About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Competition Tribunal
SAFLII
>>
Databases
>>
South Africa: Competition Tribunal
>>
2016
>>
[2016] ZACT 32
|
|
Barloworld South Africa Proprietary Limited v Salvage Management and Disposals Proprietary Limited (LM239Feb16) [2016] ZACT 32 (20 April 2016)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM239Feb16
In
the matter between:
BARLOWORLD
SOUTH
AFRICA
PROPRIETARY
LIMITED
Primary Acquiring Firm
and
SALVAGE
MANAGEMENT
& DISPOSALS
PROPRIETARY
Primary Target Firm
LIMITED
Panel
: Yasmin Carrim (Presiding Member)
: Anton Roskam (Tribunal
Member)
: Andiswa Ndoni (Tribunal
Member)
Heard
on
: 22 March 2016
Order
Issued on
: 22 March 2016
Reasons
Issued on
:
20 April 2016
Reasons
for Decision
Approval
[1]
On 22 March 2016, the Competition Tribunal ("Tribunal")
approved the proposed transaction between Barloworld South
Africa
Proprietary Limited and Salvage Management & Disposals
Proprietary Limited.
[2]
The reasons for approving the proposed transaction follow.
Parties
to proposed transaction
Primary
acquiring
firm
[3]
The primary acquiring firm is Barloworld South Africa Proprietary
Limited ("Barloworld SA") a wholly owned subsidiary
of
Barloworld Limited ("Barloworld"), a public company
incorporated in terms of the laws of the Republic of South Africa.
[4]
Barloworld has a primary listing on the Johannesburg Stock Exchange
(JSE) and secondary listing on the London and Namibian Stock
Exchanges
[5]
Barloworld and Barloworld SA control a number of firms and will
hereon be collectively referred to as the Barloworld Group.
Primary
target firm
[6]
The primary
target
firm
is
Salvage
Management
&
Disposals
Proprietary
Limited
("SMD"). SMD
is an
end-to-end
salvage
operator
providing a
full spectrum
of asset
management
services,
selling
accident
damaged,
stolen
and
recovered
vehicles,
including
passenger
and
commercial
vehicles,
agricultural
equipment
and
leisure
craft.
[1]
Proposed
transaction and rationale
[7]
Barloworld intends to acquire 51.88% of the issued shares in SMD. As
a result Barloworld will exercise control over SMD.
[8]
Barloworld Group submits that the proposed transaction will provide
further option for the acquiring firm to grow services to
the
distressed asset sale market and increase its exposure to the
insurance market.
[9]
SMD believes that strong synergies exist between Barloworld as a
supplier of motor vehicles and SMD as offering alternatives
distribution solutions. It also believes that it
(SMD) can play a role in the de-fleeting of motor vehicles and
the repossessed vehicle market.
Impact
on competition
[10]
The Barloworld Group operates through four (4) core divisions being
equipment, automotive, handling and logistics. Relevant
to this
transaction is the automotive division of the Barloworld Group which
provides a range of integrated motor usage solution,
including short
and long term rental (through Avis), vehicle ownership and asset
disposal solutions. SMD provides a full spectrum
of asset management
services, selling accident damaged, stolen and recovered vehicles
including passenger and commercial vehicles,
agriculture equipment
and leisure craft.
[11]
The Commission considered the activities of the merging parties and
found that the proposed transaction does not present a
horizontal
overlap in the management and sale of salvage vehicles as the
Barloworld Group is not active in these activities. However
there is
a horizontal overlap in the sale of pre-owned commercial vehicles as
the Barloworld Group and SMD are both active in these
activities. In
particular for the 9 month period ended 30 November 2015, SMD derived
0.67% revenue from buying and selling used
commercial vehicles, which
equates to 0.13% of total units sold by SMD in the same period. The
Commission is of the view that the
proposed transaction will not
raise concerns within this market and notes that the merged entity
will continue to face competition
from other players in the market.
[12]
Further, the Commission found that the proposed transaction presents
two vertical relationships between the merging parties
as (1) SMD
purchases and on-sells salvage vehicles from Barloworld SA, and (2)
purchases new replacement vehicles from Barloworld
SA.
[13]
In assessing the likelihood of input foreclosure and customer
foreclosure relating to the purchase of salvage vehicle by SMD
from
Barloworld SA, the Commission found that in input foreclosure, the
SMD accounts for less than 1% of the total revenue and
in customer
foreclosure, the SMD competes with reputable firms that can serve as
a viable alternative to the competitors of Barloworld
SA.
[14]
The Commission found that there are no foreclosure concerns arising
from the proposed transaction as there are alternatives
in the
market.
[15]
Therefore the Commission recommends that the proposed transaction be
approved without conditions.
[16]
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
[17]
The merging parties confirmed that the proposed transaction will not
result in any adverse impact on employment.
[18]
The proposed transaction further raises no other public interest
concerns.
Conclusion
[19]
In light of the above, we concluded 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 approved the
proposed
transaction unconditionally.
20
April 2016
DATE
______________________
Ms
Yasmin Carrim
Mr
Anton Roskam and Ms Andiswa Ndoni concurring
Tribunal
Researcher:
Busisiwe Masina
For
the merging parties:
Bowman Gilfillan
For
the Commission:
Reabetswe Molotsi
[1]
The merging parties have since agreed that the SMD Holdings'
properties (excluding R21) will instead be transferred to SMD.