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[2019] ZACT 4
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CTP Limited v Cognition Holdings Limited (LM215Nov18) [2019] ZACT 4 (18 February 2019)
COMPETITION TRIBUNAL OF SOUTH
AFRICA
Case
No: LM215Nov18
In
the matter between
CTP
Limited
Primary Acquiring Firm
And
Cognition
Holdings Limited
Primary Target Firm
Panel
: Ms Y Carrim (Presiding Member)
: Ms M Mazwai (Tribunal Member)
: Prof. I Valodia (Tribunal
Member)
Heard
on
: 30 January 2019
Order
Issued on
: 30 January 2019
Reasons
Issued on : 18 February 2019
REASONS FOR DECISION
Approval
[1]
On
30 January 2019, the Tribunal unconditionally approved the proposed
transaction in terms of which CTP Limited (CTP) would acquire
control
over Cognition Holdings Limited (Cognition).
[2]
The
reasons for the approval of the proposed transaction follow.
Parties
to the transaction
[3]
The
acquiring firm, CTP is a wholly-owned subsidiary of Caxton Publishers
and Printers Ltd (CAX). CAX is a wholly-owned subsidiary
of Caxton
and CTP Publishers and Printers Ltd (CAT). CAT is listed on the
Johannesburg Stock Exchange (JSE). CTP is the ultimate
holding
company of a group of controlled subsidiary companies through which
the business of the Caxton Group is conducted. Pre-merger,
CTP
controls Private Property (Pty) Ltd through its 50.1% shareholding.
[4]
CTP
is a printing and publishing company which has operations throughout
South Africa.
[5]
The
target firm is Cognition which is listed on the JSE. Cognition is not
controlled by any single shareholder. However, the three
shareholders
that hold more than 5% in Cognition are: CAT (34.56%); Lazio Holdings
(11.6%) and NavSur Ltd (7.6%).
[6]
Cognition
is an investment holding company whose subsidiaries operate in the
information, communication and technology (ICT) sector
by providing
interactive telecommunication, switching and business services using
fixed and mobile network. Its main areas of operation
include (i)
active data exchange services (incl SMS); (ii) document management
services; (iii) market research services; and (iv)
channel incentive
programmes.
[1]
Cognition controls various entities, but of relevance to the proposed
transaction is its control in FoneWorx (Pty) Ltd (FoneWorx).
FoneWorx
provides active data exchange services which entails offering
companies and their brands a way to engage with customers
at an
individual level.
Proposed
transaction
[7]
The
proposed transaction entails two legs. In the first leg, Cognition
will acquire the 50.1% held by CTP in Private Property. In
the second
leg CTP will acquire a majority shareholding in Cognition
inconsideration for Cognition acquiring the 50.1% currently
held by
CTP in Private Property. Post-merger, both Cognition and Private
Property will ultimately form part of the Caxton group.
Relevant
market and impact on competition
[8]
The
Commission found a vertical relationship between the merging parties.
This is because during the 2017/2018 financial year Cognition
(through FoneWorx) provided active data exchange services related to
SMS campaigns relating to Caxton magazine publications. However,
the
Commission found that the services provided by FoneWorx to the Caxton
group are minimal. Further, the Commission found that
Cognition is an
insignificant supplier in the active data exchange services market
with a market share of below 3%, and if it were
to restrict its
services, customers will find alternative suppliers.
[9]
The
Commission further found that the upstream competitors of Cognition,
in the provision of data exchange services will not be
foreclosed as
Caxton is one of many customers from different industries who make
use of active data exchange services. The Commission
therefore
concluded that foreclosures arising from the proposed transactions
are unlikely.
[10] In
view of the above, the Commission is of the view that the proposed
transaction is unlikely to substantially
prevent or lessen
competition in any relevant market.
Public
interest
[11]
The
proposed transaction does not raise any public interest concerns.
Conclusion
[12]
In
light of the above, we concluded 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 approved the proposed
transaction unconditionally.
Ms
Yasmin Carrim
Ms
Mondo Mazwai and Prof. Valodia concurring.
18 February 2019
Date
Tribunal
Case Manager
: Kgothatso
Kgobe
For
the Merging Parties
: A Roets
of Nortons inc
For
the Commission
: B Ntshingila and T Masithulela
[1]
Cognition basically helps its clients (mainly companies) to reach
consumers via mechanisms such as SMS and interactive voice
response
systems.