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[2015] ZACT 118
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SA Taxi Development Finance Proprietary Limited and Another v SATS Exchange Assets and Another (LM093Aug15) [2015] ZACT 118 (22 September 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM093Aug15
In
the matter between:
SA
Taxi Development Finance Proprietary Limited
SA
Taxi Securitization
Proprietary
Limited
Primary Acquiring Firms
and
SATS
Exchange Assets
SATDF
Exchange
Assets
Primary Target Firms
Panel
: Mr. Norman Manoim (Presiding Member)
: Mr. Andreas Wessels
(Tribunal Member)
: Ms. Medi Mokuena
(Tribunal Member)
Heard
on
: 26 August 2015
Order
Issued on
: 26 August 2015
Reasons
Issued on
: 22 September 2015
Reasons
for Decision
Approval
[1]
On 26 August 2015, the Competition Tribunal ('Tribunal")
unconditionally approved two transactions simultaneously. The
first
is between SA Taxi Development Finance Proprietary Limited ("SATDF")
and SATS Exchange Assets and the second between
SA Taxi
Securitization Proprietary Limited ("SATS") and SATDF
Exchange Assets.
[2]
The reasons for approving the proposed transaction follow.
Parties
to transaction
Primary
acquiring firms
[3]
SATDF is directly controlled by SA Taxi Finance Holdings Proprietary
Limited ("SA Taxi Finance Holdings") and ultimately
controlled by Transaction Capital Limited.
[4]
SATS is directly controlled by the Transaction Capital Securitization
Trust which is in turn controlled by individual trustees.
SA Taxi
Finance Holdings holds 100% of the preference shares in SATS.
[5]
SA
TDF
as the operating arm of the SA Taxi group is
responsible for the origination of credit agreements for each
credit providing
entity and for its own balance sheet. The allocation
of these agreements is a random process and is dependent on third
party funding
lines. SATOF is also responsible for the management and
administration of each credit provider. SATS is among one of the
credit
providing entities that SATDF is responsible for.
[6]
SATS is a ring-fenced special purpose vehicle which was an active
credit provider which originated new credit agreements. Its
revolving
period has currently expired and its current business is to realise
the value of residual credit agreements and pay back
its creditors.
SATS is dependent on the administration and management functions
provided by SATDF to fulfil its obligations.
Primary
target firm
[7]
The primary target firms are SATS Exchange Assets and SATDF Exchange
Assets.
[8]
SATS Exchange Assets comprises SATS Qualifying Rental Agreements.
Rental Agreements which qualify consists of vehicles which
fall under
the entry level vehicle portfolio.
[9]
SATDF Exchange Assets comprises SATDF Customer Credit
Agreements. Customer Credit Agreements falling
under this
category are vehicles in the premium vehicle portfolio.
Proposed
transaction
and
rationale
[10]
The proposed transaction involves an "asset swop" whereby
the SATS Exchange Assets are transferred to SATDF and the
SATDF
Exchange Assets are transferred to SATS. The result of the
transaction is that ownership of the SATS Exchange Assets would
pass
to SATDF and ownership of the SATDF Exchange Assets would pass to
SATS.
[11]
The target firms have submitted that the 'asset swop' is in order to
protect SATDF from the exposure of entry level vehicle
credit
agreements as SATDF will pursuant to the transaction comprise 100% of
premium level vehicle loans. SATS was submitted to
be an ideal
candidate for entry level vehicle credit agreements as it has no
external debt exposure. It is also houses a majority
of the SA Taxi
Groups entry level loans.
Impact
on competition
[12]
The Competition Commission ("the Commission") identified an
overlap in the merging party's activities in so far as
both provide
credit finance to operators of minibus and midibus taxi vehicles.
[13]
The Commission in their investigations established that the proposed
transaction would not alter the existing structure of
any market.
This is because SATDF is responsible for the management and
administration of both SATS Exchange Assets as well as
SATDF Exchange
Assets. This status quo will remain the same post merger. The
Commission recommends that the proposed transaction
be approved
without conditions as it is unlikely to lead to a substantial
lessening or prevention of competition.
[14]
The Tribunal is of the view that the post-merger structure does not
change subsequent to the proposed transaction and therefore
finds
that the proposed transaction would not lead to a substantial
lessening or prevention of competition.
Public
interest
[15]
The
merging
parties
confirmed
that
the
proposed
transaction
will
not
result
in
an
adverse
impact on
employment.
[1]
The
proposed
transaction
further
raises
no
other
public
interest
concerns.
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 transactions. Accordingly, we approve the
proposed
transaction unconditionally.
22
September 2015
DATE
______________________
Mr
Norman Manoim
Mr
Andreas Wessels and Ms Medi Mokuena concurring
Tribunal
Researcher:
Aneesa Raval
For
the merging parties:
Zainobia Mohammed
For
the Commission:
Thato Mkhize, Seema Nunkoo and Xolela
Nokele
[1]
Inter
alia
merger
record
page 2.