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[2018] ZACT 26
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main Street 1603 (Pty) Ltd v Tessara (Pty) Ltd (LM062May18) [2018] ZACT 26 (30 July 2018)
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case
No: LM062May18
In the matter between:
Main
Street 1603 (Pty)
Ltd
Primary Acquiring Firm
And
Tessara (Pty)
Ltd
Primary Target Firm
Panel
: Andreas Wessels (Presiding Member)
:
Enver Daniels (Tribunal Member)
:
Prof Fiona Tregenna (Tribunal Member)
Heard
on
: 4 July 2018 Order
Issued
on
: 4 July 2018 Reasons
Issued
on
: 30 July 2018
REASONS
FOR DECISION
Approval
[1]
On
4 July 2018, the Competition Tribunal ("Tribunal")
unconditionally approved the proposed transaction involving Main
Street 1603 (Pty) Ltd ("Main Street") and Tessara (Pty) Ltd
("Tessara").
[2]
The
reasons for approving the proposed transaction follow.
Parties to the proposed transaction and
their activities
Primary Acquiring Firm
[3]
The
primary acquiring firm is Main Street, a special purpose vehicle
established for the purposes of the proposed transaction. Main
Street
is wholly owned and controlled by First Carlyle Growth V ("Carlyle").
Carlyle is in turn owned by Carlyle Sub-Saharan
Africa Fund Limited
("CSSAF"), a Mauritian company managed by its managing
member CSSAF Managing Partnership L.P., a
Cayman Islands limited
partnership. CSSAF Managing Partnership LP is indirectly
wholly-controlled by The Carlyle Group LP. ('The
Carlyle Group"),
a Delaware limited partnership that is listed on the NASDAQ stock
exchange. The Carlyle Group is not controlled
by any single entity or
individual.
[4]
The
Carlyle Group is a global alternative asset manager which manages
funds that invest globally.
Primary Target Firm
[5]
The
primary target firm is Tessara, a private company incorporated under
the laws of South Africa. The current shareholders of Tessara
are:
RMB Ventures Six (Pty) Ltd; Rampan Capital Limited; Pan-African
Private Equity Fund 1 (Pty) Ltd; The Tommy Edward Rogers Trust;
and
Management. Tessara controls Tessara Properties (Pty) Ltd.
[6]
Tessara
is involved in the manufacture and distribution of packaging material
for grapes and flowers. Tessara, more specifically,
manufactures and
supplies laminated SO
2
generator sheeting to protect table grapes from post-harvest decay
and prevent fungal infections during transportation and storage,
particularly for the long-haul export of grapes from South Africa
(and other grape producing countries) to international markets.
Proposed transaction
[7]
The
proposed transaction will be effected by way of a number of steps.
Ultimately, Main Street intends to acquire the entire issued
share
capital of Tessara. Post-merger, Main Street will therefore exercise
sole control over Tessara.
Impact on competition
[8]
The
Competition Commission {"Commission") found that the
proposed transaction does not result in a horizontal overlap
between
the merging parties' activities in South Africa. This is because The
Carlyle Group is not active in the manufacture and
supply of treated
packaging material used in the fresh produce industry. The Commission
therefore concluded that the proposed transaction
is unlikely to lead
to a substantial prevention or lessening of competition in any
relevant market. We concur with the Commission's
conclusion.
Public interest
[9]
The
Tribunal raised a number of employment-related issues with the
Commission and the merging parties, including engagement between
the
merging parties and the relevant trade unions, specifically the Motor
Transport Workers Union of South Africa ("MTWU"),
to which
both the Commission and representatives of the merging parties
responded.
[1]
We were satisfied with the explanations provided.
[10] The merging
parties in their merging filing and again at the hearing confirmed
that the proposed transaction
will not have any adverse effect on
employment.
[2]
Based on this submission, we have approved the proposed transaction
unconditionally.
[11]
The proposed transaction raises
no 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 any
relevant market. In addition, no
public interest issues are expected to arise from the proposed
transaction. On the basis of the
merging parties' submissions that
the proposed transaction will not result in any retrenchments or job
losses in South Africa,
we have approved the proposed transaction
unconditionally.
Mr
Andreas Wessels
Mr
Enver Daniels and Prof. Fiona Tregenna concurring
30 July 2018
Tribunal
Case Manager : Kgothatso Kgobe
For the Merging Parties
: S van der Meulen and S Manley of Webber Wentzel
For
the Commission
: R Ncheche and T Mahlangu
[1]
Transcript, pages 11 to 24.
[2]
Merger Record, pages 10 and 46. Transcript,
inter alia
pages
17 and 18.