COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No.: LM022May21
In the matter between:
DSV Panalpina A/S Primary Acquiring Firm
And
Global Integrated Logistics Business of Agility Public
Warehousing Company K.S.C.P
Primary Target Firms
E Daniels (Presiding Member)
Y Carrim (Tribunal Panel Member)
Panel:
T Vilakazi (Tribunal Panel Member)
Heard on: 19 July 2021
Decided on: 19 July 2021
ORDER
Further to the recommendation of the Competition Commission in terms of section
14A(1)(b) of the Competition Act, 1998 (“the Act”) the Competition Tribunal orders that-
1. the merger between the abovementioned parties be approved in terms of section
16(2)(b) of the Act subject to the conditions attached hereto; and
2. a Merger Clearance Certificate be issued in terms of Competition Tribunal rule
35(5)(a).
19 July 2021
Presiding Member
Mr Enver Daniels
Date
Concurring: Ms Yasmin Carrim and Dr. Thando Vilakazi
Date : 19 July 2021
To : ENSafrica Attorneys
Case Number: LM022May21
DSV Panalpina A/S And Global Integrated Logistics Business of
Agility Public Warehousing Company K.S.C.P
You applied to the Competition Commission on 14 May 2021 for
merger approval in accordance with Chapter 3 of the Competition
Act.
Your merger was referred to the Competition Tribunal in terms of
section 14A of the Act, or was the subject of a Request for
consideration by the Tribunal in terms of section 16(1) of the Act.
After reviewing all relevant information, and the recommendation
or decision of the Competition Commission, the Competition
Tribunal approves the merger in terms of section 16(2) of the Act,
for the reasons set out in the Reasons for Decision.
This approval is subject to:
no conditions.
x the conditions listed on the attached sheet.
The Competition Tribunal has the authority in terms of section 16(3)
of the Competition Act to revoke this approval if
a) it was granted on the basis of incorrect information for which
a party to the merger was responsible.
b) the approval was obtained by deceit.
c) a firm concerned has breached an obligation attached to
this approval.
The Registrar, Competition Tribunal
Notice CT 10
About this Notice
This form is prescribed by the Minister of Trade and Industry in terms of section 27 (2) of the Competition Act 1998 (Act No. 89 of 1998).
Contacting
the Tribunal
The Competition Tribunal
Private Bag X24
Sunnyside
Pretoria 0132
Republic of South Africa
tel: 27 12 394 3300
fax: 27 12 394 0169
e-mail: ctsa@comptrib.co.za
Merger Clearance Certificate
This notice is issued in
terms of section 16 of
the Competition Act.
You may appeal
against this decision to
the Competition
Appeal Court within 20
business days.
CASE NO: LM022May21
DSV Panalpina A/S
AND
The Global Integrated Logistics business of Agility Public Warehousing Company
K.S.C.P.
ANNEXURE A: CONDITIONS
1. DEFINITIONS AND INTERPRETATION
1.1 In this document the following expressions bear the meanings assigned to them
below and related expressions bear corresponding meanings—
1.1.1 “Approval Date” means the date referred to in the Tribunal’s merger
clearance certificate (Form CT10);
1.1.2 “Commission” means the Competition Commission of South Africa, a
statutory body duly established under the Competition Act;
1.1.3 “Commission Rules” means the Rules for the Conduct of Proceedings in
the Commission;
1.1.4 “Competition Act” means the Competition Act No 89 of 1998, as amended;
1.1.5 “Conditions” means these conditions contained in this Annexure A, agreed
to by the Merged Entity and the Commission;
1.1.6 “Days” mean business days, being any day other than a Saturday, Sunday
or official public holiday in the Republic of South Africa;
1.1.7 “DSV A/S” means DSV Panalpina A/S, a public company listed on the
Nasdaq Copenhagen Stock Exchange;
1.1.8 “GIL” means the Global Integrated Logistics business of Agility Public
Warehousing Company K.S.C.P.;
1.1.9 “Implementation Date” means the date, occurring after the Approval Date,
on which the Merger is implemented by the Merging Parties;
1.1.10 “LRA” means the Labour Relations Act No. 66 of 1995 (as amended);
1.1.11 “Merged Entity” means the combined firm resulting from the Merger
between DSV A/S and GIL;
1.1.12 “Merger” means the acquisition of control over GIL by DSV A/S;
1.1.13 “Merging Parties” means DSV A/S and GIL;
1.1.14 “Minister” means the Minister of Trade, Industry and Competition, South
Africa;
1.1.15 “Moratorium Period” means the period between the Approval Date and the
Implementation Date and thereafter, a period of 2 (two) years from the
Implementation Date;
1.1.16 “South Africa” means the Republic of South Africa;
1.1.17 “Tribunal” means the Competition Tribunal of South Africa, a statutory body
duly established under the Competition Act; and
1.1.18 “Tribunal Rules” means the Rules for the Conduct of Proceedings in the
Tribunal.
2. CONDITIONS TO THE APPROVAL OF THE MERGER
2.1 EMPLOYMENT
2.1.1 The Merged Entity shall not retrench any employees in South Africa as a
result of the Merger, for the duration of the Moratorium Period.
2.1.2 For the sake of clarity, retrenchments do not include (i) voluntary separation
arrangements; or (ii) voluntary early retirement packages, (iii) unreasonable
refusals to be redeployed in accordance with the provisions of the LRA;
(iv) resignations or retirements in the ordinary course of business;
(v) retrenchments lawfully effected for operational requirements unrelated to
the Merger; (vi) terminations in the ordinary course of business, including
but not limited to, dismissals as a result of misconduct or poor performance;
(vii) any decision not to renew or extend a contract of a contract worker; and
(viii) any transfer of employees to the employment of a third party as a result
of any sale of business operations, including related assets and liabilities, or
any joint venture or similar business arrangements.
3. MONITORING OF COMPLIANCE WITH THE CONDITIONS
3.1 The Merging Parties shall inform the Commission in writing of the Implementation
Date of the Merger within 5 (five) Days of its occurrence.
3.2 The Merging Parties shall circulate a copy of the Conditions to all their employees
and/or their employee representatives and/or relevant trade unions in South Africa
within 5 (five) Days of the Approval Date.
3.3 As proof of compliance thereof, the Merging Parties shall within 5 (five) Days of
circulating the Conditions to all their employees and/or their employee
representatives and/or relevant trade unions in South Africa, provide the
Commission with an affidavit by a senior official of the Merging Parties attesting to
the circulation of the Conditions and attaching a copy of the notice sent.
3.4 The Merged Entity shall submit a report to the Commission on each anniversary
of the Approval Date, setting out its compliance with clause 2.1 of the Conditions,
for the duration of the Conditions. This report shall be accompanied by an affidavit,
attested to by a director or other suitable person of the Merged Entity in South
Africa, confirming the accuracy of the contents of the report.
3.5 Any employee of either of the Merging Parties who believes that the Merging
Parties have not complied with or have acted in breach of the Conditions may
approach the Commission.
3.6 The Commission may request such additional information from the Merging
Parties which the Commission from time to time regards as necessary for the
monitoring of compliance with these Conditions.
4. APPARENT BREACH
4.1 An apparent breach by the Merging Parties of any of the Conditions shall be dealt
with in terms of Rule 39 of the Commission Rules read together with Rule 37 of
the Tribunal Rules.
5. VARIATION OF THE CONDITION
5.1 The Merging Parties or the Commission may at any time, and on good cause
shown, apply to the Tribunal for the Conditions to be lifted, revised or amended.
6. GENERAL
6.1 All correspondence in relation these Conditions must be submitted to the following
email addresses: mergerconditions@compcom.co.za and
ministry@thedtic.gov.za.
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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No.: LM022May21
DSV Panalpina A/S (Acquiring Firm)
And
The Global Integrated Logistics Business Of
Agility Public Warehousing Company K.S.C.P.
(Target Firm)
REASONS FOR DECISION
[1] On 19 July 2021, the Competition Tribunal conditionally approved a large merger
between DSV Panalpina A/S (“DSV A/S”) and The Global Integrated Logistics
Business of Agility Public Warehousing Company K.S.C.P. (“GIL”).
[2] DSV A/S intends to acquire GIL from Agility Public Warehousing Company K.S.C.P.
(“Agility”). The proposed transaction constitutes an all-share transaction. Post
implementation of the proposed transaction, DSV A/S will exercise sole control over
GIL. The proposed transaction will be notified to the competition authorities in Kenya,
the European Union (“EU”), the United States of America, Kuwait, Saudi Arabia,
Turkey, Russia, Switzerland, the United Kingdom, Australia, Chile, Columbia, South
Korea, China and Brazil.1
[3] DSV A/S is a public company listed on the Nasdaq Copenhagen Stock Exchange
headquartered in Hedehusene, Denmark.2 It is a global, light-asset based international
freight-forwarding and logistics company that provides land (road and rail), air and sea
freight forwarding-services, as well as logistics solutions (e.g., contract logistics
services and distribution logistics services). DSV A/S’ activities in South Africa can be
categorised into: (i) land, air and sea freight-forwarding services; (ii) contract logistics
services; (iii) road / courier services; and (iv) special projects. In South Africa, DSV
Africa controls: DSV Africa Holding Proprietary Limited, DSV Skyservices Proprietary
Limited, DSV Road Proprietary Limited, DSV Real Estate Johannesburg Proprietary
Limited and Globeflight Worldwide Express Proprietary Limited (collectively referred to
as “DSV”).
[4] Relevant to the proposed transaction, are DSV A/S’ freight forwarding services and
contract logistics services. As a freight-forwarder, DSV acts as an intermediary
contract logistics services. As a freight-forwarder, DSV acts as an intermediary
between the entity that makes the shipment and the destination for the goods. Although
DSV does not carry out the shipments itself, it offers different transport modes, such
as sea / ocean freight, rail freight, road transport and air freight shipment. DSV, like all
freight-forwarders, uses its trusted contacts with carriers and partners from air
1 The transaction has been cleared in Brazil, China, Columbia, South Korea, Turkey, and The United
States. The EU filing has been declared complete with the review period to expire on 3 August 2021.
2 As of 31 December 2020, the firms holding more than 5% of the total issued share capital in DSV
A/S are: Ernst Gohner Foundation (as to 10.72%); Black Rock Inc. (as to 7.82%); Capital Group
Companies (as to 5.09%); and Morgan Stanley (as to 5.02%).
2
transport specialists and trucking companies to transoceanic lines, in order to
negotiate the best possible price for their customers. This can include using
established commercial routes with regular frequent departures, or by charter, valuing
different offers and choosing the best route that optimises speed, costs and reliability,
considering all the variables necessary for the analysis of each case. Contract logistics
consists of the outsourcing of resource management tasks to a third-party company
such as DSV. DSV’s contract logistics division handles activities such as designing
and planning supply chains, designing facilities, warehousing, transporting and
distributing goods, processing orders and collecting payments, managing inventory
and even providing certain aspects of customer service.
[5] GIL is controlled by Agility, a public company listed on the Boursa Kuwait and the Dubai
Stock Exchange that is not controlled by any firm. In South Africa, Agility controls Agility
South Africa Proprietary Limited.
[6] GIL is a global freight-forwarder and provider of contract logistics. It offers ocean, air
and road freight, warehousing and distribution, and integrated supply chain services in
more than 100 countries. GIL also provides specialist solutions for capital projects, oil
and gas, chemicals, and fairs and events logistics. In South Africa, GIL provides (i)
land, air and sea freight-forwarding (including advising on national customs and
clearance, security, license requirements and regulations related to air and sea
freight); and (ii) contract logistics services.
[7] The Commission considered the activities of the merging parties and found that the
proposed transaction results in horizontal overlaps in respect of:
a. The market for the provision of freight forwarding and clearing services: freight
forwarding activities by air, sea and land (including advising on national
customs and clearance, security, license requirements and regulations), and
customs and clearance, security, license requirements and regulations), and
b. The market for the provision of contract logistics and warehousing services.
[8] The Commission did not identify vertical overlaps. However, there is an existing
commercial relationship between the merging parties as they provide services to each
other on a non-contractual and ad hoc basis. DSV A/S provides customs brokerage
services to GIL on a non-contractual and ad hoc basis. GIL provides ad hoc
warehousing and air and ocean freight services to DSV A/S.
[9] The national market for the provision of freight forwarding and clearing services: The
merging parties submitted that the merged entity will have a post-merger market share
of approximately %, with an accretion of % in the market for the provision of freight
forwarding in South Africa. The Commission found that there is no publicly available
information to calculate market shares for the provision of freight forwarding and
clearing services. However, the submissions by market participants indicate that there
are numerous other companies active in the market for the provision of freight
forwarding and clearing services that will continue to constrain the merged entity post-
merger. Given this, the merging parties are unlikely to exercise market power within
this market and the proposed transaction is unlikely to raise competition concerns
within the market.
[10] The market for the provision of contract logistics and warehousing services: The
merging parties submitted that post-merger the merged entity will have a market share
of approximately % in the national market for the provision of contract logistics
merging parties submitted that the merged entity will have a post-merger market share merging parties submitted that the merged entity will have a post-merger market share
3
services. The Commission also found that there is no publicly available information to
calculate market shares for the provision of contract logistics and warehousing
services, and so it canvassed the views of various market participants. The views of
market participants indicate that there are numerous other companies active in the
market for the provision of contract logistics and warehousing services that will
continue to constrain the merged entity post-merger. Given this, it was the
Commission’s view that the merging parties are unlikely to exercise market power
within this market and that the proposed transaction is unlikely to raise competition
concerns within the market. We agree with the Commission’s approach to assessing
the market shares, given the paucity of public information.
[11] Since 2015, DSV A/S has acquired three firms active in the logistics sector. More
specifically these firms are active in freight forwarding services, contract logistics and
supply chain management services, and courier services. Further, as part of its
rationale DSV A/S has stated that acquisitions are an integral part of its strategy, and
that DSV A/S has a track record of successful integrations.
[12] These acquisitions, which may be viewed as creeping mergers, are often cited as a
problem in the context of concentrated industries, with high barriers to entry. In relation
to the instant transaction, the Commission noted that although DSV A/S has acquired
several firms in the broad logistic sector within South Africa in the past 5 years, the
proposed transaction does not appear to significantly increase concentration in the
relevant markets (i.e., freight forwarding services and clearing services, and contract
logistics and warehousing services market). Considering the seeming growth strategy
via acquisitions, the Commission has said that it will remain watchful in its assessments
of further acquisitions by DSV A/S. Given the above considerations, we agree with the
of further acquisitions by DSV A/S. Given the above considerations, we agree with the
Commission’s view that it is unlikely that the proposed transaction raises creeping
merger effects that will likely substantially prevent or lessen competition in any market.
[13] A competitor raised the concern that with regards to contract logistics, DSV A/S is a
large competitor with a large customer base. The competitor was concerned that this
type of merger could lead to further dominance by DSV A/S in this market, because
DSV A/S would have access to a larger customer base. DSV A/S, Imperial, and UPD
also have a large footprint in the pharmaceutical logistics market. As this South African
logistics services provider submitted, there are barriers to entry in the logistics industry,
due to the costs and infrastructure involved in setting up a national footprint and
providing services on a national basis. It is the competitor’s opinion that a transaction
such as this could have the effect of consolidating the customer base to one service
provider. This competitor had also heard that DSV A/S had put in a bid with DB
Schenker, which would further adversely affect competition in the market.
[14] DSV is aware of various media reports from around May 2021 regarding a potential
acquisition of DB Schenker.
In relation to DSV A/S
and the size of its contract logistics operations in South Africa, DSV A/S estimates its
market share in South Africa to be low and estimated market share accretion to be
even lower. DSV’s South African contract logistics business is nonetheless operated
sustainably without relying on ‘offshore funding’ to price its services below cost or at a
level that might be considered unsustainable for DSV. Any global cross-subsidisation
would be limited in respect of contract logistics where the services tend to be provided
on a local or national basis. Notwithstanding the above, the merging parties submit
4
that smaller local participants in the contract logistics space are still able to compete
effectively, as evidenced by the large number of participants active on the market.
[15] The Commission found that no unilateral effects are likely to arise as a result of the
proposed transaction given the small accretion and small resultant combined share in
the market for contract logistics, along with the presence of a number of competitors.
We agree with this analysis.
[16] The Commission also received a notice of intention to participate from the Minister of
Trade, Industry and Competition (the “Minister”) based on public interest grounds. The
Minister proposed a condition for approving the merger that no merger related
retrenchments will take place for a period of 24 (twenty-four) months in South Africa
after approval of the merger by the Tribunal.
[17] In view of the merging parties’ inability to provide an unequivocal statement on the
merger’s impact on employment, the Commission was of the view that the proposed
merger ought to be approved subject to an employment condition placing a moratorium
on merger specific retrenchments for a period of two years. Following engagements
between the merging parties and Commission, DSV A/S agreed to the conditions
imposing a 24 month moratorium in respect of all merger related retrenchments,
regardless of employee skill level.
[18] We concluded that the proposed transaction is unlikely to substantially prevent or
lessen competition in any relevant market. Further, in light of the conditions tendered,
the proposed transaction is unlikely to have a negative impact on the public interest.
19 July 2021
Mr Enver Daniels Date
Ms Yasmin Carrim and Dr Thando Vilakazi concurring
Tribunal Case Manager: Mpumelelo Tshabalala
For the Merging Parties: Aidan Scallan
For the Commission: Reabetswe Molotsi, Zanele Hadebe and Grashum
Mutizwa