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[2014] ZACT 10
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Standard Bank of South Africa Limited v LC Golf SA (Proprietary) Limited (019109) [2014] ZACT 10 (31 July 2014)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: 019109
In the matter
between:
STANDARD
BANK OF SOUTH AFRICA
LIMITED
........................................
Primary
Acquiring Firm(s)
And
LC
GOLF SA (PROPRIETARY)
LIMITED
..............................................................
Primary
Target Firm(s)
Panel : Yasmin
Carrim (Presiding Member)
: Takalani Madima
(Tribunal Member)
: Andiswa Ndoni
(Tribunal Member)
Heard on : 09 July
2014
Order Issued on : 09
July 2014
Reasons Issued on :
31 July 2014
Reasons for
Decision
Approval
[1] On 09 July 2014
the Competition Tribunal (“the Tribunal”) unconditionally
approved an acquisition by Standard Bank
South Africa Ltd of LC Golf
SA (Pty) Ltd.
[2] The reasons for
unconditionally approving the transaction follow hereunder.
Parties to the
Transaction
Primary acquiring
firm
[3]
The primary acquiring firm is Standard Bank of South Africa Limited
(“Standard Bank”). Standard Bank is a financial
services
group offering,
inter
alia,
transactional
banking, saving, lending and investment services. Standard Bank is
listed on the Johannesburg Securities Exchange
and, as such, is not
controlled by any single shareholder. For the sake of completeness,
Standard Bank’s principal shareholders
are as follows:
•
Industrial
and Commercial Bank of China (20.1%);
•
Public
Investment Corporation (13.8%); and
•
Tutuwa
Participants (5.5%).
Primary target
firm
[4] The primary
target firm is LC Golf SA (Pty) Ltd (“LCG”). LCG controls
Pearl Valley Golf Estate (Pty) Ltd (“PVGE")
and Novelway
Investments (Pty) Ltd (“Novelway”). LCG is controlled by
Leisurecorp LCC (“Leisurecorp”),
a firm incorporated in
terms of the laws of the Emirate of Dubai. Leisurecorp is ultimately
controlled by Dubai World Holdings
Ltd.
Proposed
Transaction and Rationale
[5] In 2007,
Standard Bank advanced funding to PVGE. As security for PVGE’s
indebtedness, LCG committed itself as limited
recourse guarantor,
Novelway bound itself as surety and co-principal debtor, and the
entire issued share capital of PVGE was pledged
to Standard Bank.
[6] Due to the
challenging economic climate of 2008 and following, PVGE was unable
to meet its payment obligations to Standard Bank
and it was agreed as
between Standard Bank and Leisurecorp that Standard Bank would
acquire the entire issued share capital of
LCG
[7]
While the Competition Act
1
ordinarily requires competition authority approval prior to the
implementation of transactions of this nature,
2
this transaction was in fact completed in December 2012. At that time
the parties were exempted from notifying the transaction
in terms of
the Competition Commission’s (“the Commission”)
Practice Note entitled “
The
application of merger provisions of the Competition Act to risk
mitigation financial transactions
”
(“the
Practice Note”). The Practice Note allows for an exemption
period of 12 months.
3
Following the expiry of that 12 month period, the Commission granted
an extension of six months and that extended period is to
expire
shortly. The parties have now notified the transaction and seek
approval from the Competition Tribunal in order to comply
with the
provisions of the Act.
Relevant Market
and Impact on Competition
[8] In light of the
above, reaching a conclusion on the relevant market was deemed
unnecessary and the Commission identified no
competition concerns.
Public Interest
[9] The Commission
identified no public interest concerns likely to arise from the
proposed transaction.
Conclusion
[10] Accordingly we
conclude that the proposed transaction is unlikely to substantially
prevent or lessen competition in the relevant
market, however
defined. Further, the merger does not raise any public interest
concerns that might alter that conclusion and accordingly,
we approve
the transaction unconditionally.
31
July 2014
DATE
Ms Yasmin Carrim
Dr Takalani
Madima and Ms Andiswa Ndoni concurring.
Tribunal Researcher:
Shannon Quinn
For the merging
parties: Judd Lurie- Bowman Gilfillan
For the Commission:
Thelani Luthuli
1
Act
No. 89 of 1998 (as amended), (“the Act”)
2
Section
13A of the Act
3
The
Practice Note essentially provides that when a financial institution
(in this case Standard Bank), in the ordinary course of
business, is
a party to a transaction that is purely financial in nature and that
would ordinarily constitute a notifiable merger,
the Commission will
exempt the transaction from merger notification regulations for a
specific period. Should that specific period
lapse and the financial
institution remain in control of the asset(s) acquired in terms of
the aforementioned transaction, the
ordinary merger filing
regulations become effective.