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[2013] ZACT 109
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Imperial Car Imports (Pty) Ltd v Renault South Africa (Pty) Ltd (017582) [2013] ZACT 109 (31 October 2013)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: 017582
In
the matter between:
Imperial
Car Imports (Pty)
Ltd
Acquiring
Firm
And
Renault
South Africa (Pty)
Ltd
Target
Firm
Panel:
Norman Manoim (Presiding Member) Andreas Wessels (Tribunal Member)
Medi Mokuena (Tribunal Member)
Heard
on:
09 October 2013
Order
issued on:
09 October 2013
Reasons
issued on: 31 October 2013
Decision
Approval
1.
On 09 October 2013 the Competition
Tribunal (the “Tribunal”) unconditionally approved the
proposed transaction involving
Imperial Car Imports (Pty) Ltd (“ICI”)
and Renault South Africa (Pty) Ltd (“Renault SA").
2.
The reasons for the approval of the
proposed transaction follow.
Merging
parties and their activities
3.
The primary acquiring firm is ICI, a
firm incorporated in terms of the laws of the Republic of South
Africa. ICI is a wholly owned
subsidiary of Associated Motor Holdings
(Pty) Ltd (“AMH”), which is in turn controlled by
Imperial Holdings Ltd (“Imperial
Holdings"). Imperial
Holdings is a public company listed on the Johannesburg Stock
Exchange (“JSE”) and as such
is not controlled by any one
shareholder,
4.
We note that ICI currently has a 49%
shareholding in Renault SA, the primary target firm in this
transaction.
5.
The Imperial group is a diversified
industrial services and retail group which conducts a wide range of
activities relating to transportation,
including distribution of
vehicles, parts, industrial equipment and aircraft, over 200 new and
used vehicle dealerships, logistics,
transport, warehousing,
specialist freight, supply chain solutions, car rental, tourism and
insurance. Imperial group operates
in South Africa, the rest of
Africa, Europe and Australia.
6.
The division within Imperial most
relevant for purposes of the competition assessment of this
transaction is the Distribution, Retail
and Financial Services
Division, which houses the Automotive Retail, Distributorships and
Financial Services divisions of the Imperial
group of companies. The
Automotive Retail Division owns a network of motor dealerships which
include motor brands such as Alpha
Romeo, Audi, BMW, Chrysler, Dodge,
Fiat, Ford, Lexus, Mercedes-Benz, Renault, Volkswagen and Volvo.
7.
AMH is involved in the importation of
various passenger vehicles.
8.
The primary target firm is Renault SA, a
firm incorporated in terms of the laws of the Republic of South
Africa. Currently Renault
S.A.S. (“Renault France”) has a
51% shareholding in Renault SA and ICI, as indicated above, has a 49%
shareholding.
9.
Renault SA imports and distributes
Renault vehicles in South Africa via its dealer network. Renault SA
is the only importer and
distributor of Renault vehicles within South
Africa.
10.
Renault SA is also involved in the
retail motor sector trough its dealer network. Renault SA owns four
Renault dealerships, of which
all are situated in Gauteng. These
dealerships are located as follows: (i) Bryanston; (ii) East Rand;
(iii) Northcliff; and (iv)
Edenvale (Route24).
Proposed
transaction and rationale
11.
!n terms of the proposed transaction,
ICI intends to acquire a further 11% of the issued share capital in
Renault SA from Renault
France, thus increasing its shareholding from
the current 49% to a post-merger 60%. Post-merger, ICI will have a
60% controlling
interest in Renault SA. Renault France retains joint
control over Renault SA.
12.
From ICI’s perspective this
transaction represents a further opportunity to develop and improve
Renault SA’s performance.
13.
Renault SA submitted that this
transaction is a means to better utilise the Imperial Group’s
expertise in the South African
motor vehicle market to grow and
expand the business, particularly given the long history between the
Imperial Group and the Renault
brand in South Africa.
Competition
analysis
14.
The Competition Commission (the
“Commission”) identified horizontal overlaps in the
activities of the merging parties
since both parties are involved in
the importation and distribution of both passenger cars and light
commercial vehicles (“LCVs”),
as well as in the retail
sale of both passenger cars and LCVs.
15.
The proposed transaction also has
a vertical dimension since ICI imports and distributes various brands
of passenger vehicles
and LCVs to its own Renault owned dealerships,
to Imperial owned dealerships, Renault franchises, independent
dealerships, Imperial
car rental companies and to independent car
rental companies.
16.
The Commission further analysed
potential coordinated effects resulting from the Public Investment
Corporation’s shareholding
in both Imperial and in Barloworld
Ltd, a competitor of Imperial at the retail level.
17.
The Commission indentified product
overlaps in various markets. These are:
(i)
a national market for the import and
distribution of LCVs;
(ii)
a national market for the import and
distribution of passenger vehicles;
(iii)
a national (narrower product) market for
the import and distribution of entry level, small, sports-utility and
multi-purpose vehicles;
(iv)
regional markets for the retail sale of
LCVs within each of the Bryanston, East Rand, Northcliff and Edenvale
areas; and
(v)
regional markets for the retail sale of
passenger cars, specifically entry level, small, sports-utility and
multi-purpose vehicles,
within each of the above-mentioned geographic
areas.
18.
In relation to markets (i), (ii) and
(iii) above, the Commission concluded that the proposed merger is
unlikely to substantially
prevent or lessen competition given the
numerous other brands imported and distributed by parties other than
the merged entity.
19.In
respect of the markets mentioned in (iv) above the merging parties’
combined post-merger market shares are less than
10% in each of the
identified geographic areas.
20.
In respect of the markets mentioned in
(v) above, the merging parties’ combined highest post-merger
market share is in the
Bryanston area with a market share of less
than 30%. The merged entity will continue to face competition from
numerous competitors
in each of the identified geographic areas.
21.
The proposed merger raises
no appreciable foreclosure or coordinated effects concerns and we do
not discuss those issues
in these reasons.
22.
We conclude that the proposed merger is
unlikely to substantially prevent or lessen competition in any
relevant market.
Public
interest
23.
The
merging parties confirmed that the proposed transaction will have no
adverse effect on employment in South Africa.
[1]
The proposed transaction raises no other public interest concerns.
Conclusion
24,
For the reasons mentioned above, we
approve the proposed transaction unconditionally.
31
October 2013
Date
Andreas
Wessels
NorNorman
Manoim and Medi Mokuena concurring
Tribunal
researcher: Ipeleng Selaledi
For
the merging parties: Anthony Norton of Nortons Inc.
For
the Commission: Jatheen Bhima
[1]
See merger record pages 17 and 96.