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[2015] ZACT 96
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Sun International (South Africa) Limited v GPI Slots Proprietary Limited (LM101Aug15) [2015] ZACT 96 (5 November 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No:
LM101Aug15
In
the matter between:
Sun
International
(South
Africa)
Limited
Primary Acquiring Firm
and
GPI
Slots
Proprietary
Limited
Primary Target Firm
Panel
: Norman Manoim (Presiding Member)
: Medi Mokuena(Tribunal
Member)
: lmraan Valodia
(Tribunal Member)
Heard
on
: 7 October 2015
Order
Issued on
: 7 October 2015
Reasons
Issued on
: 5 November
2015
Reasons
for Decision
Approval
[1]
On 7 October 2015, the Competition Tribunal ("Tribunal")
unconditionally approved the merger between Sun International
(South
Africa) Limited ("SISA') and GPI Slots Proprietary Limited ("GPI
Slots").
[2]
The reasons for approving the proposed transaction follow.
Parties
to
transaction
Primary
acquiring
firm
[3]
The primary acquiring firm is SISA which is a wholly-owned subsidiary
of Sun International Limited ("Sun International"}.
Sun
International is publically listed on the JSE and is not controlled
by any firm.
[4]
SISA invests and manages businesses in the hotel, resort and casino
industries which SISA collectively refers to as leisure
centres.
These leisure centres offer a variety of experiences and activities
ranging from wedding and banqueting offerings to water
sport
offerings. SISA has also recently entered the online sports betting
space.
Primary
target
firm
[5]
GPI Slots
is a subsidiary
of Grand
Parade Investments Limited ("GPI Investments"). Although
GPI Slots
is not
controlled
by any
firm,
SISA
currently
owns 25.1%
of the
shares in
GPI Slots.
[1]
[6]
GPI
Slots
is
the
holding
company
of
all
the
Limited
Pay-out
Machines
("LPM's")
gaming operations of GPI Investments. LPM's are defined by the
National Gambling
Act
as
a gambling
machine
with
a
restricted
bet and
prize and
which
are
generally
located in
bars, restaurants and clubs.
[2]
Regulation
prescribes a maximum amount of
money
per win and
per bet as
well
as
the
maximum
number of
LPM's
allowed
per
single
venue.
Proposed
transaction
and
rationale
[7]
In the proposed transaction SISA intends to acquire 25% of the shares
in GPI Slots. As SISA already owns 25.1% of the shares
in GPI Slots
the proposed transaction will increase SISA's total shareholding to
50.1%. This increase will grant SISA sole control
of GPI Slots.
[8]
SISA submits that the proposed transaction is in line with its
strategic objectives of growing its business to new areas and
products. GPI Investments submitted that the proposed transaction
presented it with the opportunity to hand over the operational
control of GPI Slots to an expert operator.
Impact
on
competition
[9]
The
Commission
based its
findings
on
the
Initial
Transaction and found that there
is no
horizontal
overlap
between the
parties as
LPM's and casinos
are
not part of
the same
product
market.
[3]
The
Commission
was
satisfied
with
this
conclusion
as
it
based
its opinion
on the
categorization
of
LPM's and
the
regulation
surrounding
it,
specifically the limitation of bet sizes and prizes. The Commission
is of the view that due to this,
LPM's do
not
compete
with the gambling
offerings
of SISA. The Commission
was
also
of the
opinion
that
due to the
lack of an
overlap
SISA would
not have any incentive to act in
an
anti-competitive manner post-merger.
[10]
The merging parties further submitted that consumers visiting SISA
casinos do so because of the wide variety of gambling options
whereas
at LMP venues the LMP's are an ancillary feature of the location. As
the Commission is of the view that there is no overlap
they had not
conducted a competitive assessment for the proposed
transaction.
[11]
On the evidence in the present record we must accept that there is no
overlap present and we therefore find that the proposed
transaction
is unlikely to substantially prevent or lessen competition in any
relevant market.
Public
interest
[12]
The Initial
Transaction
was
approved
subject
to
an
employment
condition
which
placed
a
2 year
moratorium
on merger
specific job
losses
at
SISA
and
GPI
Slots.
[4]
This
moratorium was put into place over two concerns.
[13]
The merging parties also indicated that they
will
continue to be
bound by
the
moratorium put in place in terms of the initial transaction
until it
expires, which is two
years
after 24 December
2014.
The present
transaction
thus raises no new employment
concerns
that are not already addressed
by the
prior condition.
[5]
The proposed
transaction further raises no other public interest concerns.
Conclusion
[14]
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 t
e proposed
transaction unconditionally.
05
November 2015
DATE
_________________________
Mr
Norman Manoim
Ms
Medi Mokuena and Prof lmraan Valodia concurring
Tribunal
Researcher:
Aneesa Ravat
For
the merging parties:
Nick Altini of Cliffe Dekker Hofmeyr
For
the Commission:
Ratshidaho Maphwanya and Nompucuko
Nontombana
[1]
The acquisition of these shares was approved by the Tribunal
inNovember 2014 in Sun International (South
Africa)
Limited and GPI Slots Proprietary Limited 019083
("the
Initial Transaction")
[2]
Act No 7 of 2004
[3]
See footnote
1
[4]
See footnote
1
[5]
Inter
allia
merger
record page 1
3.