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[2018] ZACT 5
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Standard Bank of South Africa Limited v Competition Commission Of South Africa (LM227Nov17) [2018] ZACT 5 (26 February 2018)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM227Nov17
In
the matter between
Sanlam
Life Insurance
Limited
Primary Acquiring Firm
And
Absa
Consultants and Actuaries (Pty)
Ltd
Primary Target Firm
Panel
: Yasmin Carrim (Presiding Member)
: Medi Mokuena (Tribunal Member)
: Andiswa Ndoni (Tribunal Member)
Heard on
: 7 February 2018
Order Issued on
: 7 February 2018
Reasons Issued on
: 26 February 2018
REASONS
FOR DECISION
Approval
[1]
On
7 February 2018, the Competition Tribunal ("the Tribunal")
conditionally approved the proposed transaction between
Sanlam Life
Insurance Limited ("Sanlam Life") and Absa Consultants and
Actuaries (Pty) Ltd ("ACA"). The reasons
for the approval
follow.
Parties
to the transaction and their activities
[2]
Sanlam Life is wholly controlled by
Sanlam Limited ("Sanlam"), and controls a number of
entities in South Africa. Sanlam
Life, through its business clusters,
provides insurance, financial planning, retirement, investment, and
wealth management products
to personal business, and institutional
customers in the South Africa and intemationally
[1]
Of relevance to the proposed transaction is the Sanlam Employee
Benefit ("SEB") division. SEB provides employee benefits
solutions to employers and retirement funds. This includes,
inter
alia,
retirement fund administration
services, umbrella fund solutions, group risk products and consulting
and actuarial services.
[3]
ACA is a wholly owned subsidiary of Absa
Financial Services Ltd("AFS"), which in turn is wholly
owned by Barclays Africa
Group Ltd. ACA administers pension and
provident funds, as well as providing consulting and actuarial
services. ACA's three main
business offerings include administration
and support services; consulting, actuarial and advisory services;
and healthcare services.
ACA also acts an intermediary by providing
certain ACA customers with SEB's group risk products. However, this
is the only instance
where ACA acts as an intermediary.
Proposed
transaction
[4]
I
n
terms of the Sale of Shares Agreement, Sanlam Life shall acquire ACA
as a going concern from AFS. Post-merger, Sanlam Life will
assume
sole control over ACA.
Relevant
markets and impact on competition
[5]
The
proposed transaction gives rise to horizontal overlaps in the
following markets: (i) the national market for the provision of
retirement fund
administration
services; (ii) the national market for the provision of employee
benefit consulting services; and (iii) the national
market for the
provision of healthcare consulting services. In the first two
markets, the merging parties will have a combined
post-merger market
share of less than 20%, with an accretion of less than 10%. In the
third market, the merging parties will have
a combined post-merger
market share of less than 5%, with an even lower market share
accretion.
[6]
The
Commission submitted that there are other firms in the relevant
markets that are able to exercise competitive constraints on
the
merged entity. The Commission thus concluded that the proposed
transaction is unlikely to substantially prevent or lessen
competition in the relevant markets. We agree with the Commission's
conclusion.
Public
interest
[7]
The
Commission found that the proposed transaction raises employment
concerns. This is because the merging parties were unable to
assess
functions or roles that might be duplicated as a result of the merger
and the number of employees that might be affected.
At the hearing,
the merging parties contended that the intention is for the two
entities to operate separately so until commercial
conditions dictate
otherwise.
[8]
In
addressing these employment concerns, the Commission recommended that
the proposed transaction be approved subject to the condition
that
the merging parties not retrench any ACA employees for a period of
two years from the implementation date of the merger. The
proposed
transaction does not give rise to any other public interest concerns.
Conclusion
[9]
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 save
for those adequately safeguarded by the
conditions.
Accordingly, we approve the proposed transaction with the conditions
attached to our order as Annexure "A".
Ms
Yasmin Carrim
Ms
Medi Mokuena and Ms Andiswa Ndoni concurring.
26
February 2018
Tribunal Researcher:
Hlumelo Vazi
For
the merging parties:
A Van der Westhuizen of Glyn Marais and M Griffiths of
Norton Rose
For
the Commission:
N Msiza
[1]
The business of the Sanlam group of companies is organised into
various clusters for management purposes due to its size.