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[2016] ZACT 11
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Unitrans Automotive (Pty) Ltd v Automall (Pty) Ltd (LM191Dec15) [2016] ZACT 11 (25 February 2016)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No:
LM191Dec15
In
the matter between:
UNITRANS
AUTOMOTIVE
(PTY)
LTD
Primary Acquiring Firm
and
THE
AUTOMALL
(PTY)
LTD
Primary Target Firm
Panel
: Yasmin Carrim (Presiding Member)
: Medi Mokuena (Tribunal
Member)
: Andiswa Ndoni (Tribunal
Member)
Heard
on
: 27 January 2016
Order
Issued on
: 27 January 2016
Reasons
Issued on
: 25 February
2016
Reasons
for Decision
Approval
[1]
On 27 January 2016, the Competition Tribunal ("Tribunal")
approved the proposed transaction between Unitrans Automotive
(Ply)
Ltd and The Automall (Pty) Ltd.
[2]
The reasons for approving the proposed transaction follow.
Parties
to proposed transaction
Primary
acquiring
firm
[3]
The primary acquiring firm is Unitrans Automotive (Ply) Ltd
("Unitrans Automotive"). Unitrans Automotive is the motor
retail division housed in JOG Trading Property and is wholly owned by
JD Group Limited. JD Group Limited is ultimately controlled
and
wholly owned by Steinhoff International Holdings Limited.
[4]
Unitrans Automotive's key service offerings are the sale of new and
preowned vehicles, parts and accessories and after-market
service.
These services are supported by the provision of consumer credit,
insurance products, fleet management services and car
rental.
Primary
target firm
[5]
The primary target firm is Automall, which is wholly owned by the
Automall Holdings Proprietary Limited ("Automall Holdings").
Automall Holdings is jointly owned by the Mark Oostinghh Family Trust
and the Peter and Mandy Houze! Family Trust. Automall does
not
control any firms.
[6]
Automall operates various vehicle dealerships in East London. Its
offering includes a service department and a parts department.
Automall's vehicle sales activities are supported by a vehicle
financing and insurance department.
Proposed
transaction
and
rationale
[7]
In terms of the Sale of Business Agreement, Unitrans Automotive shall
acquire Automall as a going concern. Pursuant to the proposed
transaction, Unitrans Automotive will acquire control of Automall's
motor dealership business.
[8]
Unitrans Automotive wishes to acquire Automall as an investment
whereas Automall wishes to realise their investment.
Impact
on competition
[9]
An assessment of the merging parties' activities found that there is
an overlap in the sale of new passenger and new light commercial
vehicles, in both the Eastern Cape and in East London.
[10]
In the East London area Unitrans Automotive operates a single
brand (Toyota) dealership while Automall operates a multi-brand
dealership but excluding Toyota.
[11]
The
Commission
assessed
the
transaction
across
all
brands
of
motor
vehicles.
In response
to a query raised by the Tribunal whether
there would
be any
competition concerns arising from a possible overlap of brands,
the merging
parties submitted that the
figures
provided
by
the
National
Association
of
Automobile
Manufacturers of
South
Africa
("NAAMSA")
[1]
includes
all brands therefore the data given by NAAMSA to the
Commission
and used in the Commission's report illustrate the market shares in
the respective relevant markets with relation
to all
brands of vehicles.
[12]
In the East London market the share post-merger in the market for new
passenger vehicles and in the market for new light commercial
vehicles will be high with a large increment. However, it was noted
by the Commission that the acquiring firm operates a single
brand
dealership in East London and the target firm does not operate the
Toyota brand in any of its dealerships in East London.
Therefore the
Commission concludes that the above market shares in the East London
region are over-stated as other brands are not
considered.
[13]
The Commission found that while the post-merger market share in the
market for new passenger vehicles was nominally relatively
high the
merged entity was likely to face competition post-transaction from
other dealerships in the regions such as Meyers Motors,
Ronnies
Motors and BMW Autohaus Monti
[14]
In the market for the sale of light commercial vehicles the
Commission finds that while the high market share indicated an
ability on the part of the merged entity to act in a unilateral
manner post-transaction, the merged entity was unlikely to act
in
such a manner because it would still be constrained by other
competitors such as Meyers Motors, Ronnies Motors and BMW Autohaus
Monti.
[15]
The Commission was of the view that the proposed transaction will not
change the dynamics in their respective markets. The
Commission
therefore concluded that the proposed transaction will not
substantially prevent or lessen competition in the East London
area.
[16]
The Tribunal questioned the merging parties with regard to an overlap
with respect to two brands, namely Nissan and Renault
The merging
parties submitted that the overlap is national with the exclusion of
East London and the Eastern Cape,
[17]
We therefore concurred with the Commissi9n's conclusion that the
proposed transactiOn is unlikely to substantially prevent
or lessen
competition in any relevant market
Public
interest
[18]
The merging parties submitted that all the employees at Automall will
be taken over as contemplated in
section 197
of the
Labour Relations
Act, No 66 of 1995
. The proposed transaction will therefore not
have a negative effect on employment
[19]
The proposed transaction further raises no other public interest
concerns,
Conclusion
[20]
In light of the above, we concluded that the prop9sed transaction was
unlikely to substantially prevent or lessen competition
in any
relevant market, In addition, no public interest issues arose from
the proposed transaction. Accordingly, we approved the
proposed
transaction unconditionally,
25
February 2016
DATE
___________________
Ms
Yasmin Carrim
Mrs
Medi Mokuena and Ms Andlswa Ndoni concurring
Tribunal
Researcher: Kameel
Pancham
For
the merging parties: Cliffe Dekker
Hofmeyr
For
the Commission:
Nolubabalo Myoli
[1]
See Tables
1 and 2 on
pages
14-15 of
the
Commission's
report.