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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case no: LM210Mar21
In the large merger between:
The Prepaid Company (Pty) Ltd (Primary Acquiring Firm)
And
GloCell Distribution (Pty) Ltd (Primary Target Firm)
Heard on: 21 April 2021
Order Issued on: 21 April 2021
REASONS FOR DECISION
[1] On 21 April 2021, the Competition Tribunal (“Tribunal”) unconditionally approved the
large merger between The Prepaid Company (Pty) Ltd (“TPC”) and GloCell Distribution
(Pty) Ltd (“GCD”).
[2] TPC is a wholly owned subsidiary of Blue Label Telecoms Limited (“BLT”), a public
company listed on the JSE. The BLT group directly and indirectly controls several firms
active in the mobile telephony space. The acquiring group’s activities include the
wholesale supply of prepaid cellular airtime and data and cellular starter packs of
certain local mobile network operators (“MNOs”). The acquiring group procures the
prepaid airtime, data and starter packs from MNOs and other wholesalers.
[3] GCD, the target firm, is also active in the wholesale supply of prepaid cellular airtime
and data and cellular starter packs to local wholesalers and retailers. The airtime, data
and starter packs are obtained from MNOs. It does not sell these products directly to
consumers. Among GCD’s current shareholders are the acquirer and GloCell (Pty) Ltd
(“the Seller”).
[4] The acquiring group intends to acquire an additional 40% of the entire issued share
capital of GCD from the Seller thereby increasing its shareholding in GCD from 48%
to 88%. Post implementation of the proposed transaction TPC will move from a position
of joint to sole control over GCD.
[5] The merger parties are both active in the national market for the wholesale supply of
pre-paid airtime, data and cellular starter packs. The merger parties also purchase and
sell these products to each other. In addition, GCD outsources its human resources
and IT services to the acquiring group. The Competition Commission (“the
and IT services to the acquiring group. The Competition Commission (“the
Commission”) characterised the interparty telephony sales as trade sales, not
warranting cause for competition concern, and the relevant activities relating to HR
and IT services, the Commission found to be de minimus since that portion of the
business concerns a limited number of employees.
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[6] The Tribunal has considered submissions in relation to the proposed transaction and
agrees with the Commission’s conclusion that the proposed transaction is unlikely to
substantially prevent or lessen competition in any relevant market. The proposed
transaction does not lead to a change in the structure of the relevant markets. The
Commission also found that the merged entity will account for approximately [20-30]%
of the national wholesale supply of pre-paid airtime, data and cellular starter packs,
with a market accretion of less than 2% as a result the proposed transaction.
Furthermore, the merged entity will continue to be constrained by a number of
alternative competitors, including each of the MNOs. In addition, other than the
acquiring group, competing wholesalers can procure prepaid airtime, data and starter
packs directly from the MNOs.
[7] From a public interest perspective, the proposed transaction will not result in negative
employment effects i.e., there will be no job losses, relocation of employees or
reduction in employees’ remuneration as a result of the proposed transaction.
Therefore, the proposed transaction does not raise any employment concerns.
Additionally, the proposed transaction does not raise any other public interest
concerns. The Tribunal has, therefore, approved the proposed transaction without
conditions.
03 May 2021
Mr Andreas Wessels Date
Ms Yasmin Carrim and Prof. Fiona Tregenna concurring
Tribunal Case Manager: Mpumelelo Tshabalala
For the Merging Parties: Dean Fonseca of Barkers Attorneys
For the Commission: Wiri Gumbie