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[2016] ZACT 45
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Firstrand Life Assurance Limited v MMI Group Limited in respect of Part of its Long-Term Insurance Policy Book (LM002Apr16) [2016] ZACT 45 (1 June 2016)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No:
LM002Apr16
In
the matter between:
FIRSTRAND
L
I
F
E
ASSURANCE
L
I
M
I
TED
Primary Acquiring Firm
and
MMI
GROUP
LIM
I
TED
I
N
RESPECT
OF
Primary Target Firm
PART
OF
I
TS
LONG-TERM
I
NSURANCE
POLICY
BOOK
Panel
:
Andreas
Wessels
(Presiding Member)
: Medi
Mokuena (Tribunal Member)
: lmraan
Valodia (Tribunal Member)
Heard
on
:
18
May
2016
Order
Issued on
:
18
May
2016
Reasons
Issued on
:
01
Ju
n
e
2016
Reasons
for Decision
Approval
[
1
]
On 18
May
2016, the Competition
Tribunal
("Tribunal")
approved
the
proposed transaction
between
FirstRand
Life
Assurance
Limited
and
MMI Group
Limited
in
respect of part of its long-term
i
nsurance
po
l
i
cy
book.
[2]
The reasons for approving the proposed transaction follow.
Parties
to proposed transaction
Primary
acquiring firm
[3]
The primary acquiring firm is FirstRand Life Assurance Limited
("FirstRand Life"), a company incorporated in terms
of the
laws of the Republic of South Africa.
[4]
F
i
rstRand
Life
is
a
registered
l
ong-term
i
nsurance
provider.
It
was
established
to provide
l
ong-term
i
nsurance
products
and
obtained
i
ts
l
ong-term
insurance
licence during
March
2015
.
[5]
F
i
rstRand
Life
is
a
wholly-owned
subsidiary
of
F
i
rst
Rand
I
n
s
urance
H
o
l
di
n
gs
Proprietary
L
i
m
i
ted
wh
i
ch,
i
n
tum,
i
s
a
wholly
-
owned
subsidiary
of
F
i
rstRand
Li
m
i
ted
,
a company
l
i
sted
on the Johannesburg
Securities
Exchange (
"
JSE
"
)
.
F
i
rstRand
Limited
controls
a
number of
firms
.
[6]
FirstRand Limited and
i
ts
subsidiaries will be collectively referred to as the
"
FirstRand
Group".
Primary
target firm
[7]
The
p
rimary
target
firm
is part
of
the
l
ong-term
i
n
surance
pol
i
cy book
of
MMI
Group Li
m
i
ted
(
"
Target
Business
"
)
.
[8]
The
Target
B
u
siness
comprises
i
ndividual
l
ong-term
i
nsurance
policies
that
are
currently
underwritten
by MMI Group Limited (
"
MMI
Group
"
).
Proposed
transaction and rationale
[9]
FirstRand Life
i
ntends
to acquire all policies underwritten by the MMI Group on behalf of
the
FirstRand
Group
.
The
l
ong-term
i
nsurance
products of the
MMI G
r
oup
that
will
be acqu
i
red
by
FirstRand
Life
i
nclude
:
(i)
Accidental
Death
;
(ii)
Ashburton Corporate
E
ndowment
;
(
ii
i)
Ashburton
I
ndividual
E
ndowment
;
(iv)
Ashburton
Living Annuity;
(v)
Cover for Life;
(vi)
Credit Life;
(vii)
Funeral
;
(viii)
Hospital Cash;and
(ix)
Lifestyle Protector
.
[
10]
F
i
rstRand
no
l
onger
requires
MMI
to
be the
i
nsurer
of
the
Target
Business
and therefore has
agreed
with
MMI
to
acquire
the
Target
Business
.
I
m
pact
on competition
[11]
The
Competition
Commiss
i
on
("Commission")
found
a
h
orizontal
overlap
between
the
activities
of
the
m
e
rgi
n
g
parties
i
n
the
prov
i
s
i
on
of
the
l
o
n
g-term
i
nsurance
.
More specifically, the
Com
m
i
ssion
found that the ac
t
i
vities
of the m
e
rging
parties
overlap
i
n
the
national
market
for
the
provision
of
l
ong-term
i
ndividual
i
nsurance
pol
i
cies
.
[
1
2]
At a product
l
evel,
FirstRand
Life
h
as
been writi
n
g
endowment,
l
i
ving
annuity, funeral and
risk
and
health
i
nsurance
policies
si
n
ce
July
2015.
I
n
their
Competitiveness
Report
the
merging parties furthermore
i
ndicated
that the majority of the categories of
l
ong-term
i
nsurance
policies that form part of the Target
Business
are closed for new business
.
This
means
that
no
new
l
ong-term
i
nsurance
policies
are
i
ssued
in
these categories.
[1]
[13]
The Commission found that the merged entity will have a post-merger
market share
of
l
ess
than
5%
i
n
the
n
ational
market
for
the
provision
of
l
ong-term
i
ndividual
i
nsurance
pol
i
cies
.
The Commission
also
found
that
the
merged
entity
will
continue
to
face competition from competitors
such
as Old Mutual Life Assurance
Company
South Africa Limited, Liberty Group
Limited, Investec Assurance Limited and other
players in
this
market.
[14]
Given the above the Commission concluded that the proposed
transaction
is
unl
i
kely
to
substantially prevent or
l
essen
competition
i
n
the
n
at
i
onal
market for
the
provision of
l
o
n
g-term
i
ndividual
i
nsurance
pol
i
cies
.
[
1
5]
We
concur
with
the
Commission's
conclus
i
on
.
H
owever,
there
i
s
n
o
n
eed
for
us
to take a definite view on the exact
scope of the relevant
product
market(s),
i
.
e
.
whether the
product
market
i
s
the market for
l
o
n
g-term
i
ndividual
i
nsurance
pol
i
cies
(as defined by the Commission) or potential narrower product
markets for the provision of
different
types of
l
ong
-
term
i
ndividual
i
nsurance
policies.
This does not
alter our
ultimate
d
ecision
since
the
merged ent
i
ty
remains
a
relat
i
vely
small player regard
l
ess
of
h
ow the
product market
i
s
del
i
neated
.
Public
interest
[16]
The
merging
parties
confirmed
that
the
proposed
transaction
will
have
no
negative
effect
on
employment.
[2]
[17]
The
proposed
transaction further
raises
no other
p
u
b
l
i
c
i
n
terest
concerns
.
Conclusion
[18]
I
n
l
i
ght
of
the
above,
we
conclude
that
the
proposed
transaction
i
s
unlike
l
y
to substantially prevent or
l
essen
competition
i
n
any re
l
evant
market.
I
n
addition,
n
o
publ
i
c
i
nterest
i
ssues
arise from the proposed transaction. Accordingly, we approve the
proposed transaction unconditionally.
01J
u
n
e
2016
DATE
_______________________
Mr.Andreas
Wessels
Ms
Medi Mokuena
and Prof
l
mraan
Valo
d
i
a concurring
Tribunal
Researcher:
Busisiwe
M
asina
For
the merging parties:
Werner
Rysbergen of
Webber
Wentzel
For
the
Comm
i
ssion:
Nolubabalo Myoli
[1]
Merger
Record
,
page
47
.
[2]
Merger Record inter alia page 09.