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[2020] ZACT 79
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RCS Cards (Pty) Ltd v Edcon Ltd (LM129Nov19) [2020] ZACT 79 (29 January 2020)
COMPETITION
TRIBUNAL
SOUTH
AFRICA
Case
No: LM129Nov19
In
the matter between
RCS
CARDS (PTY) LTD Primary
Acquiring Firm And
EDCON
LTD Primary
Target Firm
(in
respect only of certain cardholders book debt of Edcon Ltd)
Panel:
Yasmin Carrim
(Presiding Member), Andiswa Ndoni (Tribunal Member)
Halton
Cheadle (Tribunal Member)
Heard
on: 15 January 2020
Order
Issued on : 15 January 2020
Reasons
Issued on : 29 January 2020
REASONS
FOR DECISION
Approval
[1]
On 15 January 2020, the Competition Tribunal ("Tribunal")
unconditionally approved the large merger transaction
whereby RCS
Cards (Ply} Ltd ("RCS") intends to acquire ownership of a
portion of certain cardholders' book debt owned
by Edcon Ltd
("Edcon"), hereunder collectively referred to as 'the
merging parties'.
[2]
Our reasons for unconditional approval follow.
Parties
to the transaction
Primary
Acquiring Firm
[3]
RCS is incorporated in South Africa and is ultimately controlled by
BNP Paribus Societe Anonyme. RCS does not control
any firm in South
Africa.
[4]
RCS and its controllers are jointly referred to as the 'RCS Group'.
[5]
The RCS Group provides consumer finance services, focusing on
unsecured credit including retail credit card facilities
and
insurance products in South Africa. The RCS Group is structured into
two main business lines: transaction finance (card products)
and
fixed term finance (loans).
Primary
Target Firm
[6]
Edcon's book debt consists of cardholders' book debt owned by Edcon
("Edcon Book Debt"). The Edcon Book debt
comprises Edcon
store accounts and gross receivables.
[7]
The Edcon Book Debt refers to all claims and entitlements for the use
of an Edcon branded store card by individuals who
qualify for and
have been issued a with an Edcon store card; or claims recorded in
the revolving credit facility agreements concluded
between Edcon and
the principal debtor.
[8]
Edcon is controlled by 1<2019216440 South Africa Ltd and is listed
on the JSE.
Proposed
transaction
[9]
RCS intends to acquire the Edcon Book Debt in tranches over a certain
period of time. Post transaction, at the end of
the period agreed by
the parties, RCS will wholly own and control the Edcon Book Debt.
[1OJ
RCS also intends to acquire a portion Edcon's book debt which is
currently owned by ASSA Bank in a separate notifiable
transaction. We
heard both transactions at the same time. The reasons for that
transaction is set out separately.
[1]
Competition
assessment
[11]
The merging parties provide consumer retail finance in the form of
in-store unsecure credit.
[12]
The Commission found a horizontal relationship between the merging
parties in the market for the provision of unsecured customer
credit
related to the purchase of goods in retail stores. The Commission
however investigated the proposed transaction in the national
market
for unsecured credit lending as there are other forms of unsecured
credit lending that compete with in-store unsecured lending.
Therefore, the market for unsecured credit lending (relevant market)
was preferred.
[13]
The Commission found that the merging parties will have a combined
post-merger market share of less than 10% in the market
for unsecured
credit lending in South Africa. Given the low post-merger market
share, the Commission was of the view that the proposed
the
transaction is unlikely to change the market structure. The
Commission also found that there is an excess of 10 market
participants
with a greater presence in the relevant market which
will continue to competitively constrain the merging parties.
[14]
The Commission examined the transaction further and found that the
proposed transaction is unlikely to raise existing barriers
to entry
into the unsecured credit market nor will it give rise to any
information exchange concerns.
[15]
We enquired from the merging parties as to the effect of the proposed
transaction on the current and future cardholders (customers)
with
credit facility agreements with Edcon. The merging parties submitted
that there will be no effect on customers as the proposed
transaction
essentially deals with which entity would be funding the credit
whether it be Edcon or RCS. Customers will retain the
same offering.
[16]
We were satisfied with the Commission's analysis and the merging
parties' response above.
Public
interest
[17]
The proposed transaction did not raise any employment concerns or
adversely affect any other public interest ground.
Conclusion
[18]
In light of the above, we were of the view that the proposed
transaction is unlikely to result in a substantial lessening of
prevention of competition in any market. In addition, the proposed
transaction raises no public interest concerns.
[19]
We accordingly approved the proposed transaction without conditions.
Ms
Yasmin Carrim
Ms
Andiswa Ndoni and Prof. Halton Cheadle concurring.
Date:
29 January 2020
Tribunal
Case Manager : Ndumiso Ndlovu
For
the Merging Parties : R Wilson and S Manley of Webber Wentzel
For
the Commission: M Mfuphi and W Gumbie
[1]
See RCS Cards (Pty) Ltd and ABSA Bank Ltd (in respect only of
cardholders book debt owned by the ABSA Bank Ltd) (Case No:
LM131Nov19).