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[2016] ZACT 6
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Clarkbiz Trading Proprietary Limited v Uvundlu Investments Proprietary Limited (LM184Nov15) [2016] ZACT 6 (27 January 2016)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No:
LM184Nov15
In
the matter between:
CLARKBIZ
TRAD
I
NG PROPRIETARY
LIMITED
Primary Acquiring Firm
and
UVUNDLU
I
NVESTMENTS
PROPRIETARY
LIMITED
Primary Target Firm
Panel
: Norman Manoim (Presiding Member)
: Andiswa Ndoni (Tribunal
Member)
: lmraan Valodia
(Tribunal Member)
Heard
on
: 13 January 2016
Order
Issued on
: 13 January 2016
Reasons
Issued on
: 27 January 2016
Reasons
for Decision
Approval
[1]
On 13 January 2016, the Competition Tribunal ("Tribunal")
approved the proposed transaction between Clarkbiz Trading
Proprietary Limited and Uvundlu Investments Proprietary
Limited.
[2]
The reasons for approving the proposed transaction follow.
Parties
to proposed transaction
Primary
acquiring firm
[3]
The primary acquiring firm is Clarkbiz Trading (Pty)
Ltd ("Clarkbiz"), a special
purpose
vehicle established specifically for the purposes of the proposed
transaction. Clarkbiz is controlled by Uni-Span Holdings
(Pty) Ltd
("Uni-Span"), a company incorporated in accordance with the
laws of South Africa.
[4]
Uni-Span is a holding company and is active through its
subsidiaries which are involved,
inter
a/ia, in the processing and supPty of rolled steel as well as
supPty and dismantling of formwork and scaffoldings.
Primary
target
firm
[5]
The primary target firm is Uvundlu Investments (Pty) Ltd
("Uvundlu"), a private company
incorporated in accordance with the laws of the Republic of South
Africa. It is controlled by Imperial Holdings Limited ("Imperial"),
a public company incorporated in accordance with the laws
of South Africa.
[6]
Uvundlu is a holding company and does not render
any services or products. Uvundlu
controls a
number of subsidiaries, collectively referred to as the "Goscor
Group of Companies" and which are active in,
inter alia,
the import and sale of forklifts, supPty of industrial and
commercial cleaning products, distribution of compaction and
earthmoving
equipment, sale of compressors and accessories
as well as the distribution and leasing of a wide range of
powered
access equipment.
Proposed
transaction and rationale
[7]
Clarkbiz intends to acquire 50% of the issued shares and claims of
Uvundlu.
[8]
Broadly, the merging parties submit that the proposed transaction
will allow them to leverage their business and enhance their
current
product offering.
Impact
on competition
[9]
The Commission found that the activities of the merging parties
overlapped within the broad work at height equipment market
as both
parties supPty work at height equipment.
[10]
Within this product market, the acquiring firm supplies access
scaffolding. Its primary activities involve the renting, installation
and dismantling of scaffolding. On the other hand, the target firm is
involved in the leasing, sale and servicing of powered access
equipment including Mobile Elevating Work Platform ("MEWP")
such as cherry pickers, boom and scissor lifts/ manlifts,
telescopic
handles, vertical lifts, cranes, material lifts and self-propelled
lifts.
[11]
Customers and competitors contacted by the Commission agreed that
access scaffolding and powered access equipment or MEWPs
were not
substitutable. In particular, customers will source the equipment
from dedicated scaffolding suppliers and dedicated MEWPs
suppliers as
each requires different skills and expertise. In addition safety,
speed, versatility, convenience and economy of MEWPs
made them
distinct from fixed units such as scaffolding. It is for these
reasons that both access scaffolding and mobile access
equipment are
considered distinct narrow markets within the access
equipment market.
[12]
Market participants also indicated that the leasing and servicing of
powered access equipment constituted a disctint market
from the
renting, installation and dismantling of scaffolding. Given the
aforementioned, the Commission was of the view that MEWPs
and
scaffolding are not substitutable and as such belong in different
market.
[13]
The Commission concluded that there was no overlap in the activities
of the merging parties. However they stated that if a
view is held
that there is an overlap between the activities of the merging
parties, that there are alternative players in the
market that will
continue to constrain the behavior of the merged entity post-merger
such as Skyjacks (Pty) Ltd, Eazi Access Rental
(Pty) Ltd, Sterling
Plant Hire (Pty) Ltd and SOS Access Rental (Pty) Ltd to name a few.
[14]
The Commission therefore concluded that the proposed transaction is
unlikely to substantially prevent or lessen competition
in any
relevant market.
[15]
We concur with the Commission's conclusion that the
proposed transaction is unlikely to substantially
prevent or lessen competition in any relevant market.
Public
interest
[16]
The merging parties confirmed that the
proposed transaction will not result in any
adverse
impact on employment.
[17]
The proposed transaction further raises no other public interest
concerns.
Conclusion
[18]
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.
27
January 2016
DATE
____________________
Mr
Norman Manoim
Ms
Andiswa Ndoni and Mr lmraan Valodia
Tribunal
Researcher:
Karissa Moothoo
Padayachie
For
the merging parties:
Cliffe Dekker Hofmeyr Inc
For
the Commission:
Amanda Mfuphi