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[2020] ZACT 83
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Bidvest Services Holdings (Pty) Ltd v New Frontiers Tours (Pty) Ltd (LM128Nov19) [2020] ZACT 83 (7 February 2020)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM128Nov19
In
the matter between
BIDVEST
SERVICES HOLDINGS (PTY) LTD
Primary Acquiring Firm
and
NEW
FRONTIERS TOURS (PTY) LTD
Primary Target Firm
Panel
: Ms M Mazwai (Presiding Member), Ms Y Carrim (Tribunal Member), Mr
AW Wessels (Tribunal Member)
Heard
on : 22 January 2020
Order
Issued on : 22 January 2020
Reasons
Issued on : 7 February 2020
NON-CONFIDENTIAL
REASONS FOR DECISION
APPROVAL
[1]
On 22 January 2020, the Competition Tribunal ("Tribunal")
unconditionally approved a large merger between Bidvest
Services
Holdings (Pty) Ltd and New Frontiers Tours (Pty) Ltd.
[2]
The reasons for the approval of the proposed transaction follow.
PARTIES
TO THE TRANSACTION
[3]
The primary acquiring firm is Bidvest Services Holdings (Pty) Ltd
("Bidvest Services"), a wholly owned subsidiary
of Bidvest
Group Ltd ("Bidvest Group"), a public company listed on the
Johannesburg Stock Exchange. Bidvest Group controls
various firms in
South Africa and internationally, and it is not controlled by any
firm.
[4]
Bidvest Services operates through multiple entities. Of relevance for
competition assessment in this proposed transaction
is its wholly
owned subsidiary Bidvest Travel Holdings (Pty) Ltd ("BidTravel").
BidTravel houses the executive management
of Bidvest Services' travel
services.
[5]
BidTravel's offerings include providing travel management services to
corporate businesses, and locals travelling internationally
("outbound travel services") for leisure.
[6]
The primary target firm is New Frontiers Tours (Pty) Ltd ("NFT"),
a company whose issued shares are held by
the Verity Trust, Gary
Smith and Paula Moore ("the sellers").
[7]
NFT is a destination management company exclusively offering travel
services to foreigners travelling to Southern Africa
("inbound
travel services") for leisure.
PROPOSED
TRANSACTION
[8]
Bidvest Services intends to acquire 100% of the issued share capital
of NFT from the sellers. Post-merger, Bidvest Group
will ultimately
acquire sole control of NFT.
IMPACT
ON COMPETITION
[9]
The Competition Commission ("Commission")
[1]
considered the activities of the parties and did not identify any
horizontal overlaps in their activities. The Commission based
this on
its finding that Bidvest Services only operates in the outbound
travel services market in South Africa, while NFT operates
exclusively in the inbound travel services market.
[2]
The Commission also found that both demand-side and supply-side
substitutability of the merging parties' services was unlikely
because of the large number of participants in both markets.
Furthermore, the Tribunal has previously held that the inbound and
outbound travel services markets are distinguishable.
[3]
[10]
The Commission also did not identify any vertical overlaps from the
activities of the parties.
[11]
Due to the above, the Commission concluded that the proposed
transaction is unlikely to substantially lessen or prevent
competition
in any market. We found no reason to disagree.
PUBLIC
INTEREST
[12]
Prior to the proposed transaction, some of BidTravel's subsidiaries
had retrenched several employees. The Commission investigated
these
retrenchments and was satisfied that they were not merger specific.
The merging parties confirmed this during the hearing
and further
stated that no retrenchments would result from the proposed
transaction. The proposed transaction does not raise any
other public
interest concerns.
Conclusion
[13]
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, we believe that all public interest
concerns were addressed satisfactorily.
[14]
Accordingly, we approved the transaction without conditions.
Ms M Mazwai
Ms
Y Carrim and Mr AW Wessels concurring
Date:
7 Februay 2020
Tribunal
Case Manager : P Kumbirai
For
the Merging Parties : P Cleland of Werksmans Attorneys
For
the Commission: R Darji and T Masithulela
[1]
[2]
Inbound travel operators serve international customers travelling to
South Africa, whereas outbound travel operators serve customers
in
South Africa travelling internationally.
[3]
Imperial Holdings Limited/Tourism Investment Corporation Limited (CT
33/LM/Jun0l) paras 7 and 9.