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[2015] ZACT 6
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Applethwaite Farm (Pty) Ltd and Another v Threewaterskloof Holdings (Pty) Ltd and Others (019927) [2015] ZACT 6 (6 January 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: 019927
In the matter
between:
Applethwaite
Farm (Pty)
Ltd
............................................................................................
Acquiring
Firms
Sikisa Trading
Corporation (Pty) Ltd
and
Theewaterskloof
Holdings (Pty)
Ltd
.......................................................................................
Target
Firms
Boskloof Fruit
& Timber Industries (Pty) Ltd
Novo Packhouse
(Pty) Ltd
Panel: Andreas
Wessels (Presiding Member)
Mondo Mazwai
(Tribunal Member)
Imraan Valodia
(Tribunal Member)
Heard on: 10
December 2014
Order issued on : 10
December 2014
Reasons issued on :
06 January 2015
Reasons for
Decision
Approval
1. On 10 December
2014 the Competition Tribunal (“Tribunal”)
unconditionally approved an acquisition by Applethwaite
Farm (Pty)
Ltd (“Applethwaite”) and Sikisa Trading Corporation (Pty)
Ltd (“Sikisa”) of the following three
primary target
firms: Theewaterskloof Holdings (Pty) Ltd (“TWK”);
Boskloof Fruit & Timber Industries (Pty) Ltd
(“Boskloof);
and Novo Packhouse (Pty) Ltd (“Novo”).
2. The reasons for
the approval of the proposed transaction follow.
Parties and their
activities
Acquiring firms
3. The primary
acquiring firms are Applethwaite and Sikisa, firms incorporated in
terms of the laws of the Republic of South Africa.
4. Applethwaite is a
wholly-owned subsidiary of Capespan Farms (Pty) Ltd (“Capespan
Farms”). Capespan Farms is controlled
by Capespan (Pty) Ltd
(“Capespan”), which is ultimately controlled by Capespan
Group Ltd (“Capespan Group”).
Capespan Group is
controlled by Zeder Financial Services Ltd (“Zeder Financial
Services”), which is a wholly-owned
subsidiary of Zeder
Investments Ltd (“Zeder Investments”). Applethwaite is a
farm located in Grabouw in the Western
Cape. It produces pome fruit
(i.e. apples and pears) that are supplied throughout the country as
well as internationally.
5. Sikisa is
controlled by Fruit Exporters of South Africa (Pty) Ltd (“Fruit
Exporters”), which is a wholly-owned subsidiary
of Capespan.
Sikisa used to operate a mango packhouse in Tzaneen in the Limpopo
Province. According to the merging parties, this
packhouse has been
moth-balled for a number of years.
6. Applethwaite and
Sikisa do not control any firms, but the Capespan group controls a
number of firms in South Africa as well as
in Mozambique, Germany,
the United Kingdom, Japan, Hong Kong and the United States of
America. Through its subsidiaries, the Capespan
group is involved in
the sale and marketing of fresh fruit produce to the international
market as well as the provision of logistics
services.
Target firms
7. The primary
target firms are TWK, Boskioof and Novo, firms incorporated in terms
of the laws of the Republic of South Africa,
8. TWK, Boskioof and
Novo are controlled by Farmsecure Finance (Pty) Ltd (“Farmsecure
Finance”). Farmsecure Finance
is controlled by Farmsecure
Holdings (Pty) Ltd (“Farmsecure Holdings”).
9. TWK wholly-owns
Boskioof. Neither Boskioof nor Novo controls any firms.
10.TWK and Boskioof
own farms located in the Western Cape which produce pome fruit and
plums. Novo operates a fruit cold storage
and packing business which
focuses on pome fruit, nectarines, peaches and plums. Novo’s
facilities are located in Paarl in
the Western Cape.
Proposed
transaction and rationale
11. In terms of the
proposed transaction, Applethwaite intends to acquire 100% of the
issued share capital of TWK and Boskioof.
Further, Sikisa intends to
acquire 100% of the issued share capital of Novo. Post-merger, TWK
and Boskioof will be 100% owned by
Applethwaite and Novo will be 100%
owned by Sikisa.
12.The Capespan
group submitted that this transaction fits into its growth strategy.
13. The target firms
submitted that they see the proposed transaction as an opportunity to
obtain funding for their business operations.
Competition
analysis
14. The Commission
identified horizontal overlaps between the activities of the merging
parties in respect of (i) the market for
the production and sale of
pome fruit; and (ii) the market for fruit cold storage and packaging
services.
15.The Commission
further identified a vertical relationship between the activities of
the merging parties since Capespan provides
TWK and Boskloof with
export marketing services in international markets, i.e. the
marketing and distribution of goods in international
markets.
16. In relation to
the market for the production and sale of pome fruit, although the
merging parties supply the fruit both locally
and internationally,
the Commission did not deem it necessary to conclude on the relevant
geographic market. The Commission assessed
this market on a national
basis and found that the merging parties would account for less than
5% of this market post-merger. The
merging parties indicated that
Applethwaite, TWK and Boskloof primarily sell fruit in the export
market. We further note that competitors
and customers confirmed that
TWK and Boskloof are small players in the production and sale of pome
fruit in South Africa. We take
no view as to the exact parameters of
the relevant geographic market since the proposed merger raises no
concerns regardless of
the scope of the geographic market.
17. In relation to
the market for fruit cold storage and packaging services, the
Commission noted that Sikisa has stopped operating.
The Tribunal
however posed questions about potential overlaps in the activities of
the acquiring group and the target firms in
this/these market(s), but
was satisfied with the answers provided by the merging parties in
relation to the proposed transaction.
We have no reason to believe
that the proposed merger will substantially prevent or lessen
competition in the market(s) for fruit
cold storage and packaging
services, however defined.
18. In relation to
the above-mentioned vertical relationship, the Commission found that
Capespan already markets the majority of
TWK and Boskloof s pome
fruit destined for the export market. The Commission further found
that competitors will continue to have
access to a sufficient number
of customers since TWK and Boskloof are small players in the market
for the production and sale of
pome fruit. The Commission also found
that the merged entity is unlikeiy to sustain an input foreclosure
strategy since there are
several other export marketing firms that
can serve as alternatives to local fruit producers. Based on this,
the Commission concluded
that the proposed transaction is unlikely to
result in any foreclosure concerns. We concur with the Commission’s
finding.
Public interest
19.The
merging parties confirmed that the proposed transaction will have no
adverse effect on employment and will not result in
any retrenchments
in South Africa.
1
20.The proposed
transaction raises no other public interest concerns.
Conclusion
21. For the reasons
mentioned above, we approve the proposed transaction unconditionally.
06 January 2015
Date
Andreas Wessels
Mondo Mazwai and
Imraan Valodia concurring
Tribunal Researcher:
Ipeleng Selaledi
For the merging
parties: Paul Cleiand ofWerksmans
For the Commission:
Zanele Hadebe
1
See
inter
alia
merger
record, page 13.