r;o, ~ tf 1c: f ff iPn tribunal
' .. ,, rli ·•I• 1.·~
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM115Sep16
In the matter between:
Unitrans Supply Chain Solutions (Pty) Ltd Primary Acquiring Firm
and
Xinergistix (Pty) Ltd
Panel
Heard on
Order Issued on
Reasons Issued on
Approval
Primary Target Firm
: Norman Manoim (Presiding Member)
: Mondo Mazwai (Tribunal Member)
: Medi Mokuena (Tribunal Member)
: 23 November 2016
: 23 November 2016
: 12 December2016
Reasons for Decision
[1] On 23 November 2016, the Competition Tribunal ("Tribunal") unconditionally
approved the large merger between Unitrans Supply Chain Solutions (Pty) Ltd
("Unitrans") and Xinergistix (Pty) Ltd ("Xinergistix"). The reasons for approving
the proposed transaction follow.
Parties to the transaction
Primary acquiring firm(s)
[2] Unitrans, a company incorporated in accordance with the laws of the Republic
of South Africa ("RSA"), is a wholly-owned subsidiary of Unitrans Holdings (Pty)
Ltd ("Unitrans Holdings"). Unitrans Holdings is in turn wholly-owned by KAP
1
Industrial Holdings Ltd ("KAP"). KAP is a public company listed on the
Johannesburg Securities Exchange ("JSE") and is therefore not controlled by
any firm. For purposes of the proposed transaction, Unitrans, KAP and all their
subsidiaries will be referred to as the Acquiring Group. The Acquiring Group
consists of two main division, namely the diversified logistics division and the
diversified industrial division.
[3] Of relevance to the proposed transaction, is the Acquiring Group's activities in
the logistics industry, specifically the transportation, distribution, facilities and
warehouse management services and management of inbound and outbound
cargo. These activities are conducted by Unitrans. Unitrans is an integrated
logistics, warehouse and distribution management business that provides its
services to sectors such as petrochemical, mining construction, agriculture and
fast moving consumer goods ("FMC goods"). Unitrans is also involved in the
transportation of refrigerated frozen, chilled and ambient perishable food
products to various supermarkets. Unitrans's depots are located in Gauteng,
Cape Town and Durban, but it provides transport to destinations throughout
South Africa and Southern Africa.
Primary target firm
[4] Xinergistix is a firm incorporated in accordance with the company laws of RSA
and is not controlled by any firm or individual.
[5] Xinergistix is a transport and logistics company that provides local and cross
border transportation services from its depots located in Cape Town,
Johannesburg, Bloemfontein, Port Elizabeth and Durban. Xinergistix's main
focus is on general cargo and refrigerated transport services, which include ice
cream, milk, meat and other perishable goods supplied to the FCM goods
sector.
Proposed transaction and rationale
[6] The proposed transaction will enable Unitrans to increase its current
shareholding in Xinergistix form 28.31 % to 51.40%, by acquiring 23.09% from
2
--------------- -- -1 ------i ----
Western National Insurance Company ("WNI"). Post-merger, Unitrans will
control Xinergistix.
[7] The proposed transaction will provide Unitrans with an opportunity to increase
its presence in the general line-haul business, whilst for WNI, the proposed
transaction will provide it with an opportunity to dispose of its shares in
Xinergistix.
Impact on competition
[8] The proposed transaction gives rise to a horizontal overlap.
[9] During the hearing, Mr Gary Chaplin the CEO of KAP, submitted that the
merging parties operate in separate markets which are complementary to each
other. This is because Unitrans operates primarily in the specialized market for
bulk goods, whilst Xinergistix operates primarily in the market for line haul
work.1 The Commission however identified two relevant product markets, and
assessed the proposed transaction for horizontal overlaps in the market for the
provision of general cargo transportation and the market for the provision of
temperature controlled distribution services. The Commission's analysis was
based on the number of trucks owned by the merging parties as this is the more
reliable source of information that is readily available. The post-merger market
shares in the market for the provision of general cargo transportation is less
than 10%, whilst in the market for the provision of temperature controlled
distribution services the post-merger market share is less than 3%. The
Commission submitted that in both markets the merged entity will continue to
face competition from other competitors such as Imperial Holdings Limited, and
Super Group Limited inter alia. The Commission thus submits that the proposed
transaction is unlikely to substantially lessen or prevent competition in any of
the identified markets.
[1 O] In this merger we do not need to decide on whether the firms operate in
different markets as suggested by Mr. Chapman, or operate in the same
different markets as suggested by Mr. Chapman, or operate in the same
markets but have low market shares, as suggested by the Commission. On
1 See pages 3-4 of transcript of hearing.
3
----!
either scenario the merger does not give rise to competition concerns. We thus
agree with the Commission's conclusion that the proposed transaction is
unlikely to substantially prevent or lessen competition in any relevant market.
Public interest
[11] The merging parties submitted that the proposed transaction will not
result in an adverse impact on employment, or have any impact on other public
interest concerns.
Conclusion
[12] In light of the above, we conclude that the proposed transaction is
unlikely to substantially prevent or lessen competition in the identified markets.
In addition, no public interest issues arise from the proposed transaction.
ccordingly, we approve the proposed transaction unconditionally.
an Manoim
Ms Mondo Mazwai and Ms Medi Mokuena concurring
Tribunal Researcher: Caroline Sserufusa
12 December 2016
DATE
For the merging parties: Nashaa Loopoo of Cliffe Dekker Hofmeyr Inc
For the Commission: Maanda Lambani
4