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[2016] ZACT 93
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Pepkor Proprietary Limited v Southern View Finance SA Proprietary Limited and Another (LM094Aug16) [2016] ZACT 93 (14 November 2016)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No:
L
M094Aug
1
6
In
the matter between:
PEPKOR
PROPRIETARY
L
I
M
I
TED
Primary
Acquiring Firm
and
SOUTHERN
VIEW F
I
NANCE SA PROPRIETARY LIMITED
Primary Target Firms
&
VAN AS ASSOCIATES
PROPRIETARY
LIMITED
Panel
:
M
ondo
Mazwai
(P
r
esiding
Member)
:
Yasmin
Carrim
(Tr
i
bunal
M
ember)
:
lmraan
Valodia
(Tribunal
Member)
Heard
on :
12 October 2016
Order
I
ssued
on
:
1
2
October
2016
Reasons
I
ssued
on
:
1
4
N
ovember
2016
Reasons
for Decision
Approval
[1]
On
12
October
2016
,
the
Competition
Tribunal
("Tribunal
"
)
approved
a
proposed
transaction between
Pepkor
P
roprietary
Limited
and
S
outhern
View
Fina
n
ce
SA Proprietary
L
i
m
i
ted
&
Van
As
Associates
Proprietary
L
i
m
i
ted
.
[2]
The reasons for approving the proposed transaction follow
.
Parties
to the proposed transaction
Primary
acquiring firm
[3]
The primary acquiring
i
s
firm
i
s
Pepkor (Pty) Ltd, (previously JD Group Trading (P
l
y)
Ltd), a company
i
ncorporated
I
n
accordance with the
l
aws
of the Republic of South Africa.
[4]
Pepkor is
wholly-owned
by Pepkor
H
o
l
dings
(Pty) Ltd
("Pepkor
H
o
l
dings"),
wh
i
ch
i
s
i
n turn,
solely control
l
ed
by Steinhoff
Africa
H
o
l
dings
(Pty) Ltd ("Stein
h
off
Africa
"
)
,
which
i
s
ultimately co
n
trolled
by Stein
h
off
I
n
ternational
Holdings NV.
We
shall
r
efer
to these firms
collectively
as
the
"Acquir
i
ng
Group"
.
[5]
Pepkor
manages
a
portfol
i
o
of
retailchains
focused on
the
discount
and
val
u
e
markets, and
selling predominantly
clothing,
footwear
and
textiles
as
well
as
furniture.
I
n
South Africa,
i
ts
main clothing stores are PEP, Ackermans, Dunns, John Craig, Shoe City
and
F
l
ash.
I
n
th
e
furniture business
,
Pepkor
is
active
in
the
retail
of
furniture,
household goods,
products
for
home
decoration, electrical
appliances,
electronics,
building
materials and do-it-yourself home
i
mprovement
items through the following stores:
B
arnetts
,
B
rad
l
ows,
Joshua
D
oore
,
Morkels,
P
r
i
ce
'n
Pride,
Russels,
Sleepmasters,
H
i
Fi
Corp,
I
ncredible
Connection, Pennypinchers,
Timber
City,
Ti
l
ehouse
,
U
nitraco
and Truss
plant.
Primary
t
a
rget firm
[6]
The primary target firms are Southern View Finance SA (Pty) Ltd ("SVF
SA") and Van
As
& Associates Recoveries (Pty) Ltd
("Van As"), both are companies
i
ncorporated
i
n
accordance with the
l
aws
of the Republic of South Africa.
[7]
SVF SA and Van As shall collectively be referred to as the
"
Target
F
i
rms".
[8]
The Target
F
i
rms
are wholly-owned subsidiaries
of
S
outhern
H
o
l
d
i
ngs
F
u
l
crum
SA (Pty) Ltd
(
"
SH
F
ulcrum")
.
SH Fulcrum
i
s
wholly-owned by Fulcrum Financial
Services SA ("Fu
l
crum
F
i
nancial
Services"), a company
i
ncorporated
i
n
accordance with the
l
aws
of Switzerland.
F
ulcrum
F
i
nancial
Services
i
s
i
n turn
wholly-owned
by
Fulcrum
I
nvestment
Partners SA, which is u
l
timately
owned by Campion Capital SA ("Campion"), a pr
i
vate
company incorporated
in
terms
of
the
l
aws of
Switzerland. Campion
and
all
i
ts
subsidiaries
will
collectively
be
referred
to
as
the
"Fulcrum
Group".
[9]
SVF
SA
performs
call
centre
and
l
oan
admin
i
stration
services
i
n
-
ho
u
se
to
entities
within the
Fu
l
crum
Group,
i
n
respect
of
the
Fu
l
crum
Group's
m
i
cro-lending
busi
n
ess
.
I
n
particular, the
Fulcrum
Group's
micro-lending
business
i
n
South Africa,
i
s
provided under the Capfin brand (through Pepkor's PEP and Ackermans'
retail
network).
[10]
Van
As
performs
debt
collection related
matters,
such
as
briefing
attorneys
and
managing the
debt
collection
process,
i
n
respect
of
Fu
l
crum
Group's
micro-lending business
u
n
der
the
Capfin
brand
.
Proposed
transaction
[1
1
]
Pepkor
i
ntends
to acqu
i
re
the entire
i
ssued
share capital of the Target
Firms
from
SH
Fulcrum as well
as
the
claims
that
SH
Fulcrum
may
have
against the
Target
F
i
rms.
Post-merger, Pepkor will control the Target Firms.
I
m
p
act
on
competition
[1
2
]
Relevant to the current transaction
are two
p
re-existing
agreements between Pepkor and the
Fulcrum
Group
:
[13
.
1
.
]
I
n
terms
of
the
First
Agreement,
Pepkor
provides
quick
and
simple
personal
l
oans
to
consumers
i
n
South Africa
under
the
Capfin
brand
(which
belongs
to
the
Fulcrum
Group),via
Pepkor
'
s
P
E
P
and
Ackermans
retail
stores
.
Pepkor
faci
l
i
tates
credit
appl
i
cations
on behalf of Capfin
i
n
PEP
and
Ackermans stores on criteria determined
by
the
Fulcrum
Group
[1]
.
I
n
terms
of
this
arrangement,
PEP
and
Ackermans
are
compensated
by
Capfin on a per application
commission
basis,
for
the benefit of access by customers to PEP
'
s
and Ackermans'
retail
network.
[
1
3
.
2.]
The Second Agreeme
n
t
arises
from
the
F
u
l
crum
Grou
p
'
s
acquisition of
Pepkor's consumer credit
and
i
nsurance
business
i
n
March t
h
i
s
yea
r
.
I
n
terms
of
a management
and
outsource
arrangement
between
them,
Pepkor
provides
call
centre,
l
oan
administration and debt collection services to the
Fulcrum Group on an outsourced basis
i
n
respect of Pepkor's furniture business.
[13]
The Commission
considered the
activities of
the mergi
n
g
parties
and
found that
there
was a horizontal overlap, as both
parties are
i
nvolved
i
n
the provision of call centre,
l
oan
admin
i
stration
and
debt
collection
services.
[14]
The Commission noted,
however, that pre-merger, the Target
Firms provide the call
centre,
l
oan
admin
i
stration
(through
SVF
SA)
and
debt
collection
services
(through
Van As) to
the Fulcrum
Group's
m
i
cro-lending
business,
i
n-ho
u
se.
The
Target
Firms
have
not been
active
i
n the
open
market
for
call
centre,
l
oan
admin
i
stration
and
debt
collection services.
[15]
On
the
other hand, the Acqu
i
ring
Group
already provides
call centre,
l
oan
administration and debt collection services
i
n
respect of
the Fu
l
crum
Group's consumer credit
and
i
nsurance
business
on
an
outsourced
basis,
to
the
Fu
l
crum
Group.
The
Acquiring
Group
also
does
n
ot provide
call centre,
l
oan
admin
i
stration
and
debt
collection services to the open market.
[16]
In essence,
the transaction
extends
the
call centre,
l
oan
administration and debt collection
services
currently provided
by
the
Acquiring
Group
to
the
Fulcrum
Group
in
respect of the
l
atter's
consumer credit and
i
nsurance
b
u
siness,
to
i
ts
Capfin micro
l
endi
n
g
b
u
siness
(prev
i
ously
provided
i
n-
h
ouse
by SVF SA
and
Van
As
re
s
pect
i
vely).
[17]
The Commission is of the view that the proposed transaction is
unlikely to substantially prevent or lessen competition in the
call
centre, loan administration and debt collection services as the
merging parties' services are not available to the open market.
The
Commission concluded that the proposed transaction was unlikely to
substantially prevent or lessen competition in the identified
markets.
[18]
We concur with the
Commission's
conclusion.
Public
interest
[19]
The
merging
parties
confirmed
that
the
proposed
transaction
will
have
no
negative
effect on employment.
[20]
The proposed transaction further raises no other public interest
concerns.
Conclusion
[
21]
I
n
light of the above, we conclude that the
proposed transaction
i
s
unlikely to substantially prevent
or
l
essen
competition
i
n any
re
l
evant
market.
In
addition,
no
publ
i
c
interest
issues
arise
from
the
proposed
transaction
.
According
l
y,
we
approve
the proposed
transaction
unconditionally.
14
November 2016
DATE
_______________
Ms
Mondo Mazwai
Ms
Yasmin Carrim and Prof lmraan Valodia concurring
Tribunal
Researcher:
Busisiwe Masina
For
the merging parties: Lizel B
li
gnaut
of ENS
Africa
For
the
Commission
:
M
aanda
Lambani
[1]
See
tr
a
n
sc
ript
,
p
ag
e
2
lin
es
2
0
25
a
nd
page
3,
lin
es
1-
2