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[2015] ZACT 113
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Sanlam Life Insurance Limited v ACT Healthcare Assets (Pty) Ltd (LM065Jul15) [2015] ZACT 113 (15 September 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No:
LM065Jul15
In
the matter between:
Sanlam
Life Insurance Limited
Primary
Acquiring
Firm
and
ACT
Healthcare
Assets
(Pty)
Ltd
Primary
Target Firm
Panel
: Mr Andreas Wessels (Presiding Member)
: Prof lmraan I Valodia
(Tribunal Member)
: Ms Medi Mokuena
(Tribunal Member)
Heard
on
: 02 September 2015
Order
Issued on
: 02 September 2015
Reasons
Issued on
: 15 September
2015
Reasons
for Decision
Approval
[1]
On 02 September 2015, the Competition
Tribunal ("Tribunal") unconditionally
approved the merger between Sanlam Life Insurance Limited
("Sanlam Life") and ACT Healthcare Assets (Ply)
Ltd
("ACT").
[2]
The reasons for approving the propo
sed
transaction follow.
Parties
to proposed transaction
Primary
acquiring
firm
[3]
The primary acquiring firm is Sanlam Life, a
firm incorporated in South Africa.
Sanlam Life is a wholly-owned subsidiary of Sanlam Limited
("Sanlam"). Sanlam is a public company listed on the JSE
Limited.
[4]
The Sanlam Group's business is organized into four clusters being
Sanlam Personal Finance, Sanlam Emerging Markets, Sanlam Investments
and Short-term insurance.
[5]
Relevant for the assessment of the proposed transaction are the
group's activities conducted through the Sanlam Personal Finance
division. Through various entities, the Sanlam Personal Finance
division is active in the provision of medical administration
services, managed healthcare services, health risk management and
health insurance products.
Primary
target firm
[6]
The primary target firm is ACT. ACT is wholly-owned by Afrocentric
Investment Corporation Limited ("Afrocentric").
[7]
In South Africa, Afrocentric controls Afrocentric Health Limited
("AHL") and WAD Holdings (Pty) Ltd. AHL
controls a number of firms and relevant for the assessment of the
proposed transaction are Medscheme Holdings (Pty) Ltd ("Medscheme");
Helios IT Solutions (Pty) Ltd; Aid for Aids Management (Pty) Ltd;
Resticraft (Ply) Ltd; and Klinnika (Pty) Ltd.
[8]
The Afrocentric group is involved in the administration of medical
aid funds and managed healthcare activities,
as well as
the provision of healthcare and related services to end consumers
directly as part of an extended administrative or
managed healthcare
business.
Proposed
transaction and rationale
[9]
Afrocentric,
ACT and Sanlam
Life
have
entered
into
a
subscription
agreement
in
terms
of
which
Sanlam
Life
will
subscribe
for shares
representing
28.7% of
the
issued
ordinary
share
capital
of ACT
for
a
subscription
price of
R703
million.
Sanlam Life
will
also
acquire
certain
minority
protections
in
relation
to
ACT
and
certain
of
its
subsidiaries,
which
confer
control
upon
it for
the
purposes
of
section
12(2)(g)
of
the
Competition Act
of
1998
[1]
.
[10]
The Sanlam group submitted that it expects growth in
the healthcare sectors and does not at present have
scale in this
sector commensurate with the rest of its retail offerings. It would
like to extend a medical scheme offering to its
clients.
[11]
ACT submitted that the proposed transaction would
inter
a/ia provide Medscheme with access to
the Sanlam group's extensive distribution capabilities.
Impact
on competition
[12]
The Competition Commission ("Commission") identified a
horizontal overlap in the activities of the merging parties
in
relation to (i) the supply of medical scheme administration services;
and (ii) the provision of managed healthcare services.
[13]
In the market for the provision of medical scheme administration
services, the Commission found that the merging parties will
have a
combined national market share of approximately [20-30]% with
an accretion in market share as a result of the proposed
transaction
of approximately [0-1]%. The merging parties will continue to face
competition from large players such as Discovery
Limited
("Discovery") and MM! Holdings Limited ("MMI")
and other smaller market participants.
[14]
In the market for the provision of managed
healthcare services, the Commission found that
the
merging parties will have a combined national market share of
approximately [25-35]%, with an accretion in market share as
a result
of the proposed transaction of approximately [0-1]%. The merging
parties will compete with large players such as Discovery
and MMI and
other smaller market participants.
[15]
The Commission furthermore contacted customers as part of its market
investigation and these customers did not raise any concerns
regarding the proposed transaction as they indicated that there are
alternatives available to them in the affected markets.
[16]
The Commission concluded that the proposed transaction is unlikely to
substantially prevent or lessen competition in the abovementioned
markets.
[17]
We concur with the Commission's conclusion that the proposed
transaction is unlikely
to
substantially prevent or
l
essen
competition in
any
relevant market.
Public
interest
[18]
The
merging
parties
confirmed
that
the
proposed
transaction
will have
no
negative
impact
on
employment
since
no
retrenchments
are
envisaged.
[2]
[19]
The proposed transaction further raises no other public interest
concerns.
Conclusion
[20]
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 transactions. Accordingly, we approve
the proposed
transaction unconditionally.
15
September 2015
DATE
________________________
Mr
Andreas Wessels
Prof
lmraan I Valodia and Ms Medi Mokuena concurring
Tribunal
Researcher:
Aneesa Raval
For
the merging parties:
Kesiah Frank of Glyn Marais Anton Roets of Nortons Inc
For
the Commission:
Kholiswa Mnisi and Lindiwe
Khumalo
[1]
Act
No.
89 of
1998, as
amended.
[2]
Merger record
inter
alia
page
11.