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[2018] ZACT 3
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Sasfin Bank Ltd v Absa Technology Finance Solutions (Pty) Ltd (LM1970ct17) [2018] ZACT 3 (22 January 2018)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: LM1970ct17
In
the matter between:
Sasfin
Bank
Ltd
Primary
Acquiring Firm
and
Absa
Technology Finance Solutions (Pty)
Ltd
Primary Target
Firm
Panel
: AW Wessels (Presiding Member)
: Medi Mokuena (Tribunal Member)
: Andiswa Ndoni (Tribunal Member)
Heard
on
: 20 December 2017
Order
Issued on : 20 December 2017
Reasons
Issued on : 22 January 2018
Reasons
for Decision
Approval
[1]
On
20 December 2017, the Competition Tribunal ("Tribunal")
approved the proposed transaction between Sasfin Bank Ltd ("Sasfin")
and Absa Technology Finance Solutions (Pty) Ltd ("ATFS").
[2]
The
reasons for approving the proposed transaction follow.
Parties
to the proposed transaction
Primary
acquiring firm
[3]
The
primary acquiring firm is Sasfin, a company incorporated in
accordance with the company laws of the Republic of South Africa.
Sasfin is a wholly-owned subsidiary of Sasfin Holdings Limited, a
bank controlling company listed on the Johannesburg Securities
Exchange ("JSE").
[4]
The
Sasfin Group operates in the broad banking and financial services
sector, providing multiline banking and financial services
and
mainstream products.
[5]
One
of the firms which Sasfin controls, Fintech (Ply) Ltd ("Fintech"),
offers asset rental finance solutions to businesses
and equipment
suppliers. It provides financing for
inter
alia
office automation equipment,
industrial equipment, audio visual equipment, IT equipment, automated
teller machines, medical equipment
and CCTV equipment.
[6]
Sasfin
is furthermore active in the technology financing segment trough
Sunlyn (Pty) Ltd ("Sunlyn"). Sunlyn has its own
sales force
for the origination of discounting and finance contracts. Sunlyn
however does not retain these contracts for itself
as it does not
have the necessary capital base to do so but instead cedes the
underlying contracts to Sasfin.
Primary
target firm
[7]
The
primary target firm is ATFS, a wholly-owned subsidiary of Absa Bank
Ltd ("Absa"), which in turn is a wholly-owned
subsidiary of
the JSE listed Barclays Africa Group Limited.
[8]
ATFS
provides discounting and direct financing solutions to discounting
entities, i.e. to the suppliers of technology equipment,
secured
against technology rental agreements as well as, in some instances,
financing solutions directly to end-users i.e. the
purchasers of
technology equipment.
Proposed
transaction and rationale
[9]
In
terms of the Sale Agreement, Sasfin intends to acquire the business
of ATFS. Sunlyn, as an associate entity of Sasfin, will acquire
the
business of ATFS in order to facilitate the securitisation of the
loans arising from the ATFS business following the implementation
of
the proposed transaction.
[10] The
proposed transaction affords the Sasfin Group the opportunity to grow
its technology equipment
rental book and acquire a new customer base.
Impact
on competition
[11]
The Competition Commission
(“Commission") identified a horizontal overlap between the
activities of the merging parties
in respect of the national market
for the provision of financing for office automation equipment.
[12]
The Commission found that the merged
entity will have a market share of less than 25% in this market.
Further, the Commission found
that the merged entity wilt face
competition from a number of firms in this market, including Quince
Capital, Merchant West and
Wesbank. The Commission therefore
concluded that the proposed transaction is unlikely to substantially
prevent or lessen competition.
[13]
We concur with the Commission that the
proposed transaction is unlikely to substantially prevent or lessen
competition in any relevant
market.
Public
interest
[14]
In
relation to the effect of the proposed transaction on employment, the
Tribunal requested clarity on the fact that the merging
parties
submitted that the proposed transaction will not result in any
negative effect on employment, yet they offered an undertaking
that
there will be no merger-specific job losses for a period of only one
year following the implementation of the proposed transaction.
[1]
[15]
During
Tribunal questioning the merging parties submitted that although the
above was their initial undertaking in the merger filing,
their
undertaking now extends to one in which no job losses would take
place as result of the proposed transaction even beyond
a one year
period.
[2]
[16]
The proposed transaction further raises
no other public interest concerns.
[17] Given
the merging parties' undertaking that there will be no job losses or
retrenchments as a result
of the proposed transaction, we conclude
that the proposed transaction raises no 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. Furthermore, based on the merging parties'
undertaking that there will be
no job losses or retrenchments as a
result of the proposed transaction, the proposed transaction raises
no public interest concerns.
Accordingly, we have approved the
proposed transaction unconditionally.
Mr
AW Wessels
Mrs
Medi Mokuena and Ms Andiswa Ndoni concurring
22 January 2018
Case
Manager:
Kameel Pancham
For
the merging parties:
Mark Griffiths
of Norton Rose Fulbright
For
the Commission:
Simphiwe Gumede
[1]
Merger Record, pages 8 and 66
[2]
Transcript page 9, line 8, to page 12, line 5.