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[2015] ZACT 30
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Sasfin Bank Limited v Fintech (Pty) Ltd (020487) [2015] ZACT 30 (31 March 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: 020487
In the matter
between:
SASFIN
BANK
LIMITED
........................................................................................
Primary
Acquiring Firm
And
FINTECH
(PTY)
LTD
....................................................................................................
Primary
Target Firm
Panel: Mr A Wessels
(Presiding Member)
: Prof. I Valodia
(Tribunal Member)
: Ms M Mokuena
(Tribunal Member)
Heard on: 11 March
2015
Order Issued on: 11
March 2015
Reasons Issued on :
31 March 2015
Reasons for
Decision
Conditional
approval
[1] On 11 March
2015, the Competition Tribunal (“Tribunal”) conditionally
approved the acquisition by Sasfin Bank Limited
(“Sasfin Bank”)
of Fintech (Pty) Ltd (“Fintech”). The conditions that we
have imposed relate to employment,
as explained below.
[2] The reasons for
approving the proposed transaction follow.
Parties to
proposed transaction
[3] The primary
acquiring firm is Sasfin Bank. Sasfin Bank is wholly owned by Sasfin
Holdings Limited (“Sasfin”). Sasfin
is not controlled any
one firm. Sasfin Bank and Sasfin will collectively be referred to in
these reasons as “the Sasfin Group”.
[4] The Sasfin Group
provides multiline banking and financial services and mainstream
products to entrepreneurial businesses. It
has six key business
areas: business banking, capital, treasury, wealth management,
transactional banking and commercial solutions.
[5]
The primary target firm is Fintech. Fintech controls a number of
firms.
1
[6]
Fintech offers asset rental finance solutions to businesses and
equipment suppliers. It provides financing in respect of
inter
alia
office
automation equipment, audio visual equipment, IT equipment, selected
industrial equipment, automated teller machines, medical
equipment
and CCTV equipment.
Proposed
transaction and rationale
[7] The Sasfin Group
intends to acquire 100% of the issued share capital in Fintech.
[8]
The Sasfin Group submitted that the proposed transaction presents
inter aiia
an
opportunity to strengthen its position in the market, access to more
clients and economies of scale.
[9] Fintech
submitted that the proposed transaction will reduce risks since
Fintech wiil have the support of Sasfin Bank as an established
bank
in South Africa.
Relevant markets
and impact on competition
[10] Broadly
speaking the merging parties both operate in the market for the
provision of rental sale and instalment sale agreement
services.
[11] The Competition
Commission (“Commission”) identified a horizontal overlap
in the activities of the merging parties
in respect of rental and
instalment financing for office automation equipment, audio visual
equipment, information technology equipment
and industrial equipment.
The Commission however did not find it necessary to definitively
conclude on the relevant product markets.
[12] The Commission
found that the merged entity will have a post-merger market share of
less than 5% in the market for the provision
of rental sale and
instalment sale financing services in South Africa. The Commission
further found that the merged entity will
be constrained by other
competitors such as FirstRand Bank, Nedbank Ltd and other non-bank
competitors such as HP Finance and Pinnacle.
The Commission therefore
concluded that the proposed transaction is unlikely to substantially
prevent or lessen competition in
any relevant market.
[13] Even if
potential narrower relevant product markets than the provision of
rental sale and instalment sale financing services
are considered, it
is unlikely that the proposed merger will raise competition concerns
given the relative size of the merging
parties in the areas where the
merging parties’ activities overlap.
[14] We thus concur
with the Commission’s conclusion.
Public interest
[15] We beiow deal
with the anticipated effects of the proposed transaction on
employment. The proposed merger raises no public
interest concerns
other than employment concerns.
[16] The merging
parties submitted to the Commission that the merged entity will not
retrench any employees for a period of one
year after the
implementation of the proposed merger. The Commission then required
clarity regarding the potential retrenchments
and requested that the
merging parties provide estimations as to the number of employees
that may potentially be affected by the
proposed transaction, their
skills profile and educational background. The merging parties
subsequently provided the number of
employees that may be affected
and their respective positions within Sasfin Bank and Fintech. Based
on these submissions, the Commission
recommended a conditional
approval of the proposed transaction by placing a moratorium on the
maximum number of employees that
may be retrenched as result of the
proposed merger.
[17]
The merging parties had no objection to the Commission’s
proposed employment condition but, for a specific reason
2
,
requested that the Commission consider an extended period before
notifying and circulating the conditions to all employees of
the
merging parties. The Commission was of the view that this request was
not unreasonable. We however disagree. This was however
resolved at
the hearing and the merging parties agreed that they shall circulate
a copy of the conditions to the employees
3
within 7 days of the merger approval date.
[18] The Tribunal
furthermore made certain comments regarding the drafting of the
Commission’s proposed conditions. We have
ultimately approved
the proposed transaction subject to the following employment
conditions as agreed to by the merging parties:
a.
Except for a maximum of eight (8) skilled employees of the merged
entity employed within the Finance, Information Technology,
Collections, Credit, Human Resources, Marketing, Sales and
Administration Divisions that may be retrenched as a result of the
proposed merger, the merging parties shall not retrench any other
employees as a result of this merger.
4
b. In the event that
it becomes necessary to retrench the above-mentioned employees, the
merged entity will endeavour to offer such
employees alternate
positions within Sasfin or voluntary severance packages.
Conclusion
[19] In light of the
above, we conclude that the proposed transaction is unlikely to
substantially prevent or lessen competition
in any relevant market.
[20]
With regards to public interest, we have approved the proposed
transaction subject to the above-mentioned employment conditions
as
agreed to by the merging parties. The conditions that we have imposed
are attached hereto market as
“
Annexure
A”.
31 March 2015
DATE
Mr A Wessels
Prof. I Valodia
and Ms M Mokuena concurring
Tribunal Researcher:
Moleboheng Moleko
For the merging
parties: Kirsty Van Den Bergh and Ryan Goodman of
Edward Nathan
Sonnenbergs Inc
For the Commission:
Relebohile Thabane and Werner Rysbergen
1
See
merger record, pages 6, 32 and 33.
2
Claimed
as confidential by the merging parties.
3
All
those employees employed by Sasfin Bank and Fintech at the time of
implementation of the merger.
4
For
the sake of clarity, retrenchments do not include (i) voluntary
separation arrangements; (ii) voluntary early retirement packages;
(iii) unreasonable refusals to be redeployed in accordance with the
provisions of the
Labour Relations Act, 1995
, as amended; (iv)
resignation or retirements in the normal course; and (v)
retrenchments lawfully effected for operational requirements
unrelated to the merger.