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[2016] ZACT 62
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Eoh Holdings Limited v Aptronics Proprietary Limited (LM024MAY16) [2016] ZACT 62 (26 August 2016)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM024May16
In
the matter between:
EOH
HOLDINGS
LIMITED
Primary Acquiring Firm
and
APTRONICS
PROPRIETARY
LIMITED
Primary Target Firm
Panel
: Norman Manoim (Presiding Member)
: Medi Mokuena (Tribunal
Member)
: Fiona Tregenna
(Tribunal Member)
Heard
on
: 28 July 2016
Order
Issued on
: 28 July 2016
Reasons
Issued on
: 26 August
2016
Non-Confidential
Reasons for Decision
Approval
[1]
On 28 July 2016, the Competition Tribunal ("Tribunal")
approved the proposed transaction between EOH Holdings
Limited and Aptronics (Ply) Ltd.
[2]
The reasons for approving the proposed transaction follow.
Parties
to proposed transaction
Primary
acquiring
firm
[3]
The primary acquiring firm is EOH Holdings Limited ("EOH
Holdings") a company listed on the Johannesburg Securities
Exchange ("JSE").
[4]
EOH Holdings and its subsidiaries will collectively be referred to as
the "Acquiring Group"
Primary
target firm
[5]
The primary target firm is Aptronics (Ply) Ltd (Aptronics), a company
incorporated in accordance with the laws of South Africa.
Aptronics
does not control any firm.
Proposed
transaction
and
rationale
[6]
The Acquiring Group intends to acquire 100% of the issued share
capital of Aptronics.
On
completion of the transaction, the Acquiring Group will control
Aptronics.
[7]
Aptronics submits that the proposed transaction will 'help it
recoup its investment through receipt of cash and
shares in the
Acquiring Group'. The proposed transaction will also provide
Aptronics and its employees with better growth opportunities
as a
result of access to the Acquiring Group's customer base and the
shared services and resources of a larger listed group.
Impact
on competition
[8]
The merging parties both supply IT services and IT software as a part
of a comprehensive package of
IT
hardware. Therefore the
proposed transaction gives rise to a horizontal overlap in the supply
of
IT
hardware and IT services in South Africa.
[9]
The Competition Commission ("Commission") considered the
activities of the merging parties and found that there is
a
horizontal overlap in three (3) markets in the supply of information
technology
(IT)
services:
IT
Hardware:
[10]
Based on
the merging parties' turnover the Commission found that the merged
entity will have a combined post-merger market share
of [less than
5%],
[1]
with an accretion
of [less
than 5%] in
the supply
of IT Hardware.
Servers,
personal computers, storage and networking equipment:
[11]
By using the total value of the servers, personal computers, storage
and networking equipment of the merging parties as a basis
for
calculating market share the Commission found that in the market for:
•
The supply of servers,
the merged entity will have a market share of [less than 10%] with an
accretion of [less than 5%]
•
The supply of personal
computers, the merged entity will have a market share of [less than
5%] with an accretion of [less than 5%]
•
For the supply of
storage, the merged entity will have a market share of [less than
15%], with an accretion of [less than 5%].
•
For the supply of
networking equipment, the merged entity will have a market share of
less than 15% with an accretion of less than
5%].
IT
Services:
[12]
The Commission found that the merged entity will have a post
transaction market of less than 10% with an accretion of [less
than
5%].
[13]
Given the above the Commission concluded that the market shares of
the merged entity are relatively low in all markets. Furthermore,
in
all of the relevant markets the merged entity will continue to be
constrained by other players in the market.
[14]
Therefore the Commission is of the view that the proposed transaction
is unlikely to substantially prevent or lessen competition
within the
relevant market.
[15]
We concur with the Commission's conclusion
Public
interest
[16]
The merging parties confirmed that the proposed transaction will have
no negative effect 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.
26
August 2016
DATE
________________________
Mr.
Norman Manoim
Ms
Medi Mokuena and Prof Fiona Tregenna concurring
Tribunal
Researcher:
Busisiwe Masina
For
the merging parties: Michael
Baxter
For
the Commission:
Nolubabalo Myoli
[1]
Certain
information
has
been
claimed
as
confidential
by the
parties
and thus
exact
percentages
have been
removed from
the
public
reasons
and
represented
as
approximations.