About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Competition Tribunal
SAFLII
>>
Databases
>>
South Africa: Competition Tribunal
>>
2016
>>
[2016] ZACT 84
|
|
African Rainbow Capital (Pty) Ltd v Ooba (Pty) Ltd (LM257MAR16) [2016] ZACT 84; [2016] 2 CPLR 794 (CT) (7 September 2016)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM257Mar16
In
the matter between:
AFRICAN
RAINBOW
CAPITAL
(PTY)
LTD
Primary Acquiring Firm
and
OOBA
(PTY)
LTD
Primary Target Firm
Panel
: AW Wessels (Presiding Member)
:
Prof Fiona Tregenna (Tribunal Member)
:
Andiswa Ndoni (Tribunal Member)
Heard
on
: 29 June 2016 and 10 August 2016
Last
submission received on : 11 August 2016
Order
Issued on
: 12 August 2016
Reasons
Issued on
: 07 September
2016
Reasons
for Decision
Conditional
approval
[1]
On 12 August 2016, the Competition Tribunal (''Tribunal")
approved the proposed transaction between African Rainbow Capital
(Ply) Ltd ("ARC") and ooba (Pty) Ltd ("ooba")
subject to certain behavioural conditions.
[2]
The reasons for conditionally approving the proposed transaction
follow.
Parties
to proposed transaction
Primary
acquiring
firm
[3]
The primary acquiring firm is ARC, a private company incorporated in
terms of the company laws of the Republic of South Africa.
ARC is a
wholly-owned subsidiary of Ubuntu-Botho Investments (Pty) Ltd
("UBI"). Sizanani-Thusanang-Helpmekaar (Pty) Ltd
("Sizanani") holds 68.8% of the ordinary shares of UBI. The
remaining 31.2% of the ordinary shares of UBI is held by
various
Broad Based Black Economic Empowerment groups (the "UBI BBBEE
entities"). The sole shareholder of Sizanani is
Ubuntu-Ubuntu
Commercial Enterprises (Ply) Ltd ("Ubuntu-Ubuntu"). The
shares of Ubuntu-Ubuntu are held by various trusts
for the benefit of
Mr Patrice Motsepe and his immediate family, except for the Motsepe
Foundation.
[4]
We note that UBI is Sanlam Limited's ("Sanlam") empowerment
partner. UBI holds 14.5% of the shares of Sanlam. The
relevance of
this will be explained below. Sanlam is however not a party to the
proposed transaction.
[5]
ARC controls a number of firms of which lndwe Risk Services (Ply) Ltd
("IRS") is relevant for the competition assessment
of the
proposed transaction. IRS is an insurance broker that provides
intermediary services to registered and approved insurers
that offer
insurance solutions for personal lines, business insurance and risk
consulting.
Primary
target
firm
[6]
The primary target firm is ooba, a private company incorporated in
terms of the company laws of the Republic of South Africa.
ooba is
not controlled by any single firm. ooba controls
inter alia
evo
Group (Ply) Ltd, evo Business Services (Ply) Ltd and ooba Investment
Holdings (Ply) Ltd ("OIH") (collectively referred
to
hereinafter as the "ooba Group").
[7]
The ooba Group compromises of companies that provide mortgage
originator services that assist home buyers with sourcing
bond
financing for residential property. It also provides building,
mortgage protection insurance as well as personal line cover
in
respect of household items and vehicles.
Proposed
transaction
and
rationale
[8]
In terms of the
Subscription
Agreement,
ARC intends to
acquire 30% of the issued ordinary and participatory shares in ooba.
Following the implementation of the proposed
transaction, ARC will
hold the majority shares in ooba and will be able to exercise veto
rights in terms of the Memorandum of Incorporation.
ARC will
therefore be able to materially influence the business of ooba and
exercise control in terms of
section 12(2)(g)
of the
Competition Act,
89 of 1998
as amended ("the Act").
[9]
ARC submitted that its overall vision and strategy is to invest in
the full spectrum of financial and related services. ARC
intends to
achieve this vision and strategy by building and maintaining
strategic partnerships within South Africa and abroad,
by obtaining
equity in product providers.
[10]
ooba submitted that it will derive a number of benefits from the
proposed transaction
inter alia
that ARC will serve as a
strategic partner in order to access growth opportunities and
increase the BBEE ownership within
opportunities within the ooba
Group.
Impact
on competition
[11]
As stated above, IRS provides insurance brokerage services whilst the
ooba Group provides various types of insurance. The Competition
Commission ("Commission") identified a vertical
relationship between the activities of the merging parties in the
markets
for the provision of insurance brokerage services and the
provision of short term (property and motor) insurance as well
as
long-term insurance.
[12]
The Commission found that the merging parties have low market shares
(estimated to be below 5%) in the respective markets where
there is a
vertical relationship. The Commission further found that there are
large competitors such as Sanlam and Mutual &
Federal in the
insurance markets and players such as Professional Provident Society
Marketing Services, Badger Holdings, MiWay
Insurance, Outsurance and
others in the insurance brokerage services market(s).
[13]
Given the existence of alternative service providers and the merging
parties' low market shares in the vertically affected
markets, the
Commission concluded that the proposed transaction is unlikely to
raise any foreclosure concerns. We concur with this
finding.
[14]
However, following its investigation the Commission was concerned
that the proposed transaction will give rise to coordination
concerns. The concern was that the proposed transaction is likely to
create a platform for the sharing of competitively sensitive
information between ooba and certain of its competitors in the short-
and long-term insurance markets due to pre-existing common
shareholdings of Hollard Holdings (Pty) Ltd ("Hollard") and
ooba in OIH, and UBl's interest in Sanlam. (We note that
Hollard and
Sanlam are not parties to the proposed transaction.)
[15]
Currently UBI, the holding company of ARC, has the ability to appoint
three non executive board members on the board of
Sanlam and may
cast 14,5% of the votes that may be cast at a shareholders meeting.
Hollard and ooba hold 25% and 75% shares, respectively,
in OIH.
[16]
The proposed transaction, i.e. ARC's acquisition of 30% of the shares
of ooba, creates an indirect structural link between
Sanlam (through
UBl's 14.5% shareholding in Sanlam) and ooba (through ARC's 30%
shareholding in ooba) and Hollard (through Hollard's
25% shareholding
in OIH).
[17]
Hollard, Sanlam and ooba are all competitors in the provision of
short- and long-term insurance in South Africa. Although ooba
is
primarily a mortgage originator, ancillary to its mortgage
origination business it provides, through OIH and OIH's subsidiaries,
home and home-loan insurance solutions, as well as certain personal
line insurance products. Sanlam provides a comprehensive range
of
short- and long-term insurance products through its subsidiaries,
Sanlam and Sanlam Life Insurance Ltd ("Sanlam Life")
and
their subsidiaries.
[18]
We however note that ooba's current national market shares in the
short- and long term insurance markets are very small.
[19]
To remedy the concerns in relation to potential post-transaction
information exchange between ooba and the abovementioned competitors
in the insurance markets, the Commission recommend that the proposed
transaction be approved subject to certain behavioural conditions
relating to the removal of common board representation to server any
ties that might facilitate information sharing between these
competitors.
[20]
We concur with the Commission that behavioural conditions are
warranted to address these concerns and explain below what conditions
we have imposed.
[21]
The merging parties engaged with the Commission in an attempt to
craft conditions based on principles relating to cross-directorships
that the merging parties (and ARC specifically) were willing to
accept and that would give comfort to and adequately address the
concerns that the competition authorities may have with cross
directorships. The basis of this was that the remedies should
only
regulate and prohibit cross-directorships between competing entities.
[22]
ARC stressed its intention to establish a substantial, black owned
and controlled investment company focusing on the financial
services
industry and that ARC has and will continue to have close ties to the
Sanlam Group. Furthermore, the merging parties submitted
that the
Sanlam UBI relationship has been instrumental in the establishment
and growth of UBI and ARC and will continue to be material
to grow
ARC as an empowered financial services entity.
[26]
Since the Commission and the merging parties could not reach
agreement on all aspects of the proposed conditions, each party
submitted a set of proposed behavioural conditions for the Tribunal's
consideration. The set of conditions proposed by the merging
parties
essentially prohibits cross-directorships between ooba and Sanlam
entities where the director would be involved in any
operational
Sanlam business that operates in the short- and long-term insurance
markets. The Commission's proposed set of conditions
was broader,
prohibiting cross directorships between ooba and Sanlam, as well
as between ooba and Sanlam Life.
[27]
Although the Commission and
the
merging parties ultimately
to
a large extent resolved their differences
regarding
the proposed
behavioural
conditions,
one
main dispute
remained
unresolved.
The
unresolved issue
was
post-transaction cross
directorships
between
ooba and Sanlam Life and mainly revolved around
Mr
Johan van Zyl as a non-executive director on the board of Sanlam
Life. Of relevance is that Mr Van
Zyl
also
serves
as
a
divisional
non-executive
member
of
a
non-statutory board
of
Sanlam
Personal
Finance
(a
division
of
Sanlam
Life). The
latter
division operates
Sanlam's long-term
insurance
business.
[1]
[28]
The
merging
parties were
of the
view
that
Mr
Van
Zyl
should,
post-transaction,
be able to sit on the
ooba board if he relinquishes
his
position on the
board
of Sanlam Personal
Finance
(an entity
competing with ooba),
while
remaining
on the
Sanlam Life
board.
[2]
[29]
We note that Mr Johan van der Merwe, ARC's second potential nominee
to the ooba board, is not a director of Sanlam or Sanlam
Life. He
holds an advisory position on a Sanlam Life divisional board which
does not provide products or services that overlap
with those
provided by ooba or OIH.
[30]
We considered a number of factors in relation to the abovementioned
remaining dispute between the Commission and the merging
parties,
including the Sanlam Group's operational and governance structures,
as explained below:
[31]
First, we note that ARC's nominated directors to the Sanlam and
Sanlam Life boards are non-executive directors.
[32]
The factual situation
regarding the structure and functioning of the main boards of the
Sanlam Group are set out in the Sanlam Annual
Report 2015.
[3]
This indicates that the main board of Sanlam and the main board of
Sanlam Life are duplicated boards that operate effectively
as
a
single main
board
for
the
Sanlam
Group.
The
directors appointed to
the Sanlam board are also appointed to the board of directors of
Sanlam Life.
Furthermore,
the Sanlam and Sanlam Life board meetings are combined meetings and
are held concurrently.
The
Sanlam and Sanlam
Life
boards therefore operate
effectively
as a single "holding
company" main board that
is
responsible for the Sanlam Group's overall group strategy and
business. Thus, the available factual evidence suggests that Sanlam
Life operates
de
facto
as
a holding company and not as an
operating
company (contrary to
the
Commission's view
that
informed its proposed set
of
conditions).
[33]
We
furthermore
note that
the
conditions
that
we
have
imposed
require
that
for
the duration
of the
conditions,
ARC shall within
15 business
days of any change
to
the
Sanlam Group operational and corporate governance structure that is
material to the effectiveness of
the
imposed conditions inform the Commission of
these
changes.
[4]
[34]
The Sanlam Life legal entity houses the overwhelming majority of
Sanlam Group's activities. Sanlam Life's business operations
within
the Republic of South Africa are conducted overwhelmingly through
clusters or operational divisions that are subject to
the direction
of "divisional boards" and/or management committees. These
clusters or business divisions are Sanlam, Sanlam
Personal Finance,
Sanlam Investments and Sanlam Emerging Markets.
[35]
The abovementioned group businesses or clusters plan and present
their strategic plans and budgets to the Sanlam Group Executive
Committee. Importantly, no non executive directors serving on
the Sanlam and Sanlam Life boards of directors serve on the
Sanlam
Group Executive Committee. Part of the conditions that we have
imposed is the requirement that ARC shall ensure that its
nominees to
the board of directors of ooba do not serve on the Sanlam Group
Executive Committee and are not executive directors
of any entity in
the Sanlam Group (see paragraph 38 below).
[36]
The
non-executive
directors
on the Sanlam
and Sanlam
Life main boards do
not in the ordinary
course receive detailed and granular competitively sensitive
information in regard to the Operational
Entities'
[5]
businesses
in
the
relevant
insurance
markets
because when the Sanlam
and Sanlam Life boards sit, they sit as a duplicate board, dealing
with matters of strategy at a high level.
In other words, these
directors do not receive information on the detailed
level that is usually
associated with the board of directors of an
operational entity.
[37]
We further considered the fact that ooba is currently a very small
player in the provision of short- and long-term insurance
in South
Africa and that there are a number of alternative insurance providers
other than Sanlam.
[38]
Given all of the above, we have approved the proposed
merger subject to the following behavioural conditions:
[38.1]
Upon the Implementation Date
[6]
and for as long as ARC
has shareholding in and
the
ability
to
nominate
directors
to
the
boards
of
ooba
and
UBI has a shareholding in
ARC
and
the
ability
to
nominate
directors to
the boards
of Sanlam and therefore
Sanlam Life (given the duplicated
main
boards described above):
ARC
shall ensure that its nominees to the board of directors of ooba:
(i)
are
not
the
same
persons
serving, nominated
and/or
appointed
on
any
boards
of
the
Sanlam
Competing
Entities
[7]
or
management
committees
of
the
divisions or clusters of the Sanlam Competing Entities that operate
in
the
Overlapping Relevant Markets
[8]
;
(ii)
do not serve on the Sanlam Group Executive Committee and are not
executive directors of any entity in the
Sanlam Group;
(iii)
are not the same persons nominated and/or appointed on the board of
OIH or management committees of OIH;
(iv)
decline any and all invitation(s) to attend any meeting(s) of the
board of directors and/or management committees
of OIH; and
(v)
undertake to adhere to a Confidentiality and Information Exchange
Policy.
[39]
Furthermore, the merging parties offered the following additional
safeguards which we have also imposed as conditions:
[39.1]
ARC shall design and implement a Confidentiality and Information
Exchange Policy to the satisfaction of the Commission. The
Confidentiality and Information Exchange Policy will stipulate
inter
alia
-
(i)
that
ARC's
nominees
on
the
ooba
board
do
not
share
or
discuss
any Competitively
Sensitive
lnformation
[9]
belonging to
ooba
and
OIH
with any
persons
serving, nominated and/or appointed on any boards of the Sanlam
Competing Entities or management committees of the divisions
or
clusters of the Sanlam Competing Entities that operate in
the Overlapping Relevant
Markets, or any person not entitled to receive the Competitively
Sensitive Information
belonging to ooba and OIH in
the
ordinary course; and
(ii)
any ARC nominee to ooba's board that is also appointed to the Sanlam
and Sanlam Life boards
shall:
(a)
recuse himself or herself from any ooba board discussion in regard to
detailed and granular Competitively
Sensitive Information;
(b)
will not exercise his or her right as a director of ooba to require
ooba to provide to him or her any detailed
or granular Competitively
Sensitive Information; and
(c)
in the event that he or she is unable to perform his or her duties as
a director of ooba by reason of the
restrictions placed on him or her
in terms of the Confidentiality and Information Exchange Policy, he
or she will resolve that
conflict in compliance with the above
undertakings, including by way of disclosure to the ooba board and/or
as he or she may be
otherwise be advised given the particular
circumstances and, if necessary, by resigning from the ooba board.
[39.2]
ooba shall put in place and maintain adequate policies and practices
to ensure that no detailed or granular Competitively
Sensitive
Information belonging to ooba and OIH is shared with any ARC nominee
to ooba's board that is also appointed to the Sanlam
and Sanlam Life
boards or to any boards of the Sanlam Competing Entities or
management committees of the divisions or clusters
of the Sanlam
Competing Entities that operate in the Overlapping Relevant Markets.
In this regard ooba shall design and implement
a Confidentiality and
Information Exchange Policy to the satisfaction of the Commission.
The Confidentiality and Information Exchange
Policy will stipulate
inter
alia
that ooba will ensure that the board packs
and information provided by ooba to the ARC nominee director that is
also appointed
to the Sanlam and Sanlam Life boards do not include
any detailed or granular Competitively Sensitive Information.
[39.3]
The Confidentiality and Information Exchange Policy shall apply to
all employees and management of the Merging Parties and
UBI.
[40]
For the sake of clarity, the above means that Mr Johan van Zyl as a
non-executive director of the Sanlam Life board can be
appointed to
the ooba board as long as he relinquishes his position on the
divisional board of the competing entity, Sanlam Personal
Finance.
[41]
The imposed set of conditions is proportional to competition concerns
identified by the Commission and adequately addresses
those concerns.
Public
interest
[42]
The merging parties
confirmed
that
the
proposed
transaction
will
not
have
any
negative effect on employment in South
Africa.
[10]
[43]
The proposed transaction further raises no other public interest
concerns.
Conclusion
[44]
In light of the above, we conclude that the proposed transaction
raises coordination concerns. However, the set of behavioural
conditions that we have imposed
adequately addresses these concerns. For ease of reference the set
of
conditions is attached hereto marked as
"Annexure
A".
Furthermore, no public interest issues arise from the proposed
transaction.
07
September 2016
DATE
_______________________
Mr
AW'Wessels
Ms
Andiswa Ndoni and Prof. Fiona Tregenna concurring
Case
Manager:
Kameel Pancham
For
the merging parties: Adv
Hamilton Maenetje instructed by ENSAfrica
For
the Commission:
Dineo Mashego and Lindiwe Khumalo
ANNEXURE
A: CONDITIONS
African
Rainbow Capital Proprietary Limited
and
ooba
Proprietary Limited
CT
Case Number: LM257Mar16
1.
DEFINITIONS
The
following expressions shall bear the meanings assigned to them below
and cognate expressions bear corresponding meanings -
1.1.
"Acquiring
Firm"
means
ARC;
1.2.
"Approval
Date"
means
the date referred to in the Tribunal's
Merger Clearance Certificate (Form CT1O);
1.3.
"ARC"
means African Rainbow Capital (Pty) Ltd;
1.4.
"Business
Day"
means
any day other than a Saturday, Sunday or a day gazetted as a national
public holiday in the Republic of South Africa;
1.5.
"Commission"
means the Competition Commission of South Africa;
1.6.
"
Competition
Act"
means
the
Competition Act 89 of 1998
, as amended;
1.7.
"Competitively
Sensitive
Information"
means competitively sensitive information in regard to
products/services within the Overlapping Relevant Markets and
includes
but is not limited to information relating to:
1.7.1.
Pricing - including, but not limited to, prices/ discounts/ rebates
offered to specific clients and planned
reductions or increases;
1.7.2.
Margin information by product or client;
1.7.3.
Cost information;
1.7.4.
Information on specific clients and client
strategy, including
information with respect
to the sales volumes of clients;
1.7.5.
Marketing strategies;
1.7.6.
Budgets and business plans; and
1.7.7.
Agreements and other (non-standard) terms and conditions relating to
the supply and distribution
of the relevant products/services.
1.8.
"Conditions"
mean these conditions;
1.9.
"Hollard"
means
Hollard Holdings (Pty) Ltd;
1.10.
"Implementation
Date"
means the date, occurring following the Approval Date, on which
the Proposed Transaction is implemented by the Merging Parties;
1.11.
"Merging
Parties"
mean ARC and ooba;
1.12.
"OIH"
means ooba Investment Holdings (Pty) Ltd;
1.13.
"ooba"
means ooba (Pty) Ltd;
1.14.
"ooba
Group"
means ooba and all subsidiaries of ooba;
1.15.
"Operational
Entities"
means:
1.15.1.
all legal entities (and their divisions and business units)
in the
Sanlam Group (other than Sanlam Life) that conduct business
operations; and
1.15.2.
in respect of Sanlam Life, all its divisions and/or business
units
that conduct business operations;
1.16.
"Overlapping
Relevant
Markets"
means all the markets related to the provision of insurance
products/services offered by the ooba Group and in this instance
include
the provision of building insurance, mortgage protection
insurance, personal line cover in respect of household
items
and vehicles including similar financial service or insurance
products that the ooba Group might offer from time to time;
1.17.
"Proposed
Transaction"
means the acquisition of control over ooba by ARC;
1.18.
"Sanlam"
means Sanlam Limited;
1.19.
"Sanlam
and
Sanlam
Life
boards"
mean the boards of directors of Sanlam and Sanlam Life;
1.20.
"Sanlam
Competing
Entities"
mean
the Operational Entities within the Sanlam Group that supply similar
products/services or operate in the same line of business
as the ooba
Group particular in the Overlapping Relevant Markets;
1.21.
"Sanlam
Group"
means
Sanlam and all its wholly-owned subsidiaries and any firm in which
Sanlam has material influence over the operations of such
firm;
1.22.
"Sanlam
Group
Executive
Committee"
means
the committee that has oversight over the Sanlam Group's operational
entities and is made up of, inter alia, the Sanlam Group's
Chief
Executive Officer and Financial Director, the Chief Executive
Officers of the various Sanlam business clusters and divisions
and
other key Sanlam Group executives, all of which are Sanlam Group
employees;
1.23.
"Sanlam
Life"
means Sanlam Life Insurance Limited;
1.24.
"Tribunal"
means the Competition Tribunal of South Africa;
1.25.
"Tribunal
Rules"
mean the rules prescribed in the
Competition Act; and
1.26.
"UBI"
means Ubuntu-Botho Investments (Ply) Ltd.
2.
RECORDAL
2.1.
On 18 March 2016, the Commission received notice of the Proposed
Transaction whereby
ARC intends to acquire control over ooba pursuant
to acquiring a 30% (thirty percent) shareholding in ooba. Following
its investigation,
the Commission was concerned that the Proposed
Transaction is likely to create a platform for the sharing of
Competitively Sensitive
Information between ooba and its competitors
in the long term and short-term insurance markets due to
pre-existing common
shareholdings of Hollard and ooba in OIH, and
UBl's interest in Sanlam. Hollard and Sanlam are, however, not
parties to the Proposed
Transaction.
2.2.
Currently UBI, the holding company of ARC, has the ability to appoint
3 (three)
non executive board members on the board of Sanlam and
may cast 14.5% (fourteen and a half percent) of the votes that may be
cast at a shareholders meeting. Hollard and ooba hold 25% (twenty
five percent) and 75% (seventy five percent) shares, respectively,
in
OIH.
2.3.
ooba is primarily a mortgage originator, but ancillary to its
mortgage origination
business it provides, through OIH and OIH's
subsidiaries, home and home-loan insurance solutions, as well as a
small volume of
personal line insurance products. Sanlam provides a
comprehensive range of short- and long-term insurance products
through its
subsidiaries, Sanlam and Sanlam Life, and their
subsidiaries and, accordingly, there is the Overlapping Relevant
Markets.
2.4.
Hollard, Sanlam and ooba are competitors in the provision of short-
and long-term
insurance (ooba's national market share in the short-
and long-term insurance markets is however very small. ARC's
acquisition
of 30% (thirty percent) of the shares of ooba creates an
indirect structural link between Sanlam (through UBl's 14.5%
(fourteen
point five percent) shareholding) and ooba (through ARC's
30% (thirty percent) shareholding) and Hollard (through Hollard's 25%
(twenty-five percent) shareholding in OIH).
2.5.
The Merger Parties have furthermore placed on record that:
2.5.1.
the main board of Sanlam and the main board of Sanlam Life are
duplicated boards and operate
effectively as a single main board for
the Sanlam Group;
2.5.2.
ARC's nominated directors to the Sanlam and Sanlam Life boards are
non executive directors;
2.5.3.
no non-executive directors serving on the Sanlam and Sanlam Life
boards of directors serve
on the Sanlam Group Executive Committee;
2.5.4.
Sanlam Life's business operations within the Republic of South Africa
are conducted overwhelmingly
through clusters or operational
divisions that are subject to the direction of "divisional
boards" and/or management
committees; and
2.5.5.
non-executive directors on the Sanlam and Sanlam Life main boards do
not in the ordinary course
receive detailed and granular
Competitively Sensitive Information in regard to the Operational
Entities' businesses in the Overlapping
Relevant Markets.
3.
CONDITIONS
TO
THE
APPROVAL
OF THE
MERGER
Upon
the Implementation Date and for as long as ARC has shareholding in
and the ability to nominate directors to the boards of ooba
and UBI
has a shareholding in ARC and the ability to nominate directors to
the boards of Sanlam and therefore Sanlam Life (given
the duplicated
main boards described above):
3.1.
ARC shall ensure that its nominees to the board of directors of ooba:
3.1.1.
are not the same persons serving, nominated and/or appointed on any
boards of the Sanlam Competing
Entities or management committees of
the divisions or clusters of the Sanlam Competing Entities that
operate in the Overlapping
Relevant Markets;
3.1.2.
do not serve on the Sanlam Group Executive Committee and are not
executive directors of any
entity in the Sanlam Group;
3.1.3.
are not the same persons nominated and/or appointed on the board of
OIH or management
committees of OIH;
3.1.4.
decline any and all invitation(s) to attend any meeting(s) of the
board of directors and/or
management committees of OIH; and
3.1.5.
undertake to adhere to a Confidentiality and Information Exchange
Policy.
3.2.
ARC shall design and implement a Confidentiality and Information
Exchange Policy
to the satisfaction of the Commission. The
Confidentiality and Information Exchange Policy will stipulate
inter
alia
-
3.2.1.
that ARC's nominees on the ooba board do not share or discuss any
Competitively Sensitive Information
belonging to ooba and OIH with
any persons serving, nominated and/or appointed on any boards of the
Sanlam Competing Entities or
management committees of the divisions
or clusters of the Sanlam Competing Entities that operate in the
Overlapping Relevant Markets,
or any person not entitled to receive
the Competitively Sensitive Information belonging to ooba and OIH in
the ordinary course;
and
3.2.2.
any ARC nominee to ooba's board that is also appointed to the Sanlam
and Sanlam Life boards
shall:
3.2.2.1.
recuse himself or herself from any ooba board discussion in regard to
detailed and
granular Competitively Sensitive Information;
3.2.2.2.
will not exercise his or her right as a director of ooba to require
ooba to provide to him
or her any detailed or granular Competitively
Sensitive Information; and
3.2.2.3.
in the event that he or she is unable to perform his or her duties as
a director of ooba
by reason of the restrictions placed on him or her
in terms of the Confidentiality and Information Exchange Policy, he
or she will
resolve that conflict in compliance with the above
undertakings, including by way of disclosure to the ooba board and/or
as he
or she may be otherwise be advised given the particular
circumstances and, if necessary, by resigning from the ooba board.
3.3.
ooba shall put in place and maintain adequate policies and practices
to ensure that
no detailed or granular Competitively Sensitive
Information belonging to ooba and OIH is shared with any ARC nominee
to ooba's
board that is also appointed to the Sanlam and Sanlam Life
boards or to any boards of the Sanlam Competing Entities or
management
committees of the divisions or clusters of the Sanlam
Competing Entities that operate in the Overlapping Relevant Markets.
In this
regard ooba shall design and implement a Confidentiality and
Information Exchange Policy to the satisfaction of the Commission.
The Confidentiality and Information Exchange Policy will stipulate
inter
alia
that ooba will ensure that the board packs and information provided
by ooba to the ARC nominee director that is also appointed
to the
Sanlam and Sanlam Life boards do not include any detailed or granular
Competitively Sensitive Information.
3.4.
The Confidentiality and Information Exchange Policy shall apply to
all employees
and management of the Merging Parties and UBI.
4.
MONITORING
OF
COMPLIANCE
WITH
THE
CONDITIONS
4.1.
ARC shall within 3 (three) months of the Approval Date, develop
and
submit a Confidentiality and Information Exchange Policy to the
Commission in line with the Conditions.
4.2.
ooba shall within 3 (three) months of the Approval Date,
develop and
submit a Confidentiality and Information Exchange Policy to the
Commission in line with the Conditions.
4.3.
The Commission shall provide comments on the Confidentiality
and
Information Exchange Policy contemplated in respectively 4.1 and 4.2
above within 10 (ten) business days of receipt.
4.4.
Within 10 (ten) business days of the approval of the policy
contemplated in 4.1 and 4.2 above by the Commission, ARC and ooba
respectively shall submit an affidavit confirming the implementation
of the policy.
4.5.
Within 10 (ten) days of the Approval Date, ARC shall submit
an
affidavit listing the names of the persons nominated and appointed by
UBI as board members to the boards of directors of UBI,
Sanlam, ARC
and ooba, their tenure and the nature of their directorships.
4.6.
For the duration of these Conditions, ARC shall notify the
Commission
of any changes to the board members or nature of their directorships
as listed per 4.5 within 10 (ten) days of such
change.
4.7.
For the duration of these Conditions, ARC shall within 15
(fifteen)
business days of any change to the Sanlam Group operational and
corporate governance structure that is material to the
effectiveness
of these Conditions inform the Commission of these changes.
4.8.
The Merging Parties and/or the Commission shall be entitled,
upon
good cause shown, to apply to the Tribunal for a waiver, relaxation,
modification and/or substitution of one or more of the
Conditions.
4.9.
The
documents
referred
to
in
paragraphs
above
must
be submitted
to
the
following e-mail
address:
mergerconditions@compcom.co.za.
4.10.
Any person who believes that the Merging Parties have not complied
with and so are in breach of these
Conditions may approach the
Commission. In the event that the Commission determines that there
has been an apparent breach of the
Conditions by the Merging Parties,
the breach shall be dealt with in terms of Rule 37 of the Tribunal
Rules.
[1]
See Transcript
10
August
2016,
page 5.
[2]
Transcript 10 August 2016, page 5.
[3]
Accessible
at
w
ww.sanlam.com.
Specifically
see
pages
217 - 219 of the
2015
Sanlam Annual Report.
[4]
See paragraph 4.7 of the imposed conditions.
[5]
"Operational Entities" mean all
legal
entities
(and
their
divisions
and
business
units)
in
the
Sanlam
Group (other
than
Sanlam
Life) that
conduct
business
operations;
and
in
respect
of
Sanlam
Life,
all
its
divisions
and/or
business
units that
conduct
business
operations.
[6]
"Implementation
Date"
means the
date,
occurring following
the
date
of approval,
on which
the proposed transaction
is
implemented
by the
merging
parties.
[7]
"Sanlam
Competing
Entities"
mean the
Operational
Entities within
the
Sanlam
Group
that
supply similar
products/services
or
operate
in the
same
line
of
business
as the ooba
Group
particular
in the Overlapping
Relevant
Markets.
[8]
"Overlapping
Relevant
Markets"
mean
all
the
markets
related to
the
provision
of insurance
products/services
offered
by the
ooba
Group
and
in
this
instance
include
the
provision of
building insurance,
mortgage
protection
insurance,
personal
line cover
in respect
of
household
items and vehicles
including
similar
financial
service
or
insurance
products that
the
ooba
Group
might offer
from time to time.
[9]
As defined in the conditions.
[10]
See
Merger
Record,
inter
alia
page
11.