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[2014] ZACT 39
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Dimension Data Middle East And Africa (Pty) Ltd v Dataflo SA (Pty) Ltd (018382) [2014] ZACT 39 (11 March 2014)
COMPETITION TRIBUNAL
OF SOUTH AFRICA
Case No: 018382
In the matter between:
DIMENSION
DATA MIDDLE EAST
Primary
Acquiring Firm
AND
AFRICA (PTY) LTD
And
DATAFLO SA (PTY)
LTD
Primary Target Firm
Panel
:
Norman Manoim (Presiding Member)
:
Medi Mokuena (Tribunal Member)
:
DrTakalani Madima (Tribunal Member)
Heard
on ;
05 March 2014
Order
Issued on :
05 March 2014
Reasons Issued
on :
11 March 2014
Reasons for Decision
Approval
[1]
On 5 March 2014 The Competition Tribunal (“Tribunal”)
unconditionally approved the acquisition by Dimension Data Middle
East and Africa (Pty) Ltd of the remaining 50% stake in Dataflo SA
(Pty) Ltd.
[2]
The reasons for unconditionally approving the proposed
transaction follow.
Parties to the
Transaction
Primary acquiring firm
[3]
The primary acquiring firm is Dimension Data Middle East and
Africa (Pty) Ltd (“DDMEA”), a company incorporated in
terms
of the laws of South Africa. DDMEA is controlled by Dimension
Data Holdings Pic (“DD Holdings Pic”) which is in turn
controlled by Nippon Telegraph and Telephone Corporation (“NTT”),
a company incorporated in terms of the laws of Japan.
[4]
NTT and DD Holdings Pic directly or indirectly exercise
control over the following companies in South Africa:
•
DDSA Holdings;
•
Rumiscene (Pty)
Ltd;
•
Dimension Data
Management Services (Pty) Ltd;
•
Protocol Venture
Capital (Pty) Ltd; and
•
Merchant SA (Pty)
Ltd.
[5]
DDMEA controls the following firms in South Africa:
•
Dimension Data
(Pty) Ltd;
•
Linx (Pty) Ltd;
•
Omni-Link (Pty)
Ltd;
•
Internet Solutions
(Pty) Ltd;
•
Dimension Data
Facilities (Pty) Ltd;
•
Dimension Data
Integrated Security Solutions (Pty) Ltd;
•
The Oval
Advertising and Promotions Co (Pty) Ltd;
•
Plessey (Pty) Ltd;
•
Syac (Pty) Ltd;
and
•
Dataflo SA (Pty)
Ltd.
[I]
Primary
target firm
[6]
The primary target firm is Dataflo SA (Pty) Ltd (“Dataflo”)
which is jointly owned by DDMEA and Coca-Cola SABCO (Pty)
Ltd (“CCS”)
with each entity holding a 50% share.
Proposed Transaction
[7]
In terms of the Sale and Purchase of Shares Agreement, DDMEA
is acquiring the remaining 50% shares held in Dataflo from CCS. Upon
the acquisition of the remaining 50% shareholding, DDMEA will gain
sole control of Dataflo.
Rationale
[8]
CCS wishes to sell its 50% shareholding in Dataflo since
Dataflo’s business falls well outside the core focus of CCS.
Thus
CCS is largely unable to influence Dataflo’s strategic
direction. DDMEA has extensive experience in the information
technology
(“IT”) industry, has identified numerous
opportunities for Dataflo to pursue and thus wishes to acquire sole
control
of Dataflo.
Relevant Market and
Impact on Competition
[9]
The relevant geographic market was found to be national. The
Commission did not conclude on the relevant product market but
assessed
the proposed transaction in the broad market for the
provision of IT services and in the following narrow markets:
•
the market for the
provision of IT consulting services;
•
the market for the
provision of business consulting services;
•
the market for the
provision of custom application development services;
•
the market for the
provision of managed services;
•
the market for the
provision of outsourcing services; and
•
the market for the
provision of hosting services.
[10]
A horizontal overlap was found to exist in each of the
aforementioned narrow markets. Post-merger, the merged entity will
hold market
shares of 22% (accretion of 1 %) in the market for the
provision of managed services and 35% (accretion of 1%) in the market
for
the provision of hosting services. Notwithstanding these high
market shares, the accretion in both markets is small. Furthermore
the market for the provision of broad IT services is fragmented and
the merged entity will remain constrained by numerous viable
competitors such as Business Connexion, Gijima and Bytes.
Conclusion
[11]
In light of the above we conclude that the proposed
transaction is unlikely to substantially prevent or lessen
competition in the
broad market for the provision of IT services or
in the aforementioned narrowly defined markets. In addition, no
public interest
concerns arise from the proposed transactions.
Accordingly, we approve the transaction unconditionally.
11 March 2014
DATE
___________________________
Norma
n
Manoim
Medi Mokuena and Dr
Takalani Madima concurring
Tribunal Researcher:
Derrick Bowles
For the merging parties:
Tyron Fourie - Mahons Attorneys
For
the Commission: Themba Mahlangu and Lesenda Grace Mohamed
[I]
See paragraph 6 below.