COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No.: LM019May21
In the matter between:
Altron TMT SA Group (Pty) Ltd Primary Acquiring Firm
And
Law Trusted Third Party Services (Pty) Ltd Primary Target Firms
Panel : E Daniels (Presiding Member)
: Y Carrim (Tribunal Panel Member)
: I Valodia (Tribunal Panel Member)
Heard on : 20 September 2021
Decided on : 20 September 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).
20 September 2021
Presiding Member
Mr Enver Daniels
Date
Concurring: Ms Yasmin Carrim and Prof. Imraan Valodia
Date : 20 September 2021
To : Webber Wentzel Attorneys
Case Number: LM019May21
Altron TMT SA Group (Pty) Ltd And Law Trusted Third Party
Services (Pty) Ltd
You applied to the Competition Commission on 30 April 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.
1
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case no: LM019MAY21
Altron TMT SA Group (Pty) Ltd (Primary Acquiring Firm)
and
Law Trusted Third Party Services (Pty) Ltd (Primary Target Firm)
REASONS FOR DECISION
[1] On 20 September 2021, the Competition Tribunal conditionally approved the
large merger between Altron TMT SA Group (Pty) Ltd ( “Altron TMT”) and Law
Trusted Third Party Services (Pty) Ltd (“LawTrust”).
[2] The proposed transaction involves Altron TMT acquir ing 100% of the issued
shares in LawTrust. Post-merger, Altron TMT will wholly own LawTrust.
[3] Altron TMT is ultimately controlled by Allied Electronics Corporation Limited
(“Altron”), a JSE listed compan y not controlled by any firm. The Altron Group 1
has investments in telecommunications, multi -media, and information
technology. Of relevance i n the current transaction are the Acquiring Group’s
information technology (“IT”) security services.
[4] Law Trust is a wholly owned subsidiary of Etion Limited ("Etion") , a JSE listed
entity. LawTrust holds 50% shares in Electronic DNA Proprietary Limited
(“eDNA”), which is a joint venture with DataCentrix Proprietary Limited
(“DataCentrix”). LawTrust is a specialist cyber security solutions provider, whose
main streams of business are:
4.1. Public Key Infrastructure (“ PKI”), a WebTrust certified Trust Centre in
South Africa from which LawTrust issues various types of digital
certificates.
4.2. Digital signature solutions, in terms of which LawTrust issues Advanced
Electronic Signatures. LawTrust is currently the only accredited provider
of Advanced Electronic Signature certificates and Advanced Electronic
Signatures. LawTrust offers a variety of electronic signature solutions,
these include SigningHub, Bulk signing and Signing solutions;
4.3. Biometrics software , in terms of which LawTrust develops a matching
platform to support the onboarding and ID Proofing of customers for
digital signature accounts.
digital signature accounts.
1 Refers to Altron TMT, its controllers, and subsidiaries.
2
Horizontal overlaps
[5] The Competition Commission (the “Commission”) identified horizontal overlaps
in the activities of the merging parties and assessed the impact of the proposed
transaction on the following markets:
(i) the broad national market for the provision of all IT security products and
services;
(ii) the narrow national upstream market for the provision of PKI and digital
certificates;
(iii) the narrow national downstream market for supply of digital signature
solutions; and
(iv) the narrow national market for the supply of biometric solutions.
[6] The Commission found that p ost-merger, the merged entity will have a l ow
market share of less than 15% in the broad national market for the provision of
all IT security products and services, and will continue to face competition from
a number of suppliers of IT and security products and services.2
[7] In the national upstream market for the provision of PKI and digital certificates,
the Commission found that the merged entity will have a moderate market share
of less than 25%, and customers will have access to supply from alternative
providers in the market.3
[8] However, in respect of Advanced Electronic Signature certificates (a specific
type of digital certificates), LawTrust has a pre -merger monopoly position
because the South African Post Office (“SAPO”) has not been operational and
the South African Accrediation Authority (“SAAA”) has not accredited other
players in the market. The Commission is of the view that the proposed merger
does not change this position because LawTrust will remain the only supplier of
Advanced Electronic Signature certificates after the merger, and until the SAAA
has accredited another player . The Commission was concerned that in the
absence of alternative suppliers in this market, LawTrust might be incentivised
to price excessively post-merger. In order to address this concern, the merging
parties agreed to a condition that any future price increases would be in line with
parties agreed to a condition that any future price increases would be in line with
consumer price inflation.
[9] Further, the Commission concluded that the proposed transacton is unlikely to
result in the merged firm having the ability to unilaterally increase prices in the
upstream market for the provision of PKI and digital certificates due to the
merging parties’ post-merger market shares being moderate; the existence of
alternative suppliers for the supply of digital certificates that customers can
switch to; and where customers do not have alternative suppliers, only LawTrust
is active and the proposed merger does not alter this.
2 Such as Accenture, DRS, Gijima, DataCentrix, and Ayo.
3 Such as TrustFactory and Gijima in the local market, and Entrust, Sectigo, Entersekt, Sectigo ,
Symantec, DigiCert, Global Sign, Verisign and Thawte in the global market.
3
[10] In the narrow national downstream market for th e supply of digital signature
solutions, the Commission received conflicting views regarding the availability of
alternative digital signature solutions. However, the Commission ultimately
found that the other local suppliers such as EOH and PBSA, and international
suppliers such as DocuSign, Adobe Sign, PandaDoc and HelloSign may be able
to constrain the merged entity post merger.
[11] In respect of Advanced Electronic Signature certificates, the Commission noted
that the merger does not alter the merged entity’s ability and incentive to engage
in exclusionary conduct as LawTrust is the only supplier of Advanced Electronic
Signature solutions pre- and post -merger. However, according to the
Commission, this is not merger specific.
[12] The Commission also found that the merger does not raise any concerns in the
narrow national market for the supply of biometric solutions , as the me rging
parties are insignificant players in the market with a market share of less than
15%, and there are several firms in the market which supply biometric solutions.4
[13] During the hearing, the merging parties put on record that whilst they agree with
the manner in which the Commission defined the relevant markets, they do not
agree with the market share s as the Commission did not take into account the
market shares of international players in its calculation s. The Commission
acknowledged that it faced difficulties in obtaining market shares from various
international players and that it is possible that the market shares may be
overstated in some of the relevant markets . However, the Commission
submitted that th e reduced market shares would not have altered the theories
of harm that formed part of the Commission’s analysis.
Vertical overlaps
[14] The Commission identified a vertical overlap in relation to PKI and digital
certificates solutions (upstream market) and digital signature solutions
certificates solutions (upstream market) and digital signature solutions
(downstream market), as both LawTrust, and the Acquiring Group supply PKI
and digital certificates in the upstream market while both firms also supply digital
signature solutions at the downstream level of the value chain.
[15] The Commission found that while the merged entity may not have the ability to
foreclose rivals in the downstream marke t from accessing PKI and digital
certificates, the merged entity may have an incentive to do so as this would
enable the merged entity to expand its own downstream digital signature
solutions.
[16] The Commission found that as a result of LawTrust’s monopoly in respect of
Advanced Electronic Signature certificates, the merged entity will likely have the
ability and incentive to foreclose its downstream rivals. However, the conditions
imposed address this concern by requiring the merging parties to supply
Advanced Electronic Signature Certificates to all South African entities that
4 Such as EOH, Managed Integrity Evaluation (Pty) Ltd and Xpert Decision System (Pty) Ltd, Idemia,
NEC, and Ideco.
4
require these products, including the merging parties’ downstream rivals, on fair,
reasonable and non-discriminatory commercial and pricing terms.
[17] The Commission also found that the merged entity lacks the ability to foreclose
rival digital signature solutions providers from accessing Altron Group as a
customer. However, it may have the incentive to do so due to the merged entity
having its own digital signature solution which competes with others in the
market and it would be contrary to the rationale of expanding LawTrust’s
business if the Altron Group resells digitial signature solutions of other providers.
Barriers to entry
[18] The Commission considered barriers to entry in the two markets where the
merging parties have high market shares, namely the PKIs and digital
certificates market and the digital signature solutions market.
[19] The Commission found that barriers to entry in both markets are high. This is
due to, inter alia, legislative requirements, and significant capital and operating
costs.
Coordination
[20] As a result of this proposed transaction, the Altron Group and DataCentrix, who
are competitors in the markets for ICT and IT solutions, will now have direct links
to each other via the eDNA joint venture. The structural link introduced by the
merger between DataCentrix and Altron Group may now make it easier for Altron
Group and DataCentrix to coordinate on competitively sensitive information such
as coordinating pric ing and marketing policies, or to exchange sensitive
information on these matters. The Acquiring Group’s and DataCentrix’s
incentives to compete might also be reduced. The conditions imposed include a
provision to prevent cross directorship ; and a provision to ensure that
competitively sensitive information in relation to the ICT solutions markets and
related markets is not discussed, disclosed nor shared by the merging parties.
[21] Accordingly, we conclude that the proposed transaction does not subs tantially
[21] Accordingly, we conclude that the proposed transaction does not subs tantially
prevent or lessen competition in any relevant market.
Public interest
[22] The merger parties made an unequivocal undertaking that there shall be no
retrenchments as a result of the proposed transaction.
[23] The Department of Home Affairs (“DHA”) submitted to the Commission, during
the merger investigation, that conditions to the merger must require LawTrust to
deliver a custom written source code in respect of a specific project of the DHA.
The Merging Parties confirmed during the hearing that LawTrust has transferred
the source code to the DHA as requested.
5
[24] The Tribunal approved the merger subject to conditions, attached as “Annexure
A”.
20 September 2021
Mr Enver Daniels Date
Ms Yasmin Carrim and Prof. Imraan Valodi concurring
Tribunal Case Manager: Camilla Mathonsi and Duduetsang Mogapi
For the Merging Parties: Daryl Dingley, Clare-Alice Vertue and Lebohang
Makhubedu of Webber Wentzel
For the Commission: Beverley Chomela and Grashum Mutizwa
ANNEXURE A
1
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No.: LM019MAY21
In the large merger between:
Altron TMT SA Group (Pty) Ltd Primary Acquiring Firm
And
Law Trusted Third Party Services (Pty) Ltd Primary Target Firm
CONDITIONS
1. DEFINITIONS AND INTERPRETATION
The following expressions shall bear the meanings assigned to them below and cognate
expressions bear corresponding meanings –
1.1. “Advanced Electronic Signature Certificate” means a digital signing certificate that
is issued by a firm which has been accredited by SAAA in terms of the ECT Act;
1.2. “Altron Group” means Altron TMT SA Group Proprietary Limited, Altron TMT
Holdings Proprietar y Limited, Altron Finance Proprietary Limited and Allied
Electronics Corporation Limited Bytes Conference Centre Proprietary Limited, iS
Partners Proprietary Limited, Arrow Altech Holdings Proprietary Limited, Altron Nexus
Proprietary Limited, Gydan Invest ments (RF) Proprietary Limited, Altron TMT
Proprietary Limited, Genbiz Trading 1001 Proprietary Limited t/a Xerox Eastern Cape,
CS Computer Services Holdings Limited, Netstar Proprietary Limited, Bytes Systems
Integration Proprietary Limited, Bytes Healthcare Solutions Proprietary Limited, Altech
UEC South Africa Proprietary Limited, and all the firms directly and indirectly
controlled by them;
1.3. "Approval Date" means the date the Tribunal issues a Clearance Certificate (Notice
CT10) in terms of the Competition Act;
1.4. “Base Price” means the more competitive 2019 prices charged by LawTrust for
Advanced Electronic Signature Certificates;
ANNEXURE A
2
1.5. “Certificate Authority” means a trusted entity that operates PKI to issue Digital
Certificates, by binding the identity of a user or system to a public key with Digital
Signature; scheduling the expiry date for certificates; and ensuring certificates are
revoked when necessary by publishing a certificate revocation list;
1.6. "Commission" means the Competition Commission of South Africa, a statutory body
established in terms of section 19 of the Competition Act;
1.7. "Competition Act" means the Competition Act 89 of 1998, as amended;
1.8. “Competitively Sensitive Information” includes, but is not limited to, any and all
such information relating to:
1.8.1. pricing – including but not limited to pricing of specific products,
prices/discounts offered to specific customers and planned price
reductions or increases in ICT solutions markets and related markets;
1.8.2. margin information by product or customers in ICT solutions markets and
related markets;
1.8.3. cost information for particular products offered in ICT solutions markets
and related markets;
1.8.4. information on specific customers and customer strategy; and
1.8.5. business plans, advertising strategies and marketing strategies on ICT
solutions markets and related markets.
1.9. "Conditions" mean these conditions contained in this Annexure A, agreed to by the
Merging Parties and the Commission;
1.10. “Consumer Price Index” means the annual Consumer Price Index of the preceding
year (beginning with the year preceding the Implementation Date);
1.11. “Days” mean business days, being any day other than a Saturday, Sunday or official
public holiday in the Republic of South Africa;
ANNEXURE A
3
1.12. “DataCentrix” means DataCentrix Proprietary Limited;
1.13. “Digital Certificate” means data files used to establish the identity of people, firms
and electronic assets on network and allow for secure, encrypted transactions. Digital
Certificates are issued by Certificate Authorities using PKI;
1.14. “Digital Signature Solutions” means electronic signature software or products
which originates from, and or rely on Digital Certificates;
1.15. “Downstream Rivals” means firms that supply Digital Signature Solutions in South
Africa in competition with LawTrust;
1.16. “ECT Act” means the Electronic Communications and Transactions Act No. 25 of
2002;
1.17. “ICT solutions markets” means products and services in the Information and
Communication Technology sector, where both Altron Group and DataCentrix
conduct themselves as Inf ormation and Communication Technology Service
Providers and System Integrators by offering the same and/or similar Information and
Communication Technology solutions to the market;
1.18. “Implementation Date” means the date, occurring after the Approval Date, on which
the Merger is implemented by the Merging Parties;
1.19. “EDNA Joint Venture” means Electronic DNA Proprietary Limited joint venture
between LawTrust and DataCentrix;
1.20. “LawTrust” means Law Trusted Third Party Services Proprietary Limited;
1.21. “Merger” means the acquisition of LawTrust by the Altron Group;
1.22. “Merging Parties” mean the Altron Group and LawTrust;
1.23. “PKI” means Public Key Infrastructure, which refers to a combination of components
such as hardware, software products, policies, procedures, and entities needed to
safely distribute, verify and revoke digital certificates. Public Key Infrastructure is a
ANNEXURE A
4
system for publishing the public keys used in public cryptography;
1.24. “Reference Price” means R933.72 for a three -year supply of Advanced Electronic
Signatures Certificates excluding the token and token software, or R1 726.71 for a
three-year supply of Advanced Electronic Signature Certificates including the token and
token software (these being the prices that applied in 2019 and adjusted to account for
CPI in 2019 and 2020);
1.25. “SAAA” means the office of the South African Accreditation Authority that is
established in terms of Chapter 6 of the ECT Act, which is also a division of the
Department of Communications and Digital Services;
1.26. “The Target Firm” means Law Trusted Third Party Services Proprietary Ltd;
1.27. “Tribunal” means the Competition Tribunal of South Africa a statutory body
established in terms of section 26 of the Competition Act;
2. Conditions to the approval of the Merger
2.1. Cross directorships
2.1.1. For as long as Merging Parties can appoint or nominate directors to the board of eDNA
Joint Venture, they shall ensure that their nominees:
2.1.1.1. are not employed in an operational role by or serve on, or are nominated
and/or appointed on any board of the holding companies and/or affiliate
companies of Altron Group that are active in ICT solutions markets with
the exception of the Altron Security business division.
2.2. Confidential information
2.2.1. No Competitively Sensitive Information in relation to the ICT solutions markets and
related markets will be discussed, disclosed nor shared in any form or means by the
Merging Parties nominees on the board of eDNA Joint Venture.
ANNEXURE A
5
2.2.2. The nominees of the Mergi ng Parties on the eDNA Joint Venture contemplated in
2.1.1 shall not disclose to nominees of DataCentrix any Competitively Sensitive
Information.
2.2.3. The nominees of the Merging Parties contemplated in 2.1.1 shall be required to sign
a Confidentiality Undert aking to ensure compliance with the abovementioned
conditions.
2.2.4. Within 60 Days of the Implementation Date, the Merging Parties shall put in place, for
the Commission’s approval, an appropriate confidential and information exchange
policy to ensure compliance with clause 2 of the Conditions.
2.2.5. Within 60 Days of receiving the confidential and information exchange policy prepared
by the Merging Parties, the Commission shall provide any comments that it has
thereon to the Merging Parties and the Merging Parties shall within 30 Days thereof
seek to finalize the policy with the Commission.
2.3. Supply of Advanced Electronic Signature Certificates
2.3.1. From the Implementation Date, the Merging Parties shall supply Advanced Electronic
Signature Certificates to all South African entities that require these products,
including the Merging Parties’ Downstream Rivals, on fair, reasonable and non -
discriminatory commercial and pricing terms.
2.3.2. Within 10 Days from the Implementation Date, the Merging Parties shall publish the
Reference Price on their website.
2.3.3. Increases in pricing of Advanced Electronic Signature Certificates
2.3.3.1. In relation to the supply of Advanced E lectronic Signature Certificates as
contemplated in 2.3.1 and to the extent that the Merging Parties intend to increase
the price of Advanced Electronic Signature Certificates, the Merging Parties shall limit
ANNEXURE A
6
such price increases to no more than a yearly price increase linked to the Consumer
Price Index.
2.3.3.2. The Base Price upon which the Consumer Price Index increases are applied shall be
the Reference Price.
3. Duration
3.1. The cross directorship and confidential information conditions in clause 2.1. and 2.2
above shall apply for as long as the Altron Group (and LawTrust) can appoint directors
to the board of the eDNA Joint Venture.
3.2. The supply and pricing conditions in clause 2.3 above shall apply for a period of 3
(three) years or until the successful accreditation and operation of another firm by the
SAAA, whichever occurs first.
4. Monitoring of compliance with the Conditions
4.1. As proof of compliance herewith, within 20 Days of the Implementation Date, the
Merging Parties shall submit an affidavit listing the names of the persons nominated
and/or appointed by the Acquiring Group to the board of directors of eDNA Joint
Venture, their tenure , and the nature of their directorships. This affidavit shall also
confirm that the nominees to the eDNA Joint Venture board meet the requirements
set out in clause 2.1.1.
4.2. The Merging Parties shall inform the Commission of the Implementation Date within
5 (five) Days of its occurrence.
4.3. Within 20 Day s of the Implementation Date, the Merging Parties shall provide the
Commission with a copy of the Confidential Undertaking (s) referred to in clause 2.2.3
signed by each director of the Merging Parties and for subsequent Directors within 30
Days of appoint ment. The Altron Group shall ensure that the Confidentiality
Undertaking shall form part of Directors’ appointment letters and Employees’ service
agreements within 30 Days after the appointment of the Director(s) and Employee(s).
ANNEXURE A
7
4.4. For as long as these Condi tions remain in place, the Altron Group shall annually,
within 45 Days of each anniversary of the Implementation Date, submit to the
Commission an affidavit from one of its directors confirming compliance with clause 2
of the Conditions, including complian ce with the confidential and information
exchange policy.
4.5. For as long as the Conditions in clause 2.3 remain in place, the Altron Group shall
annually, within 45 Days of each anniversary of the Implementation Date, submit to
the Commission an affidavit from one of its directors confirming comp liance with
clause 2.3 of the Conditions, including supporting documents in the form of a list of all
the customers Altron Group sold Advanced Electr onic Signature certificates to, the
customer contact details, and the price charged by Altron Group.
4.6. Within 20 Days from Implementation Date, the Merging Parties shall provide the
Commission with proof of implementing clause 2.3.2.
5. Apparent Breach
5.1. An apparent breach by the Merging Parties of any of the Conditions shall be dealt with
in terms of Rule 39 of the Rules for the Conduct of Proceedings in the Commission
read together with Rule 37 of the Rules for the Conduct of Proceedings in the Tribunal.
6. Variation of Conditions
6.1. The Merging Parties and/or the Commission may at any time, on good cause shown,
apply to the Tribunal for the Conditions to be waived, relaxed, modified and/or
substituted.
7. General
7.1. The affidavits/reports and or documents referred to in the Conditions shal l be
submitted to the following email address: mergerconditions@compcom.co.za and
Ministry@thedtic.gov.za.