competitiontrlbunal
SOUTH AFRICA
COMPETITION TRIBUNAL OF SOUTH AFRICA
In the matter between:
BRIMSTONE INVESTMENT CORPORATION LTD
And
FIREFLY INVESTMENTS 306 (PTY) LTD
Panel : Enver Daniels (Presiding Member)
: Yasmin Carrim (Tribunal Member)
: Andiswa Ndoni (Tribunal Member)
Heard on : 11 December 2019
Order Issued on : 11 December 2019
Reasons Issued on : 15 January 2020
REASONS FOR DECISION
Approval
Case No: LM137Nov19
Primary Acquiring Firm
Primary Target Firm
[1] On 11 December 2019, the Tribunal unconditionally approved the large merger
transaction whereby Brimstone Investment Corporation Ltd ("Brimstone") intends to
acquire sole control of Firefly Investments 306 (Ply) Ltd ("Firefly"). Hereunder we
shall collectively refer to Brimstone and Firefly as the 'merging parties'.
[2] Our reasons for approval follow.
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Parties to the transaction
Primary Acquiring Firm
[3] Brimstone is an investment holding company with various interests in firms in the
health, food, financial services, property and other related sectors.
[4] Brimstone is listed on the Johannesburg Stock Exchange ("JSE") and is not
controlled by a single shareholder.
Primary Target Firm
[5] Firefly is special purpose vehicle incorporated for the purposes of holding the entire
share capital in Obsidian Health (Pty) Ltd ("Obsidian"). Obsidian is a supplier of
healthcare products to the public and private sectors within Sub-Saharan Africa. Its
portfolio of products includes capital equipment and medical devices with the key
focus areas of cardiology, cardiovascular, theatre, ICU and high care.
[6] Brimstone holds 25% in Firefly.
[7] Firefly a is controlled by Capitalworks Private Equity Partnership ("CWPE"),
Brimstone (25%), Shawn Michal Landman, Scientific Investments Partnership
("SIP") and Oakleaf Management Trust. Of relevance is CWPE and SIP's
shareholdings as they are the sellers in this transaction.
The proposed transaction
[8] The proposed transaction comprises a move from joint to sole control.
[9] In terms of the Sale of Shares and Claims Agreement, Brimstone intends to acquire
sole control of Firefly through the acquisition of 54.93% of Firefly's shares held by
CWPE and SIP. Upon implementation of the proposed transaction, Brimstone will
hold 80% of the shares in Firefly.
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Competition Assessment
[1 OJ The Commission considered the activities of the merging parties and found no
horizontal overlap arising from the proposed transaction. Since Brimstone is moving
from joint to sole control, the Commission noted and considered Brimstone's current
shareholding in Firefly. For the completeness of its investigation, the Commission
notes that Firefly has less than 5% market share access for the supply of medical
devices. Furthermore, Firefly has competitors such as Medtronic Africa (Pty) Ltd and
Philips SA Health Systems (Pty) Ltd who may exercise competitive constraint.
[11] In addition, the Commission found that the proposed transaction does not result in
any vertical relationships that may be a cause for concern. The Commission noted
the pre-existing relationship between Brimstone and Life Healthcare Group (Pty) Ltd
("Life Healthcare"), as Brimstone holds a non-controlling interest in Life Healthcare
and supplies it with medical devices. The Commission was of the view that post
merger, Brimstone is unlikely to engage in any foreclosure strategies nor does it
have the incentive to do so.
[12] In view of the above, the Commission concluded that the proposed transaction is not
likely to result in any substantial lessening of prevention of competition in any
market.
[13] We had no reason to differ with the Commission's findings.
Public interest
[14] The merging parties submitted that the proposed transaction will not have any
adverse effect on employment and no retrenchments are contemplated as a result
of its implementation. The large merger notice was served on the employee
representatives of the merging parties. The Commission contacted the employee
representatives and no concerns were raised.
[15] Since this transaction only contemplates an increase in shareholding, it is unlikely
that there will be a duplication of jobs. The Commission was therefore satisfied with
the merging parties views that no employment concerns will arise as a result of the
the merging parties views that no employment concerns will arise as a result of the
proposed transaction.
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[16] No other public interest concerns were raised.
Conclusion
[17] The proposed transaction entails a move from joint to sole control and does not
result in any substantial lessening or prevention of competition in any market. In
addition, the proposed transaction will not result in any job losses and does not raise
any other public interest concern.
[18] We therefore unconditionally approved the proposed transaction.
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Mr Enver Daniels
15 January 2020
Date
Ms Yasmin Carrim and Ms Andiswa Ndoni concurring.
Tribunal Case Manager
For the Merging Parties
For the Commission
Ndumiso Ndlovu
A Burger-Smidt & S Rhodze of Werksmans
Attorneys
N Msiza and M Aphane
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