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[2018] ZACT 63
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Sturrock Grinrod Maritime (Pty) Ltd v Novagroup (Pty) Ltd (LM100Jun18) [2018] ZACT 63 (25 October 2018)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM100Jun18
In
the matter between:
STURROCK
GRINDROD MARITIME (PTY)
LTD
Acquiring Firm
and
NOVAGROUP
(PTY)
LTD
Target Firm
Panel
Mondo Mazwai (Presiding Member)
Medi Mokuena (Tribunal Member)
Anton Roskam (Tribunal Member)
Heard
on
26 September 2018
Reasons
issued on 25 October 2018
REASONS
FOR DECISION
Approval
[1]
On
26 September 2018, the Competition Tribunal unconditionally approved
the large merger between Sturrock Grindrod Maritime (Pty)
Ltd
("SGM")
and Novagroup (Pty) Ltd
("Novagroup").
[2]
The
reasons for the approval follow.
Primary
acquiring firm
[3]
The
primary acquiring firm is SGM which is ultimately controlled by
Grindrod Limited, collectively, referred to hereafter as the
Acquiring Group.
[4]
The
Acquiring Group is involved in freight logistics and shipping. The
Acquiring Group's subsidiaries SGM and Grindrod lntermodal
are
relevant for purposes of this transaction. They are involved in a
variety of maritime services including container logistics,
sale and
lease of containers and sale and servicing of life rafts.
Primary
target firm
[5]
The
primary target firm is Novagroup which is ultimately controlled by
Nueva Pescanovo S.L. a Spanish incorporated company.
[6]
Novagroup
comprises several sub-divisions which are involved in maritime
services ranging from container packing and un-packing,
sale and
servicing of life boats and container logistics.
Proposed
transaction and rationale
[7]
In
terms of the proposed transaction SGM intends to acquire 100% of the
issued share capital of Novagroup and post-implementation
will solely
control Novagroup.
[8]
The
parties submitted that the rationale of the proposed transaction it
to stave off the financial difficulties faced by Novagroup
and SGM's
maritime safety operations subsidiary, ("SGMT"). The
parties submitted further, that the product offering of
the target
and acquiring firms are complementary to each other and that the
proposed transaction would enhance the
BEE
rating of Novagroup.
Horizontal
assessment
[9]
The
proposed transaction resulted in an overlap in the following markets:
the national market for the provision of container storage
services;
the market for the provision of container sales; leasing and
conversions in the Western Cape; Eastern Cape and Gauteng
markets;
the Western Cape market for the provision of warehousing services;
and the national market for the provision of marine
safety services.
[10]
The Commission, in its investigation of the merger, concluded that
none of the above-mentioned
markets resulted in high market shares
post-merger. The Commission also identified several other market
participants who would
be able to constrain the merged entity
post-merger. Accordingly, the Commission was of the view that the
proposed transaction would
not substantially lessen or prevent
competition in any identified market.
Vertical
concern
[11]
During
the Commission's investigation of this merger, it received a
complaint from a customer of Novagroup. The complainant submitted
that the proposed merger would limit the number of agents who sell
refrigerated containers in the Eastern Cape, 'reefer containers'
from
two to one with the likelihood that the merged entity would keep the
same pricing structure.
[12]
The
Commission investigated the complaint and found that aside from the
merging parties there were two other available market participants
who supply reefer containers. According to the Commission the
complainant later confirmed that there were alternative suppliers
available to it. In addition, the merging parties submitted, during
the hearing, that there is no intention to align the pricing
structures for reefer containers upon implementation of the proposed
transaction. The Commission found that the proposed transaction
did
not result in a foreclosure concern.
[13]
The
merging parties submitted that the proposed will not have a negative
effect on employment. During the hearing, it was also confirmed
that
all trade unions and employee representatives were served a copy of
the non-confidential merger filing and none had raised
concerns.
[14]
The
proposed transaction further raised no other public interest
concerns.
Conclusion
[15]
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,
the concern of customer foreclosure in the Eastern Cape is unlikely
as there are alternatives in
the market. Further, there are no public
interest issues which arise from the proposed transaction.
Accordingly, we approve the
proposed transaction unconditionally.
Ms Mondo Mazwai
Mrs
Medi Mokuena and Mr Anton Roskam concurring.
25
October 2018
Date
Tribunal
case manager
: Ms Aneesa Raval.
For
the merging parties
: Mr Rick van Rensburg of ENS together with Ms
Hilda van der Mervwe of SGM and Mr
Marcus
Twine of Novagroup.
For
the Commission
: Ms Nolubabalo Myoli and Mr Ratshidaho
Maphwanya