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[2013] ZACT 100
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Hollard Insurance Company Ltd v Etana Insurance Company Ltd (017442) [2013] ZACT 100 (3 October 2013)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No.: 017442
In
the matter between
Hollard
Insurance Company Limited
Acquiring
Firm
And
Etana
Insurance Company Limited
Target
Firm
Panel
Andreas
Wessels (Presiding Member)
Andiswa
Ndoni (Tribunal Member)
Mondo
Mazwai (Tribunal Member)
Heard
on
25
September 2013
Order
issued on
25
September 2013
Reasons
issued on :
03
October 2013
Decision
Approval
[1]
On 25 September 2013, the Competition Tribunal (“Tribunal”)
unconditionally approved the merger between Hollard
Insurance Company
Limited (“Hollard”) and Etana Insurance Company Limited
(“Etana”).
[2]
The reasons for approving the proposed transaction follow.
Parties
to transaction
[3]
The primary acquiring firm is Hollard. It is controlled by Hollard
Holdings (Pty) Ltd. Hollard is a short-term insurance company
registered in South Africa. Hollard provides various insurance
solutions across three classes i.e. (i) personal lines; (ii)
commercial
lines; and (iii) corporate lines. Within these broad
categories it operates various product lines such as motor insurance,
engineering
insurance and property insurance amongst others.
[4]
The primary target firm is Etana. It is controlled by Etana Holdings
(Pty) Ltd. Etana offers a complete range of short-term
insurance
products to businesses, purely through brokers, as opposed to selling
directly to consumers. It operates across various
classes of
insurance which can be categorised into three main classes, namely
(i) personal lines; (ii) commercial lines; and (iii)
corporate lines.
It operates across various product lines, namely (i) motor insurance;
(ii) liability insurance; (iii) engineering
insurance; (iv) property
insurance; (v) transportation insurance; (vi) accident and health
insurance; and (vii) guarantee insurance.
Its products are offered
through specialist divisions. In addition Etana operates as a
reinsurer and co-insurer in limited instances.
[5]
Pre-merger Hollard hols 40% of the issued share capital of Etana.
Proposed
transaction and rationale
[6]
In terms of the proposed transaction Hollard will, through a series
of inter-related and cross-conditional steps, acquire the
entire
issued ordinary share capital of Etana (also see paragraph 5 above).
As a result Hollard will have sole control over Etana
after the
merger.
[7]
Hollard wishes to expand its presence in the short-term commercial
insurance market.
[8]
Etana through the proposed transaction seeks to create a more
compelling proposition for brokers and end consumers.
Impact
on competition
[9]
The proposed transaction has both horizontal and vertical aspects.
[10]
The vertical aspect, however, is limited. Etana is a customer of
Hollard for certain support services. These vertical solutions
are
provided through Hollard’s in-house service departments and
this position will not change post-merger. We conclude that
it is
unlikely that the proposed merger will lead to either input or
customer foreclosure and we do not deal with this issue in
any
further detail in these reasons.
[11]
Horizontally the activities of the merging parties overlap in the
market for the provision of short-term insurance solutions.
However,
there is no need for us in this case to take a definitive view on the
exact scope of the relevant product market(s). On
a more narrow
approach than the overall short-term insurance solutions market the
market could be delineated by way of insurance
classes, i.e.
personal, commercial and corporate insurance services, and even more
narrowly per insurance product category (see
paragraph 4 above).
Post-merger the merged entity will have a national market share of
less than 10% in a broad short-term insurance
market, as well as in
each of the above-mentioned three insurance classes/segments if
considered as potential separate product
markets. In potential
narrower product markets defined in terms of insurance product the
merged entity’s post-merger national
market shares remain below
20% in each product segment. Various other established market players
are active in the short-term insurance
market such as Santam, Mutual
and Federal, Outsurance, Guard risk and ABSA. The larger of these
players such as Santam and Mutual
and Federal provide a broad range
of insurance products.
[12]
Based on the above considerations we conclude that the proposed
transaction is unlikely to substantially prevent or limit competition
in any relevant market.
Public
interest
[13]
The merging parties confirmed that the proposed transaction will have
no adverse effect on employment
1
and the proposed transaction raises no other public interest
concerns.
CONCLUSION
[14]
We approve the proposed transaction unconditionally.
Andreas
Wessels
03
October 2013
Date
Andiswa
Ndoni and Mondo Mazwai concurring
Tribunal
researcher: Caroline Sserufusa
For
the merging parties: Justin Balkin of Edward Nathan Sonnenbergs Inc
For the Commission: Takalani Ramavhoya
1
See
merger record pages 22,110 and 140.