competitiontribunal
SOUTH AFRICA
COMPETITION TRIBUNAL OF SOUTH AFRICA
In the matter between:
Bidvest Bank Ltd
And
Eqstra Investment Holdings (Pty) Ltd
Panel
Heard on
Order issued on
Reasons issued on
: E Daniels (Presiding Member)
: Y Carrim (Tribunal Member)
: A Ndoni (Tribunal Member)
: 11 December 2019
: 11 December 2019
: 14 January 2020
REASONS FOR DECISION
CONDITIONAL APPROVAL
Case No: LM097Sep19
Primary Acquiring Firm
Primary Target Firm
[1] On 11 December 2019, the Competition Tribunal ("Tribunal") conditionally
approved the large merger transaction between Bidvest Bank Ltd and Eqstra
Investment Holdings (Pty) Ltd. The conditions are attached marked Annexure A.
[2] The reasons for the conditional approval follow.
PARTIES TO THE TRANSACTION
Primary Acquiring Firm
[1] The primary acquiring firm is Bidvest Bank Ltd ("Bidvest Bank"), a wholly owned
subsidiary of the Bidvest Group Ltd ("Bidvest Group"), a company listed on the
Johannesburg Stock Exchange ("JSE"). Bidvest Group controls a number of firms
in South Africa and internationally and is not control by any firm.
[2] Bidvest Bank offers a full suite of banking and financial services products. Of
relevance to the proposed transaction is Bidvest Bank's fleet management services
which comprises the purchasing and sourcing of vehicles from its dealer arm or
directly from OEMs, disposing of vehicles, managing cost control, handling
administration, managing traffic fines, vehicle licences renewals and taking care of
the fleet maintenance and services incidental to fleet management amongst others.
Primary Target Firm
[3] The primary target firm is Eqstra Investment Holdings (Pty) Ltd ("Eqstra
Investments"), a special purpose vehicle established for the proposed transaction.
Eqstra Investment is a wholly owned subsidiary of enX Group Ltd ("enX Group"), a
public company listed on the JSE.
[4] Prior to the proposed transaction, Eqstra Investment will hold all the vehicle leasing
and fleet management services of the enX Group. Eqstra Investment delivers end
to-end fleet management solution ranging from fleet consulting, fleet acquisition,
fleet services, maintenance management, fuel management, risk management,
GPS tracking and fleet remarketing amongst others.
[5] Eqstra Investment and all the firms it controls are collectively referred to as the
Target Businesses. Pre-merger all the Target Businesses are owned and
controlled by the enX Group.
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PROPOSED TRANSACTION
[6] In terms of the proposed transaction, Bidvest intends to acquire Eqstra Investments.
Upon completion of the proposed transaction, Bidvest Bank will own and control Eqstra
Investment.
COMPETITION ANALYSIS
[7] The Commission considered the activities of the merging parties and found that the
merger transaction results in a horizontal overlap in the market for the provision of
vehicle leasing and fleet management services. In this market, the Commission found
that the merged entity's market share will be below 25% post-merger with an accretion
of below 15%. Further, the Commission noted that the merged entity will continue to
face competition from other players in the market such as ASSA, Wesbank, Avis,
FleetAfrica, Standard Bank, Nedbank.
[8] In terms of countervailing power, the customers of the merging parties submitted that
they are able to negotiate prices with the suppliers of fleet management services. The
customers further submitted that should the merging parties increase prices post
merger, they would likely switch to alternative suppliers present in the market.
Consequently, the Tribunal is of the view that the proposed transaction is unlikely to
substantially prevent or lessen competition in the relevant market.
PUBLIC INTEREST
[9] The merging parties submitted that they are unable to provide an unequivocal
undertaking that there would be no retrenchments as a result of the proposed
transaction and can only indicate that they do envisage some retrenchments based on
a worst-case scenario analysis. This is due to the different sectors that the merging
parties are currently active in. Bidvest Bank customers are predominantly in the public
sector and Eqstra Investments customers are in the private sector.
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[1 O] In terms of the envisaged retrenchments, the merging parties submitted that white
collar employees who are identified as highly skilled individuals in middle, senior and
top management positions have the potential to be affected .1 The Commission
submitted that the merging parties did not follow a rational process as required and
this has resulted in employment concerns for the Commission. As such, the
Commission has recommended employment conditions to address this concern.
[11] The proposed transaction did not present any other public interest issues.
CONCLUSION
[12] For the reasons stated above, we approved the transaction subject to the conditions
agreed to by the Commission and merging parties attached hereto marked Annexure
A.
Mr. Enver Daniels
14 January 2020
Date
Ms Yasmin Carrim and Ms Andiswa Ndoni concurring.
Tribunal Case Manager
For the merging parties
For the Commission
:Lumkisa Jordaan
:Ahmor Burger-Smidt of Werksmans Attorneys and
Richard van Rensburg of ENSafrica
:Billy Mabatamela and Themba Mahlangu
1 According to the Labour Force Survey issued by StatsSA (3rd quarter 2019) and the Department of
Higher Education and Training 2019 report, White Collar Employees are mobile and can easily find
employment compared to Blue Collar employees. The Blue-Collar Employees which were believed to
be most vulnerable are protected by the condition imposed.
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