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[2018] ZACT 22
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Industrial Development Corporation of South Africa Limited v Le-Set Research (RF) Proprietary Limited (LM274Jan18) [2018] ZACT 22 (20 March 2018)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM274Feb18
In
the matter between:
Industrial Development Corporation
of
South Africa
Limited
Primary Acquiring Firm
And
Le-Set
Research (RF) Proprietary
Limited
Primary Target Firm
Panel
: Andreas
Wessels (Presiding Member)
:
Medi Mokuena (Tribunal Member)
:
Andiswa Ndoni (Tribunal Member)
Heard
on
:
01
March 2018
Order
Issued on :
01 March 2018
Reasons
Issued on :
20 March 2018
Reasons
for Decision
Approval
[1] On
1 March 2018, the Competition Tribunal ('Tribunal")
unconditionally approved
the transaction involving the Industrial
Development Corporation of South Africa Limited ("IDC") and
Le-Sel Research
(RF) Proprietary Limited ("Le-Sel").
[2]
The notification of this transaction is as a result of a prior
implemented acquisition
of shares by the IDC in Le-Sel in August
2015. The non-notification of the transaction was discovered by the
current legal representatives
of the merging parties.
[1]
[3]
The non-notification of the transaction will be dealt with separately
from this approval
as a contravention of Section 13A of the
Competition Act ("the Act").
[2]
The Competition Commission ("Commission") indicated that it
is currently in negotiations with the merging parties on
a potential
settlement pertaining to the non-notification of the transaction.
[4]
The reasons for approving the proposed transaction follow.
Parties
to the proposed transaction
Primary
acquiring firm
[5]
The primary acquiring firm is the JDC. The IDC was established in
terms of the Industrial
Development Corporation Act 22 of 1940 and is
wholly-owned and controlled by the South African Government.
[6]
The IDC was established to support and enhance industrial development
in South Africa,
as well as the rest of Africa, with the aim of
boosting economic growth and development. This is achieved by
providing funding
to entrepreneurs starting new enterprises or
supporting existing companies that want to expand their operations.
[7]
The IDC controls various firms.
Primary
target firm
[8]
The primary target firm is Le-Sel, a private company incorporated in
accordance with
the company laws of South Africa. At the time of the
transaction Le-Sel was controlled by The Frodsham Family, Trinitas
Fund General
Partner (Pty) Ltd and the Trustees of the Le-Sel
Management Investment Trust.
[9]
Le-Set controls Biz Afrika 884 (Pty) Ltd and Biz Afrika Beauty
Factory (Pty) Ltd.
[10]
Le-Set is a personal and home care manufacturer. Its product range
consists of
inter alia
aerosols, toiletries and cosmetics,
fragrances and ethnic haircare products.
Proposed
transaction and rationale
[11]
In August 2015 the JDC acquired 25.1% of the issued share capital of
Le-Set (also see paragraphs
2 and 3 above). The Commission found that
this shareholding gave the JDC "negative" control over
Le-Set in terms of section
12(2)(g) of the Act.
[12]
According to the merging parties the main reason for the proposed
transaction was to assist
the target firm which was in financial
stress in 2015. In addition to this, as a result of the transaction,
a vast number of employees
were rescued from having been retrenched
at that time.
Impact
on competition
[13]
The Commission found no overlaps between the activities of the
merging parties, since the IDC
has no interests in businesses that
supply personal and homecare products. The Commission therefore
concluded that the proposed
transaction is unlikely to substantially
prevent or lessen competition in any relevant market in South Africa.
We concur with the
Commission's finding.
Public
interest
[14] The
merging parties submitted that at the time one of the aims of the
transaction was to save 569 jobs
and to prevent a further decline of
the Le-Set business.
[15] The
Commission's investigation confirmed that Le-Sel was indeed in
financial stress at the time that
the transaction took place.
[16]
Le-Sel was however placed under voluntary business rescue in December
2017. The Commission found that
certain job losses around the time of
the business rescue were not related to the proposed transaction,
since the transaction had
already taken place in 2015.
[17] The
Commission concluded that the proposed transaction raises no public
interest concerns. We have
no reason to doubt the Commission's
findings.
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. In addition, no public interest issues arise from
the proposed transaction.
Accordingly, we approve the proposed
transaction unconditionally.
[19]
As stated above, the issue of implementation of the transaction
without notification will
be dealt with separately to the assessment
on the merits.
Mr AW Wessels
Ms
Andiswa Ndoni and Ms Medi Mokuena concurring
20 March 2018
Tribunal
Case Manager :
Caroline Sserufusa
For the merging parties
: Neo
Moshimane
of DM5 Incorporated
For
the Commission
:
Simphiwe Gumede
[1]
Also see Transcript, pages 5 and 6.
[2]
Act No. 89 of 1998, as amended.