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[2013] ZACT 105
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CA Sales Holdings (Pty) Ltd v SMC Brands SA (Pty) Ltd (017715) [2013] ZACT 105 (29 October 2013)
:
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
no.: 017715
In
the matter between:
CA
Sales Holdings (Pty) Ltd Primary Acquiring Firm
and
SMC
Brands SA (Pty) Ltd Primary Target Firm
Panel
Norman
Manoim (Presiding Member)
Yasmin
Carrim (Tribunal Member)
Andreas
Wessels (Tribunal Member)
Heard
on
01
October 2013
Order
issued on
01
October 2013
Reasons
issued
29
October 2013
DECISION
Conditional
approval
1.
On 01 October 2013, the Competition Tribunal (“Tribunal”)
approved the proposed acquisition by CA Sales Holdings
(Pty) Ltd of
SMC Brands SA (Pty) Ltd subject to a condition.
2.
The reasons for approving the proposed transaction follow.
Parties
to transaction
The
primary acquiring firm
3.
The primary acquiring firm is CA Sales Holdings (Pty) Ltd (“CA
Sales”).
4.
CA Sales is the parent company of a group of companies which acts as
agents for manufacturers of fast-moving consumer goods (“FMCG”).
CA Sales
provides
sales, merchandising, warehousing and distribution services in South
Africa, Lesotho, Botswana, Namibia and Swaziland.
5.
Through its subsidiaries in Botswana and Swaziland, CA Sales offers
sales, warehousing and distribution services to manufacturers
of FMCG
products. This full line service is not offered in South Africa.
1
6.
CA Sales owns four subsidiaries which are active in South Africa.
2
One such subsidiary is an investment-holding company, whilst another
is a sales and merchandising business which operates in retail
and
wholesale stores representing FMCG manufacturers. The other two
companies provide dedicated sales and merchandising services
of
Spar’s house brand products in specific provinces in South
Africa.
The
primary target firm
7.
The primary target firm is SMC Brands SA (Pty) Ltd (“SMC”).
Taeuber & Corssen SA (Pty) Ltd, the Annerine Smith
Trust, Rian
Smit and Herman Smith are its current shareholders. Although SMC is a
South African company, it does not conduct business
in South Africa
and it only provides in-house management services to its whoiiy-owned
subsidiaries operating in Botswana, Namibia
and Swaziland. The
management fee which SMC gets in return for its services is, however,
remitted back into South Africa.
8.
SMC has a licence agreement with Diageo Pic in terms of which SMC
distributes its premium beverage alcohol products in Botswana,
Namibia and Swaziland. These products include
inter
alia
Smirnoff vodka, Johnnie Walker whiskey, Guiness stout and Captain
Morgan. Brandhouse Beverages (Pty) Ltd distribute the Diageo
products
in South Africa.
3
Proposed
transaction
9.
The merging parties have notified the Commission of CA Sales’
intention to acquire 100% of SMC. However, in terms of the
proposed
transaction, SMC will initially only purchase 49% of SMC. CA Sales
has been granted an irrevocable right and option to
purchase the
remaining 51%. The timing of the exercise of this option is uncertain
as it depends on the approval of SMC’s
audited financial
statements for the period ending in June 2014.
10.
As a result of this call option, the Commission took the view that
both the initial transaction and the exercise of the call
option in
substance form part of a single yet interrelated transaction to
acquire 100% of SMC. it analysed the transaction on the
assumption
that CA Sales was acquiring sole control. However, as market
conditions may have changed if the option is exercised
at a later
date than that presently anticipated, the Commission sought a
condition that if the option was exercised later than
Ocotber 31
2014, the transaction would have to be re-notified.
11.
The Tribunal, with the agreement of the Commission and the merging
parties, added some clarity to the condition by amending
the wording
thereof. As a result, the transaction was approved subject to the
condition set out in Annexure A which we released
on 1 October 2013.
Competition
assessment
Overlaps
12.
Although both CA Sales and SMC’s subsidiaries distribute
alcohol, neither operates in South Africa.
13.
CA Sales operates as an alcoholic beverage distributor in Botswana
only, whilst SMC distributes alcohol in Swaziland, Botswana
and
Namibia. Furthermore, the merging parties do not have a licence to
distribute alcoholic beverages in South Africa.
14.
The proposed transaction will not result in any vertical or
horizontal effects in the South African market.
4
Public
Interest
15.
The merging parties confirmed that the proposed transaction will not
have any adverse impact on employment and that no retrenchments
will
result from the proposed transaction
5
No other public interest issues arise as a result of this
transaction.
CONCLUSION
16.
Having regard to the facts above, we find that the proposed
transaction is unlikely to substantially prevent or lessen
competition
in any relevant market. Furthermore, no public interest
concerns arise as a result of the proposed transaction. We approve
the
proposed transaction subject to the conditions set out in the
attached
“Annexure
A”.
NORMAN
MANOIM
29
October 2013
DATE
Yasmin
Carrim and Andreas Wesseis concurring
Tribunal
Researcher: Nicola llgner
For
the Commission: Tshegofatso Radinku
For
the merging parties: Susan Meyer of Cliffe Dekker Hofmeyr Inc.
ANNEXURE
A
In
the large merger involving:
CA
Sales Holdings (Pty) Ltd
I
SMC Brands SA (Pty) Ltd
CT
CASE NUMBER: 017715
CONDITIONS
1.
The acquisition of 49% of the total issued share capital of SMC
Brands SA (Pty) Ltd by CA Sales Holdings (Pty) Ltd, be approved
unconditionally in terms of section 16(2)(a) of the Act; and further
2.
The acquisition of sole control is approved in terms of section
16(2)(b) of the Act, provided that CA Sales exercises its option
to
purchase the remaining issued share capital of SMC ("Call
Option") on or before 31 October 2014. Should CA Sales exercise
its Call Option at a date later than 31 October 2014, the parties
will be required to obtain a new approval prior to implementation.
1
See
page 30 of the merger record.
2
Pack
‘n Stack Investment Holdings (Pty) Ltd, Pack ‘n Stack
(Pty) Ltd, Monteagle Merchandising
Services
(Pty) Ltd and Monteagle Merchandising Services KZN (Pty) Ltd.
3
See
page 25 of the merger record.
4
See
page 25 of the merger record.
5
See
pages 27 and 28 of the merger record.