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[2019] ZACT 38
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Palaeofin (Pty) Ltd v Southern View Finance SA Holdings (Pty) Ltd and Another (LM020May19) [2019] ZACT 38; [2020] 2 CPLR 790 (CT) (17 July 2019)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM020May19
In
the matter between:
Palaeofin
(Pty)
Ltd
Primary
Acquiring Firm
and
Southern
View Finance SA Holdings (Pty)
Ltd;
Primary
Target Firms
Century
Capital (Pty) Ltd
Panel:
Andreas Wessels (Presiding Member)
:
Andiswa Ndoni (Tribunal Member)
:
Fiona Tregenna (Tribunal Member)
Heard
on: 19 June 2019
Order
Issued on: 19 June 2019
Reasons
Issued on: 17 July 2019
Reasons
for Decision
Approval
[1]
On 19 June 2019, the Competition Tribunal ("Tribunal")
unconditionally approved the proposed transaction involving
Palaeofin
(Pty) Ltd ("Palaeofin") and Southern View Finance SA
Holdings (Pty) Ltd ("SVF") and Century Capital
(Pty) Ltd
("CenCap").
[2]
The reasons for the unconditional approval follow.
Parties
to the proposed transaction
Primary
acquiring firm
[3]
The primary acquiring firm is
Palaeofin, a private company incorporated in accordance with the
company laws of South Africa. Palaeofin
is wholly owned and
controlled by Titan Group Investments (Pty) Ltd ("Titan"),
which is, in turn, wholly owned and ultimately
controlled by the
Christo Wiese Family Trust ("the Trust").
[1]
Palaeofin does not itself control any firms. The Trust and all the
firms controlled by it, including Titan, are hereafter collectively
referred to as the Acquiring Group.
[4]
The Competition Commission ("Commission") submitted that
the Acquiring Group is an investment firm which, through
its various
subsidiaries, provides a number of products and/or services in
amongst others the following sectors, property; hotel
management;
farming; events organising; wine making; retail and mining.
Primary
target firms
[5]
The primary target firms are SVF and CenCap, both of which are
companies incorporated in accordance with the company laws of
South
Africa. SVF and CenCap are both jointly controlled by Cream Magenta
140 (Pty) Ltd ("Cream Magenta") and MetCap
14 (Pty) Ltd
("MetCap").
[6]
SVF and CenCap do not directly or indirectly control any firms and
shall hereafter collectively be referred to as the Target
Group.
[7]
SVF is an investment firm whose activities are limited to holding
loan claims against Wands Investments (Pty) Ltd, on which
SVF earns
interest. CenCap is an unsecured lender involved in the provision of
unsecured lending to customers making purchases
of movable goods such
as furniture, through the Pepkor Group. CenCap is, however, winding
down this business and is no longer offering
new loans.
Proposed
transaction and rationale
[8]
In terms of the proposed transaction, the Acquiring Group intends to
acquire all the issued share capital of the Target Group
and all the
claims (loan or otherwise) of Cream Magenta and MetCap against the
Target Group. Subsequent to the implementation of
the proposed
transaction, the Acquiring Group will have sole control over the
Target Group.
[9]
The Commission furthermore considered whether the proposed
acquisition of the Target Group by the Acquiring Group could take
place through two separate merging filings. Ultimately the Commission
found that the proposed transaction was a single indivisible
transaction on the basis that (i) the Target Group is subject to
common ownership; and (ii) the acquisition of the Target Group
is
subject to the same sale of shares agreement which does not make
provision for the target firms to be acquired separately from
each
other.
[10]
At the hearing before us, the merging parties provided a written
submission clarifying the rationale of the proposed transaction.
[2]
The rationale submitted was as follows: Cream Magenta and MetCap had
borrowed funds from the Titan group of companies to subscribe
for
preference shares in SVF ('Titan debt") and the proposed
transaction will facilitate the reduction/payment of that debt.
The
merging parties also submitted that Palaeofin will acquire all the
claims against and loan accounts of the sellers in part/total
fulfilment of the Titan debt.
[3]
Impact
on competition
[11]
The Commission considered the activities of the merging parties and
found that there is no horizontal overlap between their
activities
since none of the products and/or services provided by the Acquiring
Group are substitutes to those provided by the
Target Group. Further,
the Commission found that there is no vertical overlap between the
merging parties' activities since the
Acquiring Group does not
participate at a different level of the same value chains that the
Target Group participates in.
[12]
In light of the foregoing, the Commission concluded that the proposed
transaction is unlikely to result in the substantial
prevention
and/or lessoning of competition in any relevant market.
[13]
We concur with the above conclusion.
Public
interest analysis
[14]
The merging parties submitted
that they do not have any employees and confirmed that the proposed
transaction will not result in
any retrenchments or job losses.
[4]
[15]
The Commission noted that there is no horizontal overlap between the
activities of the merging parties and the proposed transaction
is
therefore unlikely to result in job duplications that may result in
retrenchments. The Commission was therefore of the view
that the
proposed transaction is unlikely to raise any employment concerns.
[16]
Moreover, the Commission found that 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, the proposed transaction raises no
public interest concerns. Accordingly, we approve the proposed
transaction unconditionally.
______________________
Mr
AW Wessels
Ms
Andiswa Ndoni and Prof Fiona Tregenna concurring
17
July 2019
DATE
Case
Manager: Helena Graham
For
the merging parties: Graeme Wickens of Werksmans Attorneys
For
the Commission: Zukile Sokapase and Wiri Gumbie
[1]
In addition to Titan, the Trust controls several other firms.
[2]
See letter from Werksmans Attorneys dated 10 May 2019. Also see
Transcript, page 4, line 18, to page 7, line 23.
[3]
See page 20 of the Record.
[4]
See page 10-12 of the Record.