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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM069Jul20
In the matter between:
Motus Group Ltd Primary Acquiring Firm
And
Atlantis Nissan Centurion dealership business
conducted as a going concern by Atlantis Motors (Pty)
Ltd
Primary Target Firm
Panel : AW Wessels (Presiding Member)
: E Daniels (Tribunal Member)
: Prof. F Tregenna (Tribunal Member)
Heard on : 14 September 2020
Order Issued on : 15 September 2020
Reasons Issued on : 13 October 2020
REASONS FOR DECISION
Unconditional approval
[1] On 15 September 2020, the Competition Tribunal (“Tribunal”) unconditionally
approved the proposed transaction in terms of which Motus Group Ltd (“Motus”)
intends to acquire control over the Atlantis Nissan Centurion dealership (“the
Target Business”).
[2] The reasons for the approval of the proposed transaction follow.
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Parties to the proposed transaction
[3] The acquiring firm is Motus, a South African public company which is wholly
owned and controlled by Motus Holdings Ltd (“Motus Holdings”). Motus controls
numerous firms in South Africa. Motus Holdings controls, apart from Motus,
firms such as Motus Capital and Motus Corporation. Motus Holdings and all its
subsidiaries will be collectively referred to as “the Motus Group”.
[4] The Motus Group is South Africa-based with a select international presence
mainly in the UK, Australia, South East Asia and Southern Africa. Through its
subsidiaries and associates, it operates a diversified business in the entire
automotive value chain through its four business segments namely: (i) import
and distribution; (ii) retail and rental of Original Equipment Manufacturers’
(OEM) passenger and commercial vehicle brands; (iii) motor-related financial
services; and (iv) aftermarket parts. Of relevance to the competition
assessment are the Motus Group’s activities involving the retail sale of
passenger and commercial vehicles. The Motus Group represents 22 OEMs
through 321 dealerships, including 77 pre-owned dealerships, 226 passenger
vehicle dealerships and 18 commercial vehicle dealerships nationwide. In
Gauteng, the Motus Group owns and controls two Nissan dealerships, one in
Menlyn and one at the East Rand Mall. These dealerships sell new and used
Nissan passenger and light commercial vehicles.
[5] The Target Business is the Atlantis Nissan Centurion dealership business
currently owned by Atlantis Motors (Pty) Ltd (“Atlantis Motors”). It is situated in
Centurion, Gauteng, and is active in the sale of new vehicles, used vehicles,
OEM branded parts and accessories and aftermarket services. In particular, the
Target Business supplies the following: (i) the sale of new Nissan and Datsun
passenger vehicles; (ii) the sale of new Nissan light commercial vehicles; (iii)
the sale of used vehicles; (iv) the provision of after-sale services on Nissan and
the sale of used vehicles; (iv) the provision of after-sale services on Nissan and
Datsun vehicles; and (v) the sale of after-sale parts and accessories on Nissan
and Datsun vehicles.
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Proposed transaction and rationale
[6] Motus intends to acquire the Target Business from Atlantis Motors as a going
concern. Post-merger, the Target Business will be solely controlled by Motus.
Relevant markets and impact on competition
[7] The Competition Commission (“Commission”) found that the proposed
transaction presents a horizontal overlap between the activities of the merger
parties because they both operate in the retail sale of new and used passenger
and light commercial vehicles within an 80 km radius of the Target Business.
The merger parties also provide ancillary services associated with motor
dealerships such as after-sale services, spare parts and accessories.
Sale of new passenger vehicles in Gauteng
[8] The Commission found that the merged entity’s post-merger market share in
the sale of new passenger vehicles in Gauteng will be less than 25%, with a
minimal accretion of less than 1%. The Commission further found that the
merged entity will continue to face competition in this market from several
dealerships.
Sale of light new commercial vehicles in Gauteng
[9] The Commission found that the merged entity will have a post-merger market
share of less than 15% in the sale of light new commercial vehicles in Gauteng,
with a minimal accretion of less than 1%. The Commission further found that
the merged entity will be competitively constrained in this market by dealerships
such as CMH Nissan and Datsun Midrand and Nissan Africa Pretoria.
[10] Given the minimal market share accretion in the abovementioned relevant
markets, the Commission was of the view that the proposed transaction is
unlikely to alter the structure of the new passenger and light commercial vehicle
markets in Gauteng.
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Intra-brand competition
[11] The Commission also assessed competition among dealerships selling the
same brand of vehicles. The Target Business is involved in the sale of Datsun
and Nissan brands of vehicles, and the Motus Group operates two Nissan
dealerships in Gauteng. The Commission found that there are approximately
15 Nissan and Datsun dealerships within an 80 km radius of the Target
Business. Given this the Commission was of the view that the proposed
transaction will not result in a significant portion of the Nissan and Datsun
dealerships being owned by the Motus Group post-merger as there are several
dealerships that offer Nissan and Datsun vehicles in the Gauteng area.
Therefore, the Commission concluded that the proposed transaction is unlikely
to lead to a reduction in intra-brand competition within the relevant area.
Sale of used vehicles and after-sale services
[12] Regarding the merger parties’ activities relating to the sale of used cars, the
Commission found that the proposed transaction is unlikely to raise competition
concerns given that this market appears to be highly competitive with numerous
market players, has low entry barriers and because customers of used vehicles
tend to source cars through various outlets, namely through the internet.
[13] The Commission also found no competition concerns resulting from the
proposed transaction relating to the market for after-sale services.
[14] We concur with the Commission’s assessment that the proposed transaction is
unlikely to substantially prevent or lessen competition in any relevant market.
Public interest
[15] The merger parties submitted that there will be no retrenchments as a result of
the proposed transaction.1
[16] The National Union of Metalworkers of South Africa (“NUMSA”) filed a Notice
of Intention to Participate on 22 July 2020. NUMSA indicated that the Motus
1 Merger Record inter alia pages 7 and 70.
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Group is in the process of retrenching a substantial number of its employees
across the country. The Minister for the Department of Trade, Industry and
Competition (“the Minister”) also raised concerns regarding the proposed
merger’s impact on employment.
[17] In relation to the concerns regarding retrenchments, the merger parties
submitted that there is currently a “dismissal based on operational
requirements” process being implemented in relation to 63 employees of the
Motus Group in terms of section 189 of the Labour Relations Act 66 of 1995,
as amended. The merger parties submitted that the current retrenchment
process is not related to the proposed transaction and is occurring as part of
the Motus Group’s cost saving measures in response to the Covid-19
pandemic. This process is likely to affect about 63 employees employed in
various dealerships (in areas such as Polokwane, Edenvale, Johannesburg,
Ermelo and Richard Bays) across all job categories. The Motus Group
furthermore explained certain steps it had taken to mitigate the impact of
retrenchments and to reduce the number of affected employees.
[18] The Commission assessed the above and found that the rationale for the
current retrenchment process within the Motus Group appears to be for
operational reasons and therefore is not related to the proposed merger. It
accepted the merger parties’ argument that the retrenchments are occurring as
a result of the impact that the Covid-19 national lockdown had on the business
of the Motus Group and are unrelated to the proposed transaction. In addition,
the Commission noted that the Motus Group took steps to curtail the impact on
jobs. Furthermore, the Commission noted that none of the retrenchments are
in the dealerships close to Centurion and therefore appear to be unrelated to
the proposed transaction.
[19] The Commission communicated the merger parties’ responses to the Minister
and NUMSA and no further concerns were raised with the Commission.
and NUMSA and no further concerns were raised with the Commission.
Accordingly, the Commission concluded that the proposed merger is unlikely to
result in any employment concerns.
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[20] We approved the proposed transaction unconditionally on the basis of the
merger parties’ submissions that there will be no retrenchments as a result of
the proposed transaction.
[21] The proposed transaction raises no other public interest concerns.
Conclusion
[22] In light of the above and given the merger parties’ submissions that the
proposed transaction will not result in any merger-specific retrenchments in
South Africa, we unconditionally approved the proposed transaction.
13 October 2020
Mr Andreas Wessels Date
Mr Enver Daniels and Prof. Fiona Tregenna concurring
Tribunal Case Manager : Kgothatso Kgobe
For the Merger Parties : J Sham-Guild and M Wagener of Norton
Rose Fulbright
For the Commission : Z Hadebe and N Msiza