, pages 66-72.
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• Sewing and embroidery machines, Bidvest- 1%, Amap - 28% Merged
entity - 29%
• Tapes, Bidvest - 18%, Amap - 0.1%; Merged entity- 18.01%
• Professional audio/music equipment, Bidvest - 2.56 %, Amap - 8.56%
Merged entity - 11.12% .
[4] The merging parties further submitted that the two business entities
would continue to operate separately and not be int egrated, as the
Bidvest Group operates on a decentralised basis.
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[5] The Commission also submitted during the hearin g that in as much as it
looked at each product separately, it also took int o account portfolio
power and thus submitted that post merger, the merged entity would not
have bargaining power as market participants assure d the Commission
that there were no exclusivity agreements in place with the merging
parties and as such, they were free to switch to ot her alternatives when
they wish to do so. 3
Vertical issues
[6] There is a vertical relationship in the activit ies of the merging parties, as
in some product markets the merging parties interch angeably
manufacture or distribute the other one’s products. However the
Commission submitted that there would be no negativ e impact on
competition, as in both the manufacturing and distr ibution markets that
the parties are active in, are highly competitive.
Public interest issues
[7] During the Commission’s investigation the Nati onal Union of
Metalworkers of South Africa (“NUMSA”) made a submi ssion regarding
the transaction, as it was concerned that because B idvest mostly
imports its small appliances products, it might inf luence Amap to do the
same post merger, which would affect local producti on and in effect
could result in job losses. 4 NUMSA did not however make more
specific submissions on this issue. 5
[8] The merging parties re-assured us that they had no intention of closing
down any local manufacturing plant as some of the p roducts Amap
2 See Transcript of hearing para10, page 6.
2 See Transcript of hearing para10, page 6.
3 See Transcript of hearing at page 7.
4 See Merger record at page 786, letter from NUMSA to the Commission regarding its submission to
the proposed transaction.
5 See Transcript of hearing at page 4.
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manufactures are successful well known brands such as Salton, Russel
Hobbs and Pine ware.
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[9] There is no evidential basis to conclude that t he merger will have an
adverse effect on Amap’s manufacturing activities.
CONCLUSION
[10] There are no significant public interest issue s raised by this merger or
any indication that it will lessen or prevent compe tition and we
accordingly approve the transaction without conditions.
___________________ 25 June 2013
Norman Manoim DATE
T Madima and A Ndoni concurring.
Tribunal Researcher: Caroline Sserufusa
For the merging parties:
Natalia Lopes of Edward Nathan Sonnenbergs
For the Commission: Xolela Nokele
6 See Transcript of hearing at para 10 page 8.