COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No.: LM093Oct21
In the matter between:
KAP Industrial Holdings Ltd Primary Acquiring Firm
And
DriveRisk Holdings (Pty) Ltd Primary Target Firm
E Daniels (Presiding Member)
I Valodia (Tribunal Member)
Panel:
T Vilakazi (Tribunal Member)
Heard on: 09 December 2021
Order Issued on: 09 December 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)(a) of the Act; and
2. a Merger Clearance Certificate be issued in terms of Competition Tribunal Rule
35(5)(a).
09 December 2021
Presiding Member
Mr Enver Daniels
Date
Concurring: Prof. Imraan Valodia and Dr. Thando Vilakazi
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).
Merger Clearance Certificate
Date: _______________________________________
To:
You applied to the Competition Commission on
____________________ 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.
no conditions.
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:
(Name and file number of merger:)
1
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case no: LM093Oct21
KAP Industrial Holdings Limited Primary Acquiring Firm
And
DriveRisk Holdings (Pty) Ltd Primary Target Firm
Heard on: 09 December 2021
Order Issued on: 09 December 2021
REASONS FOR DECISION
[1] On 09 December 2021, the Competition Tribunal unconditionally approved a
large merger whereby KAP Industrial Holdings Limited (“KAP”) intends to acquire
90% of the issued share capital and sole control over DriveRisk Holdings (Pty)
Ltd (“DriveRisk Holdings”).
[2] The acquiring firm, KAP, is a public company incorporated in accordance with
the laws of the Republic South Africa and listed on the Johannesburg Stock
Exchange. KAP is not controlled by any entity.1 KAP controls various companies
which include PG Bison (Pty) Ltd, KAP Automotive (Pty) Ltd and Unitrans
Holdings Group (“Unitrans”), amongst others. KAP and all the firms directly and
indirectly controlled by it will hereinafter be collectively referred to as the “KAP
Group”.
[3] DriveRisk Holdings is a private company incorporated in accordance with the
laws of the Republic of South Africa. The operational entity which carries out the
business operations of DriveRisk Holdings is DriveRisk (Pty) Ltd (“DriveRisk”).
DriveRisk Holdings is controlled by Khuthaza Holdings (Pty) Ltd (“Khuthaza”), a
private South African company. DriveRisk Holdings and all the firms directly and
indirectly controlled by it will hereinafter be collectively referred to as the
“DriveRisk Group”.
[4] The KAP Group is a diversified group consisting of industrial, chemical and
logistics businesses. It comprises seven divisions: integrated timber; automotive
components; integrated bedding; polymers; contractual logistics (South Africa);
contractual logistics (Africa); and passenger transport.
[5] DriveRisk provides value added vehicle telematics solutions with a focus on
driver behaviour management, driver behavioural analysis and improvement
driver behaviour management, driver behavioural analysis and improvement
through video-graphic in cab camera solutions, with ancillary fatigue monitoring
and driver distraction avoidance technology - with the aim of improving road
safety and mitigating safety risks to fleets and other commercial vehicles. Its
client base includes companies across a wide variety of industries, including
construction, mining, public transport, logistics and distribution.
1 The shareholders owning more than 5% of KAP shares as at 30 June 2021 are as follows:
Allan Gray (Pty) Ltd (as to 17.71%), Government Employees Pension Fund (as to 14.56%),
and Old Mutual (as to 6.46%).
2
[6] When considering the merging parties’ activities, the Competition Commission
(“Commission”) found that the proposed transaction does not result in a
horizontal overlap. The Commission did, however, identify a pre-existing vertical
relationship between the merging parties as the DriveRisk Group has supplied
vehicle telematics solutions to Unitrans, which forms part of the KAP Group in
South Africa.
[7] The Commission noted that the DriveRisk Group through its subsidiary DriveRisk
is not a dominant supplier of vehicle telematics solutions as it has an estimated
market share of less than 5%. This was confirmed by
submitted that DriveRisk is a small competitor in the supply
of vehicle telematics solutions with an estimated market share of approximately
%. indicated that the top three players in the supply of vehicle
telematics are and . submitted
that DriveRisk is a small player in the respective market, with the top players
being and amongst others. In light of this, the
Commission was of the view that the merged entity is unlikely to have the ability
to foreclose Unitrans’ competitors in access to telematics solutions.
[8] Furthermore, the Commission noted that KAP through Unitrans is not a
significant customer in the market for the supply of vehicle telematics solutions.
In this regard, the Commission found that there are numerous other firms that
compete with the KAP Group (Unitrans) in the market for the provision of
transport and logistics services such as: Imperial, Supergroup, Grindrod, Value
Logistics and Barloworld, amongst others. Considering the above, the
Commission was of the view that the proposed transaction is unlikely to result in
significant customer foreclosure concerns as the KAP Group (Unitrans) is not a
dominant player in the market for the provision of transport and logistics services.
[9] In addition, third parties engaged by the Commission (
did not raise any concerns with the proposed transaction. Taken as a
did not raise any concerns with the proposed transaction. Taken as a
whole, the Commission is of the view that the proposed transaction is unlikely to
substantially prevent or lessen competition.
[10] Regarding the proposed merger’s impact on employment, both the respective
trade unions and the employee representatives for acquirer and target were duly
notified of the proposed merger and none of them raised concerns. The merging
parties provided an unequivocal statement that the proposed transaction will not
result in any retrenchments.
[11] Regarding the spread of ownership, pre-merger DriveRisk has a % Broad-
Based Black Economic Empowerment (“B-BBEE”) shareholding, while KAP only
has 18.22% B-BBEE shareholding. The merging parties were of the view that
this is not a “substantial” negative impact. They assert that as part of the broader
KAP group of companies, DriveRisk will have improved opportunities for growth
and development. This will benefit its employees in the long term and may create
further employment opportunities. Post-merger, DriveRisk will be included within
the KAP Group’s broader framework of community development and outreach
programmes; and, supplier and enterprise development initiatives. The current
black shareholders in DriveRisk are empowered private equity investors. The
proposed transaction, argue the merging parties, will enable these investors to
realise their investment and could provide these empowered investors with an
opportunity to reinvest the proceeds into other future investment opportunities
within South Africa.
[12] The Commission engaged with a representative of a B-BBEE
shareholder of DriveRisk, to elicit his view on the
proposed transaction. confirmed that he has no concerns
market share of less than 5%. This was confirmed by market share of less than 5%. This was confirmed by
%. indicated that the top three players in the supply of vehicle %. indicated that the top three players in the supply of vehicle
telematics are and . submitted
telematics are and . submitted
[9] In addition, third parties engaged by the Commission (
[12] The Commission engaged with a representative of a B-BBEE
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regarding the merger. Furthermore, he confirmed that the proceeds he will
receive from the proposed transaction will constitute an exceptional private
equity return (in comparison to deals executed in the private equity market) and
will result in substantial value uplift for . The Commission concluded
that the reduction in B-BBEE shareholding is unlikely to be considered
substantial.
[13] We conclude that the proposed transaction is unlikely to substantially prevent or
lessen competition in any relevant market. Furthermore, it raises no public
interest concerns.
09 December 2021
Mr Enver Daniels Date
Prof Imraan Valodia and Dr Thando Vilakazi concurring
Tribunal Case Manager: Mpumelelo Tshabalala
For the Commission: Rethabile Ncheche, Ratshidaho Maphwanya, Billy
Mabatamela and Tamara Paremoer
For the Merging Parties: Aneesa Ravat and Heather Irvine of Bowmans
Attorneys
equity return (in comparison to deals executed in the private equity market) and
will result in substantial value uplift for . The Commission concluded