1
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case no: LM030Jun21
In the large merger between:
Transaction Capital Motor Holdco (Pty) Ltd (Primary Acquiring Firm)
and
WBC Holdings (Pty) Ltd (Primary Target Firm)
Heard on: 3 August 2021
Order Issued on: 3 August 2021
REASONS FOR DECISION
1. On 3 August 2021, the Competition Tribunal unconditionally approved a large merger between
Transaction Capital Motor Holdco (Pty) Ltd (“TCMH”) and WBC Holdings (Pty) Ltd (“WBC
Holdco”).
2. The transaction involves an increase in shareholding as Transaction Capital Ltd (“TC”), through
its wholly owned subsidiary, TCMH, intends to increase its shareholding in We Buy Cars (Pty)
Ltd (“WBC”) by 25% from 49.9% to 74.9%. Post-merger, TCMH will have sole control over WBC
through WBC Holdco.
3. TCMH apart from its non -controlling interest in the target firm does not conduct any further
business activities. TC is an investor in and operator of credit-orientated-alternative assets. TC’s
two divisions are SA Taxi Holdings (Pty) Ltd ( “SA Taxi”) and Transaction Capital Risk Services
Holdings (Pty) Ltd (“TCRS”). SA Taxi is a vertically integrated business platform providing, inter
alia, a comprehensive financial, insurance and allied services offering to minibus taxi operators.
Additionally, SA Taxi procures new minibus taxi vehicles for sale through its two dealerships in
Midrand and Polokwane. SA Taxi also sells second-hand minibus taxis and limited second-hand
light commercial vehicles. TCRS combines its technology, data and analytics competencies to
provide a range of business services that are primarily outsourced to consumer collection
services.
4. WBC Holdco is a holding company and does not conduct any business activities. WBC operates
in the buying and selling of second-hand vehicles. WBC operates 8 dealerships from which it
buys and sells vehicles. WBC occasionally sells second -hand minibus taxis, but this is a minor
and incidental part of its activities. Additionally, WBC acts as an intermediary in the provision of
the following related services: insurance products, service and maintenance plans, car tracking
services, vehicle finance and motor insurance.
5. In the assessment of the merging parties’ activities, the Competition Commission (“Commission”)
identified horizontal overlaps in the markets for (i) the sale of used minibus taxis; (ii) the sale of
used light commercial vehicles; (iii) the sale of used vehicles; and (iv) for the provision of ancillary
services - insurance products/services, stolen vehicle recovery services and vehicle finance. The
Commission found that there is a geographic overlap between the activities of the merging
parties in Gauteng Province. In respect of the markets for the sale of used minibus taxis, used
light commercial vehicles, and used vehicles, the Commission assessed geographic markets in
2
South Africa as a whole and in Gauteng. The provision of ancillary services was assessed on a
national basis.
6. In the n arrow market for used minibus taxis in South Africa and in Gauteng, the Commission
found that there are a number of players in the sale of used minibus taxis that would continue to
constrain the merged entity . Further, the Commission was of the view that t he proposed
transaction is unlikely to substantially change the structure of the market in Gauteng as WBC is
not a prominent player in this segment.
7. In the m arkets for used light commercial vehicles and used vehicles in South Africa and in
Gauteng, it was noted that t he acquiring group sells limited second -hand light commercial
vehicles on an ad-hoc basis. The acquiring firm is a small player in the sale of used cars . The
Commission was of the view that the proposed transaction is unlikely to change the structure of
either of these markets.
8. In the markets for the provision of insurance products and services and stolen vehicle recovery
services, the Commission found that the merging parties act as intermediaries for a wide range
of insurers, finance houses and stolen vehicle recovery services houses . In light of this , the
Commission did not assess these markets any further as all dealerships offer these services and
customers are ultimately able to freely choose an insurer that best suits the ir individual
requirements.
9. In the market for vehicle financing the Commission noted that the acquiring group (through SA
Taxi) offers vehicle finance of minibus taxis (and not in respect of other passenger vehicles
and/or trucks or busses) in South Africa. SA Taxi also finances minibus taxi operators that are
not financed by other financial institutions such as commercial banks.1 Whereas WBC does not
offer any vehicle financing services itself, it acts as an intermediary for a number of the large
banks in South Africa. On this basis, the Commission did not assess this market any further; as
the relevant market for minibus taxis finance was viewed as different from the traditional vehicle
finance market.
10. The Commission also identified vertical overlap s as the acquiring group provides minibus taxis
finance whereas WBC also sells minibus taxis (on a limited scale). Furthermore, the Commission
identified a potential vertical overlap, as the acquiring firm intends to enter the broad vehicle
finance market.
11. The Commission considered the national market for the provision of credit finance to minibus
taxis by developmental credit providers. In this market, the Commission noted that SA Taxi has
an estimated market share of between 80% and 100%; therefore, it has the ability to foreclose.
However, the merging parties provided that SA Taxi would have no incentives to deny access to
SA Taxi’s finance to other dealers and their customers . Considering th is and given the
insignificant sale of minibus taxis by WBC,2 the Commission found that the proposed transaction
is unlikely to result in input foreclosure concerns for competitors of SA Taxi and WBC (in the sale
of minibus taxis).
12. Given SA Taxi/TC ’s intention to enter the broad vehicle finance market, the Commission also
assessed vertical concerns pertaining to this market and noted that it will face competition from
the four large retail banks (i.e. ABSA, First Rand, Nedbank, and Standard Bank) and other
financiers.
1 For instance, SA Taxi and Bridge Taxi Finance provide credit finance to minibus taxi operators (i) who are blacklisted and have
defaulted - high rate of default (ii) with no employment history or source of income and (iii) no bank account or credit history or profile.
2 Less than [CONFIDENTIAL] of WBC’s total sales.
3
13. The Commission considered whether competitors of the Acquiring Group will be substantially
foreclosed from accessing WBC’s service offerings. The Commission noted WBC’s capacity as
an intermediary for a number of the large banks in South Africa in the provision of vehicle
financing / funding. However, it was found that customers can pre-arrange vehicle finance with
their bank and purchase a car from any dealership. In addition, almost all dealerships offer
vehicle finance from these large retail banks. Therefore, the Commission found that even in a
case wherein WBC exc lusively sourced vehicle finance from the Acquiring Group, it is unlikely
that these large retail banks would be substantially affected.
14. The panel agreed with the Commission’s findings on the markets identified but put questions to
the parties. The panel sought additional information on whether a portfolio effects assessment
was conducted in the market for second-hand vehicles and related markets; given that a previous
transaction involving WBC and MIH e-Commerce Holdings (Pty) Ltd t/a OLX South Africa (“OLX”)
was prohibited, in part, on this basis.3 The prohibited matter raised data sharing concerns given
that WBC would have access to several advertising platforms and media platforms which would
enable it to obtain and cross share intelligence (customer data, sales trend etc.) from AutoTrader
(and the greater Naspers stable), which in turn can be used as a competitive advantage against
other public-to-dealer platforms. Considering the aforementioned concerns, the panel deemed it
necessary to know whether the Commission assessed a portfolio effects theory of harm.
15. The Commission submitted that it had considered the data related activities of TC in the proposed
transaction and whether such activities will result in portfolio effects that could substantially
prevent or lessen competition in the market for second -hand vehicles or related markets. T he
prevent or lessen competition in the market for second -hand vehicles or related markets. T he
Commission was of the view that, because the technology, data & analytics competencies of TC
are not directly related to the second -hand vehicles market , it is unlikely that the proposed
transaction will result in portfolio effects that could substantially prevent or lessen competition in
the market for second-hand vehicles or related markets. The merging parties submitted that the
[CONFIDENTIAL]. Furthermore, [CONFIDENTIAL].
16. Based on the responses provided, w e concluded that the proposed transaction is unlikely to
substantially prevent or lessen competition in any relevant market . The Commission assessed
whether the potential transaction would have any effects on the public interest and there were
not found to be any. We found no basis to disagree with the Commissi on’s conclusion on the
public interest.
4 August 2021
Prof Imraan Valodia Date
Mr Enver Daniels and Dr Thando Vilakazi concurring
Tribunal Case Manager: L Maiwashe and K Kgobe
For the Merging Parties: R Goodman and H Lyle of ENS
For the Commission: B Mabatamela and R Maphwanya
3 MIH eCommerce Holdings Pty Ltd t/a OLX South Africa and WeBuyCars Pty Ltd Competition Tribunal Case No: LM183Sep18.