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[2019] ZACT 13
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Thebe Investment Corporation (Pty) Ltd v Pride Milling Company (Pty) Ltd (LM208Nov18) [2019] ZACT 13 (27 February 2019)
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:LM208Nov18
In
the matter between:
Thebe
Investment Corporation (Pty) Ltd
Primary Acquiring Firm
And
Pride
Milling Company (Pty) Ltd
Primary Target Firm
Panel
Yasmin Carrim (Presiding Member)
Mondo Mazwai (Tribunal Member)
Fiona Tregenna (Tribunal Member)
Heard
on
30 January 2019
Order
Issued on
30 January 2019
Reasons
Issued on 27 February
2019
Reasons
for Decision
Approval
[1]
On
30 January 2019, the Competition Tribunal ("Tribunal")
unconditionally approved the transaction involving Thebe Investment
Corporation (Pty) Ltd and Pride Milling Company (Pty) Ltd.
[2]
The
reasons for approving the proposed transaction follow.
Parties
to the proposed transaction
Primary
acquiring firm
[3]
The
primary acquiring firm is Thebe Investment Corporation (Pty) Ltd
("Thebe"), a firm incorporated in accordance with
the laws
of the Republic of South Africa.
[4]
Thebe
is jointly controlled by Batho Batho Trust, Main Street 1485 (Pty)
Ltd, Main Street 1547 {Pty) Ltd, Sanlam Life Insurance
Ltd and
Umhlomulo Equity Participation (Pty) Ltd.
[5]
Thebe
is an investment holding company that has investments mainly in
tourism, mining resources, infrastructure, renewable energy,
petrochemicals, telecommunications, financial services and
healthcare.
[6]
Of
relevance to the proposed transaction is the Thebe Group's interest
in Compass Food Group which provides a variety of food catering
services which utilise the maize products manufactured and
distributed by Pride.
Primary
target firm
[7]
The
primary target firm is Pride Milling Company (Pty) Ltd ("Pride
Milling"), a company incorporated in terms of the company
laws
of South Africa.
[8]
Pride
Milling is jointly controlled by Mr CJP Jordaan and Mr JA Bothma who
hold 73% and 27% shares respectively. Pride Milling does
not control
any firm.
Proposed
transaction and rationale
[9]
In
terms of the proposed transaction, Thebe Group intends to acquire 30%
of the issued share capital in Pride currently held between
Mr Jordan
and Mr Bothma. Upon implementation of the proposed transaction, Pride
will jointly be controlled by the Thebe Group.
. According to the Acquiring Firm, the
objective is to have a black controlled company that will be
positioned to transform the
white maize milling and processing sector
by being the only transformed business in the sector.
[10] Pride Milling is
entering into the proposed transaction to improve its Broad
Based Black Economic
Empowerment ("BEE") status.
[1]
Impact
on competition
[11]
The
Commission considered the activities of the merging parties and found
that the proposed transaction would not result in a horizontal
overlap as Pride's activities are limited to the manufacturing and
distribution of milled maize products in South Africa. Although
the
Thebe Group has activities in the agricultural sector, these pertain
to the distribution of fresh produce and not in the manufacture
and
distribution of milled maize product.
[12]
The
Commission also found that the proposed transaction would result in
the vertical integration of Pride Milling and Compass Group.
This is
because Thebe Group currently holds a non-controlling 41% stake in
the Compass Group which provides catering services in
Gauteng. Thus,
from a competition law point of
view,
Pride Milling will be in a position
to supply maize products to Compass Group. However, such vertical
integration will not have
the effect of substantially lessening or
preventing competition in the relevant market.
[13]
Furthermore,
the Commission submits that none of the competitors of Pride
identified the Thebe Group or Compass Group as a significant
customer
in respect of the procurement of maize products.
[14]
Given
the
above,
the
Commission concluded that the proposed transaction is·
unlikely to substantially prevent or lessen competition in any
relevant market in South Africa.
Public
Interest
[15]
The
merging parties confirmed that the proposed transaction will have no
adverse effect on employment in South Africa.
[2]
[16] The prop
osed
transaction raises no other public Interest concerns.
Conclusion
[17] 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
Mondo
Mazwai and Prof Imraan Valodia concurring
27
February 2019
DATE
Tribunal
Case Manager :
Ms Busisiwe Masina
For
the merging parties :
Mr Jim Motlanthe
Mkhabela Huntley Attorneys
For
the Commission
:
Mr Tumiso
Loate
[1]
To have a strategic partner in Thebe for further expansion and to
unblock value for shareholders.
[2]
Merger Record, pages 17