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[2015] ZACT 55
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Tsebo Outsourcing Group (Pty) Ltd v Thornburn Security Solutions (Northern Region) (Pty) Ltd and Others (LM012Apr15) [2015] ZACT 55 (5 June 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No:
LM012Apr15
DATE:
05 JUNE 2015
In
the matter between:
TSEBO
OUTSOURCING GROUP (PTY)
LTD
...........................................
Primary
Acquiring Firm
And
THORBURN
SECURITY SOLUTIONS (NORTHERN REGION) (PTY) LTD
..........
Target
Firms
THORBURN
SECURITY SOLUTIONS (SOUTHERN REGION) (PTY) LTD
THORBURN
REMOTE MONITORING (PTY) LTD
Panel
: Andreas Wessels (Presiding Member)
:
Prof Fiona Tregenna (Tribunal Member)
:
Medi Mokuena (Tribunal Member)
Heard
on
: 27 May 2015
Order
Issued on
: 27 May 2015
Reasons
Issued on
: 05 June 2015
Reasons
for Decision
Approval
[1]
On 27 May 2015, the Competition Tribunal
(“Tribunal”) unconditionally approved the merger between
Tsebo Outsourcing
Group (Pty) Ltd (“Tsebo Outsourcing”)
and Thorburn Security Solutions (Northern Region) (Pty) Ltd, Thorburn
Security
Solutions (Southern Region) (Pty) Ltd and Thorburn Remote
Monitoring (Pty) Ltd.
Parties
to transaction and their activities
Primary
acquiring firm
[3]
The
primary acquiring firm is Tsebo Outsourcing which is controlled by
Tsebo Holdings (Pty) Ltd (“Tsebo Holdings”).
Except for
Tsebo Outsourcing, Tsebo Holdings does not control any firms. Tsebo
Holdings is controlled by Rockwood Fund I (“Rockwood”)
[2]
.
In addition to Tsebo Holdings, Rockwood controls Safripol Holdings
(Pty) Ltd, Bravo Group (Pty) Ltd and Kwikspace Modular Buildings
Holdings (Pty) Ltd. Tsebo Outsourcing controls a number of firms.
[3]
[4]
The Tsebo group’s divisions in
South Africa include Tsebo Catering Solutions, Tsebo Facilities
Solutions, Tsebo Cleaning Solutions,
Tsebo Hygiene Solutions, Tsebo
Energy Solutions, the Tsebo Foundation and Tsebo Security Solutions.
The latter division provides
security services to corporate
commercial, retail and industrial clients, as well as residential
security and protection of individuals
in Gauteng.
Primary
target firms
[5j
The primary target firms are Thorburn Security Solutions (Northern
Region) (Pty) Ltd, Thorburn Security Solutions (Southern
Region)
(Pty) Ltd and Thorburn Remote Monitoring (Pty) Ltd (collectively
referred to hereinafter as the “target firms”).
[6]
The target firms are controlled by
Thorburn Holdings (Pty) Ltd (“Thorburn Holdings”). The
target firms do not control
any firms. They are involved in the
provision of security solutions (guarding sector) and the provision
of remote monitoring.
Proposed
transaction and rationale
[7]
In terms of the proposed transaction,
Tsebo Outsourcing will acquire the entire issued share capital held
by Thorburn Holdings in
the target firms. Post-merger, Tsebo
Outsourcing will control the target companies.
[8]
The acquiring group submitted that the
proposed transaction is in tine with its strategy to expand its
service offering in relation
to the provision of security solutions.
[9]
The shareholders of the target firms
wish to realise their investment.
Impact
on competition
[10]
The
Competition Commission (“Commission”) found that both the
acquiring group and the target firms are active in remote
security
monitoring services and guarding services (including manned and
electronic guarding). The Commission further found that
the target
firms provide remote monitoring services nationally and provide
guarding services throughout South Africa with the exception
of the
Free State.
[11]
The
Commission, ultimately, did not conclude on the exact parameters of
the relevant product and geographic markets since it did
not believe
that the proposed transaction raised any competition concerns given
the relatively small size of the merged entity
in any potential
relevant market. The Commission found that the merged entity will be
constrained by players such as ROM, Stallion
and Myertel in the
provision of remote security monitoring services and by players such
as Fidelity, G4S and Imvula Security in
the provision of guarding
services.
[12]
None
of the third parties contacted by the Commission raised any concerns
regarding the proposed transaction.
[13]
The
Commission thus concluded that the proposed transaction is unlikely
to substantially prevent or lessen competition in any relevant
market. We concur with this finding.
Public
interest
[14]The
merging parties confirmed that the proposed transaction will not lead
to any negative effects on employment.
[4]
[15]
No other public interest concerns arise
from the proposed transaction.
Conclusion
[16]
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.
05
June 2015
Andreas
Wessels
Prof
Fiona Tregenna and Medi Mokuena concurring
Tribunal
Researcher; Ammara Cachalia
For
the merging parties: Daryl Dingley of Webber Wentzel
For
the Commission: Nolubabalo Myoli
[1]
See merger record for details.
[2]
Rockwood is an en commandite partnership comprised of investors in
the form of limited partners
and
a general partner.
[3]
The reasons for approving the proposed transaction follow.
[4]
Merger record, pages 12 and 77.