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[2014] ZACT 97
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Old Mutual Capital Holding (Pty) Ltd v Old Mutual Finance (Pty) Ltd (RF) (019232) [2014] ZACT 97 (30 September 2014)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: 019232
In the matter
between:
Old
Mutual Capital Holding (Pty)
Ltd
...............................................................................
Acquiring
Firm
And
Old
Mutual Finance (Pty) Ltd
(RF)
.........................................................................................
Target
Firm
Panel: Norman Manoim
(Presiding Member),
Yasmin Carrim
(Tribunal Member)
and Anton Roskam
(Tribunal Member)
Heard on: 10
September 2014
Order issued on: 10
September 2014
Reasons issued on :
30 September 2014
Reasons for
Decision
Approval
[1] On 10 September
2014 the Competition Tribunal (“Tribunal”)
unconditionally approved the large merger between Old
Mutual Capital
Holding (Pty) Ltd (“OMCH”) and Old Mutual Finance (Pty)
Ltd (RF) (“OMF”). The reasons for
approving the proposed
transaction follow.
Parties to
transaction
[2] The primary
acquiring firm is OMCH, a company incorporated in accordance with the
company laws of the Republic of South Africa.
OMCH is a wholiy-owned
subsidiary of Old Mutual Emerging Markets Limited (“OMEML”),
a public company fisted on the
Johannesburg Securities Exchange
(“JSE”). OMCH is ultimately controlled by Old Mutual pic
("OM pic”), a
public company listed on the London,
Johannesburg, Malawi, Namibia and Zimbabwe Securities Exchange. OM
pic controls a number of
firms in South Africa and throughout the
world. For purposes of this transaction, it is worth noting that OM
pic has a 58% shareholding
in Nedbank Group Limited and a 58%
shareholding in Nedbank Limited,(herein collectively referred to as
“Nedbank”)
[3] OMCH falls under
the emerging markets unit of OM pic. Its primary activity is acting
as an investment holding company. The emerging
market unit is
involved in providing long-term savings products solutions which
address both investment protection and retirement
needs.
[4] The primary
target firm is OMF, a firm incorporated in accordance with the laws
of the Republic of South Africa. OMF is jointly
controlled by OMCH,
Business Doctor Consortium Ltd (“BDCL”) and Business
Doctor South Africa Trust No.1 (“BDSAT1”).
[5] OMF operates in
the Old Mutual Retail Mass Foundation Cluster as a credit provider
which provides unsecured loans, comprising
of personal and
consolidation loans to the South African market. OMF also offers
certain development loans funded by the Masisizane
Fund at the
request of the Old Mutual Group. Although OMF was previously active
in the home loan market, for the past five years
it has not provided
any mortgage loans.
Proposed
transaction
[6] The proposed
transaction emanates from a previous transaction between BDCL which
provided OMCH with the option to require BDSL
and BDSAT1 to sell
their entire shareholding in OMF.
OMCH is thus
partially exercising this option. The proposed transaction will
result in OMCH increasing its shareholding in OMF from
50% to 75% by
acquiring a 17% shareholding from BDCL and 8% from BDSAT1.
Post-merger, OMCH will thus solely control OMF.
Competition
assessment
[7] The proposed
transaction gives rise to a horizontal overlap in the activities of
the merging parties since Nedbank and OMF offer
unsecured loans to
individual customers. After consultation with market participants the
Commission estimated that the postmerger
market shares would be
approximately 12%. The merging parties submitted the post-merger
market shares would be approximately 17%;
however they conceded that
the Commission’s market share submissions were likely to be
more reliable, as it had access to
market participants’
information during its investigation, which they did not have.
[8]
In addition to this, the Commission submitted that the merging
parties are still likely to continue to face fierce competition
from
competitors such as Capitec Bank and African Bank,
inter
alia.
The
Tribunal raised African Bank’s recent demise with the merging
parties given that the largest share of this market was
attributed to
it. The merging parties submitted that even though African Bank was
now under curatorship it was still continuing
to operate in the
market. Therefore African Bank’s market share in the relevant
product market was unlikely to change significantly
in the short
term. share common directors.
1
in addition to this Mr McLeod stated that Nedbank and OMF have always
operated independently of each other, and would continue
to do so
post-merger.
[9]
During the hearing, Craig McLeod a senior legal advisor at Old Mutual
gave an assurance that Nedbank and OMF have always operated
independently of each other, and would continue to do so post-merger.
Public Interest
[10]
The Commission confirmed that the proposed transaction will have no
adverse effect on employment
2
and raises no other public interest concerns.
CONCLUSION
[11] We agree with
the Commission that the proposed transaction is unlikely to
substantially prevent or lessen competition and thus
approve the
transaction without conditions.
30
September 2014
DATE
Mr Norman Manoim
Ms Yasmin Carrim
and Mr Anton Roskam concurring.
Tribunal
Researcher:
Caroline
Sserufusa
For the merging
parties: Nkonzo Hlatshwayo of Webber Wentzel
For the Commission:
Relebohile Thabane
1
See
page 6 of the Transcript of the hearing.
2
See
paragraph 7 page 14 of the Commission's Report.