About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Competition Tribunal
SAFLII
>>
Databases
>>
South Africa: Competition Tribunal
>>
2018
>>
[2018] ZACT 24
|
|
Net1 Applied Technologies South Africa (Pty) Ltd v DNI-4PL Contracts (Pty) Ltd (LM018Apr18) [2018] ZACT 24; [2020] 2 CPLR 782 (CT) (31 July 2018)
COMPETITION TRIBUNAL OF SOUTH
AFRICA
Case
No: LM018Apr18
In the matter between:
NET1
APPLIED TECHNOLOGIES SOUTH AFRICA (PTY)
Primary
Acquiring Firm
LTD
And
DNl-4PL
CONTRACTS (PTY)
LTD
Primary Target
Firm
Panel
: Norman Manoim (Presiding Member)
: Andiswa Ndoni (Tribunal Member)
: Fiona Tregenna (Tribunal Member)
Heard
on
: 20 June 2018
Order
Issued on : 20 June 2018
Reasons
Issued on : 31 July 2018
Reasons
for Decision
Approval
[1]
On
20 June 2018, the Competition Tribunal ("Tribunal")
approved the proposed transaction involving Net1 Applied Technologies
South Africa (Pty) Ltd and DNl-4PL Contracts (Pty) Ltd.
[2]
The
reasons for approving the proposed transaction follow.
Parties
to proposed transaction
Primary
acquiring firm
[3]
The
primary acquiring firm is Net1 Applied Technologies South Africa
(Pty) Ltd ("Net 1"), a private company incorporated
in
accordance with the company laws of South Africa. Net1 is a
wholly-owned by Net1 UEPS Technologies, Inc. ("Net1
Technologies"),
a US company listed on the NASDAQ and is not
controlled by any firm.
[4] Net1
controls numerous firms in South Africa namely, Cash Paymaster (Pty)
Ltd, Cash
Paymaster (KwaZulu-Natal) (Pty) Ltd and Cash Paymaster
(Northern Province) (Pty) Ltd.
[1]
[5]
Net1
is a provider of payment solutions, transaction processing services
and financial technology. Net1's technologies are used
in electronic
commerce transactions which include the sale and distribution of
airtime and the sale of airtime to Net1 merchant
network
[2]
,
which in turn sells the airtime to end user consumer.
Primary
target firm
[6]
The primary target firm is
DNl-4PL Contracts (Pty) Ltd, a private company incorporated in
accordance with the laws of the Republic
of South Africa.
[7]
The shares in DNI are held by AJD
Holdings (Pty) Ltd, Rickmark Holdings (Pty) Ltd and Net1. DNI is
engaged in retail communication
and distributions to the informal
market throughout South Africa. Its retail communications and
distribution services includes
the sale and distribution of prepaid
airtime and starter packs.
[3]
Proposed
transaction and rationale
[8]
The proposed transaction involves a share subscription resulting in
Net1 increasing
its shareholding in DNL-4PL from 49% to 55%.
[4]
[9]
The acquiring firm Net1 submits that the its investment in DNI will
allow it to further
address the need of un-banked or under-banked
population by integrating mobile telephony service offerings with
payment, product,
distribution and hardware services. DNI submits
that from its perspective, the proposed transaction will provide its
existing shareholders
with the opportunity to further realise the
value of their investment in DNI.
Impact
on competition
[10] The
merging parties submitted that the provision of airtime services can
be further segmented into
a market for the sale of airtime and the
distribution of starter packs, which are pre-loaded with airtime.
Although DNI is involved
in both segments it is primarily a
distributor of starter packs. Net1 is also involved in the sale of
airtime, but has less than
0.5 % of the market. The overlaps are thus
not significant.
[11]
The major competitor in the sale
of airtime apart from the networks themselves, is Blue Label. Blue
Label and Net 1 have various
business relationships which we sought
clarity on at the hearing.
[5]
[12]
Firstly, we were advised that Net
1 is a customer of Blue Label and does not regard itself as a
competitor.
[13] Secondly, Blue
Label and Net 1 are both shareholders in Cell C. We raised with the
merging parties
whether this could provide an opportunity for
information exchange in respect of the airtime sales market between
DNI (now post-merger
controlled by Net 1) and Blue Label. The merging
parties informed us that the information exchanged on the Cell C
board does not
deal at any granular level with airtime distribution
market. This makes concerns about exchange of competitively sensitive
information
unlikely.
[14] We are satisfied
with these explanations that the merger raises no competition
concerns.
Public
interest
[15]
The proposed transaction will not give rise to any public interest
concerns.
[6]
[16] Furthermore, the
proposed transaction raises no other public interest concerns.
Conclusion
[17] 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.
Mr
Norman Manoim
Ms
Andswa Ndoni and Prof Fiona Tregenna concurring
31 July 2018
Tribunal Case Manager
: Busisiwe Masina
For
the merging parties : Ms Lara
Granville of Cliffe Dekker Hofmeyr
For
the Commission
: Mr Thabelo Masethulela and Nonhlanhla Msiza
[1]
Furthermore Nett has non-controlling interest in Walledoc (Pty) Ltd
and Finbond Group (Pty) Ltd.
[2]
Nett merchant network include EasyPay (Pty) Ltd, RMT Systems (Pty)
Ltd, Manje Mobile Electronic Payment Services (Pty) Ltd.
[3]
DNI conducts its operations through, DNI Retail (Pty) Ltd, The
Starter Pack Company (Pty) Ltd, M4Jam (Pty) Ltd, Specpack Field
Services (Pty) Ltd, International Tower Corporation (Pty) Ltd and
M4Jam South Africa (Pty) Ltd
[4]
The remaining shares will be held by AID and Rickmark.
[5]
The Commission took into account that competition in airtime sales
also comes from sales by the major networks as well as other
independents such as Glocell and Shoprite.
[6]
The proposed transaction will not result in any job losses or
retrenchment.