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[2015] ZACT 49
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MMI Group Limited v Long-Term Insurance Policy Book of Smart Life Insurance Company Limited (LM016May15) [2015] ZACT 49 (3 June 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM016May15
DATE:
03 JUNE 2015
In
the matter between:
MMI
GROUP
LIMITED
................................................................................
Primary
Acquiring Firm
And
THE
LONG-TERM INSURANCE POLICY BOOK OF
SMART
LIFE INSURANCE COMPANY
LIMITED
........................................
Primary
Target Firm
Panel
: Mr A Wessels (Presiding Member)
:
Prof F Tregenna (Tribunal Member)
:
Ms M Mokuena (Tribunal Member)
Heard
on
: 27 May 2015
Order
Issued on
: 27 May 2015
Reasons
Issued on
: 03 June 2015
Reasons
for Decision
Approval
[1]
On 27 May 2015, the Competition Tribunal
(“Tribunal”) unconditionally approved the acquisition by
MMI Group Limited
(“MMI”) of the long-term insurance
policy book of Smart Life Insurance Company Limited (“Smart
Life Policy Book”).
[2]
The reasons for approving the proposed
transaction follow.
Parties
to proposed transaction
[3]
The
primary acquiring firm is MMI. MMI is controlled by MMI Holdings
Limited (“MMI Holdings”), a public company listed
on the
Johannesburg Securities Exchange Limited. No one firm controls MMI
Holdings for competition law purposes. MMI Holdings directly
and
indirectly controls a number of firms.
[1]
MMI Holdings and its subsidiaries will collectively be referred to
hereinafter as the MMI group.
[4]
The MMI group’s core businesses
include long- and short-term insurance, asset management, savings,
investment, healthcare
administration, health risk management,
employee benefits and rewards programmes. It conducts its business
through the following
operating brands: Momentum, Metropolitan,
Guardrisk and Eris Properties. Relevant for the competition
assessment are the MMI group’s
activities in respect of
long-term insurance, Including individual long-term insurance and
group (group scheme) long-term insurance.
[5]
The primary target firm is Smart Life
Poiicy Book.
[6]
Smart Life Policy Book comprises mainly
of endowment assurance and whole of life policies, as well as some
term assurance policies.
The endowment assurance and whole of life
policies have been designed to protect the repayment of capital
amounts associated with
mortgages, providing a benefit in the event
of death and at a specified maturity rate. The term assurance
policies provide benefits
in the event of death during a specified
term.
Proposed
transaction
[7]
MMI Holdings wishes to acquire sole
control of Smart Life Policy Book.
Relevant
markets and impact on competition
[8]
The Competition Commission
(“Commission”) identified a horizontal overlap in the
merging parties’ activities in
the market for the provision of
individual long-term insurance.
[9]
According to the Commission’s
market investigation the merged entity will have a national market
share of less than 15% in
this market. Other players such as Old
Mutual Life Insurance, Liberty Life, Discovery and Sanlam are active
in this market.
[10]
The
Commission further found that there is a pre-existing vertical
relationship between the merging parties since MMI currently
acts as
a reinsurer for Smart Life Policy Book. However, the Commission
concluded that this vertical relationship is unlikely to
result in
any foreclosure concerns since the relationship existed pre-merger
and the status quo will remain post-merger.
[11]
We
concur with the Commission’s finding that the proposed merger
is unlikely to substantially prevent or lessen competition
in any
relevant market.
Public
interest
[12]The
merging parties confirmed that the proposed transaction will not have
any negative effect on employment in South Africa
and that no job
losses will result from the proposed transaction.
[2]
The proposed merger further raises no other public interest concerns.
Conclusion
[13]
In
light of the above, we conclude that the proposed transaction is
unlikely to substantially prevent or lessen competition in any
relevant market. In addition, no public interest issues arise from
the proposed transaction. Accordingly we approve the proposed
transaction unconditionally.
03
June 2015
DATE
Mr
A Wessels
Prof.
F Tregenna and Ms M Mokuena concurring
Tribunal
Researcher: Moleboheng Moleko
For
the merging parties: Derushka Chetty of Edward Nathan Sonnenbergs
Inc.
For
the Commission: Billy Mabatamela, Seema Nunkoo and Xolela Nokele
[1]
See merger record for details.
[2]
Merger record, pages 13 and 84.