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[2015] ZACT 45
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Bain Capital Investors LLC v TI Fluid Systems Limited (LM232Mar15/021048) [2015] ZACT 45 (4 June 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM232Mar15/021048
DATE:
04 JUNE 2015
In
the matter between:
BAIN
CAPITAL INVESTORS
LLC
.............................................................................
Acquiring
Firm
And
Tl
FLUID SYSTEMS
LIMITED
.........................................................................................
Target
Firm
Panel
: Norman Manoim (Presiding Member)
:
Medi Mokuena (Tribunal Member)
:
Andiswa Ndoni (Tribunal Member)
Heard
on : 20 May 2015
Order
Issued on : 20 May 2015
Reasons
Issued on : 4 June 2015
Reasons for
Decision
Approval
[1]
On 20 May 2015, the Competition Tribunal (“Tribunal”)
unconditionally approved the merger between Bain Capital Investors
LLC (“Bain Capital”) and Tl Fluid Systems Limited (“Tl
Fluid”).
[2]
The reasons for approving the proposed transaction follow.
Primary
acquiring firm
[3]
The primary acquiring firm is Bain Capital, a company
incorporated under the laws of the United States of America. Bain
Capital
is not controlled by any firm. Bain Capital controls a number
of firms throughout the world. In South Africa, Bain Capital controls
Edgars Consolidated Stores Limited (“Edcon”) and IMCD
South Africa (Pty) Ltd (“IMCD Group”). Bain Capital’s
subsidiaries AS1MCO Technologies Limited (“ASIMCO”) and
FTE Verwaltungs GMbH (“the FTE Group”) are relevant
to
the proposed transaction.
[4]
Bain Capital is a private, alternative asset management firm.
It provides investment advice and investment fund management to its
extensive list of private equity investment funds which in turn
invest in companies across various sectors including the automotive
sector. In relation to the South African companies, Edcon is a
retailer of clothing, footwear and cosmetics in South Africa whilst
the IMCD group is a distributor of specialty chemicals in a
diversified range of end markets.
[5]
ASIMCO
and the FTE Group are involved in the production and supply of
automotive components. ASIMCO specializes in the manufacturing
of
fuel injection systems, powertrain, chassis components, rotating
electrics and noise, vibration and harshness (“NVH”)
products.
[1]
ASM I CO also supplies rubber parts which are used for vehicle noise
reduction, vibration damping and sealing in passenger vehicles.
[6]
The FTE Group produces and supplies hydraulic clutch actuation
systems and components for transmissions, hydraulic brake actuation
systems and components for passenger cars, light and heavy trucks.
The FTE Group does not sell any hydraulic brake actuation systems
in
South Africa.
Primary
target firm
[7]
The primary target firm is Tl Fluid, a company incorporated in
terms of the laws of England and Wales. Tl Fluid is not controlled
by
any firm. It Controls various companies throughout the world. In
South Africa, it controls Tl Automotive Fuel Systems (South
Africa)
(Pty) Ltd (“Tl Automotive Fuel Systems”) and Tl Group
Automotive Systems (South Africa) (Pty) Ltd (“Tl
Group
Automotive Systems”). Neither Tl Automotive Fuel Systems nor Tl
Group Automotive Systems control any firm.
[8]
Tl Fluid conducts its South African operations through Tl
Automotive Fuel Systems and Tl Group Automotive systems which
assemble
fuel tanks, delivery systems and automotive components.
Thereafter, these products are sold directly to automobile
manufacturers
and to the independent aftermarket.
Proposed transaction
and rationale:
[9]
In terms of the proposed transaction, Bain Capital will
acquire Tl Fluid. Upon completion of the proposed transaction, it
will have
sole control over Tl Fluid.
[10]
Bain
Capital submits inter alia that the acquisition provides an
attractive investment opportunity because Tl Fluid System’s
global automotive fluid storage, carrying and delivery systems for
light vehicles will facilitate growth. As the target firm, Tl
Fluid
recognises Bain Capital as an attractive business partner.
Relevant market and
Impact on Competition:
[11]
The
Competition Commission considered the activities of the merging
parties in order to determine the relevant market. It found
that both
the acquiring firm and the target firm are involved in the
manufacture and supply of automotive components internationally.
However, in South Africa, their operations are limited to only the
supply of automotive components as the merging parties do not
manufacture any automotive components in South Africa.
[12]
On
a more detailed analysis of the product market, the Commission found
that except for a relatively small amount of rubber parts,
used for
vehicle noise reduction, vibration damping and sealing in passenger
vehicles,, the acquiring group does not supply any
other automotive
products to the South African market. Conversely, Tl Fluid supplies
fuel tanks, delivery systems and automotive
components, such as HVAC
fluid carrying systems, air-conditioning, brake pipes, clutch pipes
etc, to the automobile manufacturers
and the independent aftermarket.
Thus, there is no product overlap in the activities of the merging
parties.
[13]
The
Commission accordingly concluded that the proposed transaction is
unlikely to substantially lessen or prevent competition in
the
relevant market.
[2]
Public
interest:
[14]
The
Commission concluded that there are no public interest concerns
likely to arise from the proposed transaction.
Conclusion:
[15]
In
light of the above, we agree with the Commission’s analysis and
conclude that the proposed transaction is unlikely to substantially
prevent or lessen competition in the relevant market. In addition, no
public interest issues arise from the proposed transaction.
DATE
04 June 2015
Medi Mokuena and
Andiswa Ndoni concurring
Tribunal
Researcher: Ammara Cachalia
For
the merging parties: Thato Mkhize, Xolela Nokele
For
the Commission: Anton Roets, Nortons Incorporated.
[1]
ASIMCO did not make any of these types of sales in South Africa over
2012 and 2013.
[2]
The Commission is currently engaged in a cartel investigation
involving automotive components.
Neither
the target firm or the acquiring firms are a subject of that
investigation we were informed.