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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case no: LM135Dec21
A.P. Moller – Maersk A/S Primary Acquiring Firm
And
Senator International Primary Target Firms
REASONS FOR DECISION
[1] On 2 March 2022, the Competition Tribunal (“Tribunal”) unconditionally approved a
large merger between A.P. Moller – Maersk A/S (“APMM”) and target firms which
comprise of Senator International Spedition GmbH Company (“SI GmbH”), Senator
International Holding LLC (“SI LLC”), Senator International Freight Forwarding LLC
(“FF LLC”), and their subsidiaries and affiliated companies, together with certain
contractual relationships entered into by Senator Freight Services GmbH (“SFS
GmbH”) that are material for the Senator International business (collectively referred
to as “Senator International”).
Primary acquiring firm
[2] The primary acquiring firm, APMM, is incorporated under the laws of Denmark. APMM
is ultimately controlled by A.P. Moller Holding A/S (“APMH”). In South Africa, APMM
controls eight firms including APM Terminals Southern Africa Proprietary Limited and
Maersk South Africa Proprietary Limited.
[3] APMM is active in air freight forwarding, inland transportation and harbour towage
services.
Primary target firms
[4] Senator International controls one firm in South Africa, Senator International Logistics
Proprietary Limited (“Senator International Logistics”). Senator International Logistics
is active in freight forwarding services in air and ocean freight, as well as contractual
warehousing services, customs clearance services and road transport. Senator
International also owns aircraft used in their air freight forwarding services.
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Description of the proposed transaction
[5] In terms of the proposed transaction, APMM intends to acquire sole control of Senator
International.
Competition assessment
Horizontal overlap
[6] The Competition Commission (“Commission”) identified a horizontal overlap between
the activities of the merging parties in relation to the provision of air freight forwarding
services in South Africa.
[7] The Commission found that the merged entity will have a market share of less than
10% in the national market for the provision of air freight forwarding services . The
Commission further found that the merged entity will be constrained by other market
participants such as DSV Panalpina, Kuehne and Nagel, Morgan Cargo, DB Schenker,
Expeditors International, among many other air freight forwarding companies operating
in South Africa.
Vertical assessment
[8] The proposed transaction presents a vertical overlap since Senator International
provides ocean freight forwarding services in South Africa, which utilises container line
shipping services provided by APMM. The Commission found that container line
shipping services are an upstream input for the downstream providers of ocean freight
forwarding services.
Input foreclosure
[9] The Commission assessed whether competitors of Senator International in respect to
the supply of ocean freight forwarding se rvices would be foreclosed from an input
(container line shipping provided by APMM) if the merged entity were to exclusively
procure freight forwarding services internally. Regarding ability, the Commission noted
that in relation to the trade routes of APM M that include South Africa, APMM has
market shares ranging between [10 to 50]% on the different routes impacted. As such,
the Commission was of the view that APMM has the ability to foreclose competitors of
Senator International in relation to some routes especially where the market shares
are relatively high. APMM’s trade routes where it has a relatively large market share
are relatively high. APMM’s trade routes where it has a relatively large market share
are: (i) South Africa - Indian Sub-Continent & Middle East; (ii) Mediterranean - South
Africa; and (iii) North America - South Africa.
[10] However, the Commission found that in all the instances, the merged entity is unlikely
to have the incentive to engage in an input foreclosure strategy as Senator
International is unlikely to fulfil the ocean freight forwarding requirements of APMM
since it accounts for less than % of APMM’s total volume. As such, the Commission
was of the view that the majority of APMM’s volumes are already available to
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competitors of Senator International and will likely remain so post -merger. The
Commission therefore concluded that merged entity would be unlikely to recoup lost
revenues from a self -dealing strategy in this instance rega rdless of the route
considered.
Customer foreclosure
[11] The Commission also considered whether other container shipping liners will have
access to ocean freight forwarders post the implementation of the proposed
transaction. The Commission found that Senator International has an insignificant
market share as regards the rendering of ocean freight forwarding services and that
there remain several alternative providers of ocean freight forwarding services post -
merger, such as DSV, DB Schenker, DHL, Bidvest, Rhenuss, among numerous others.
This suggests that the merged entity will not have the ability to engage in anti -
competitive customer foreclosure post-merger.
[12] The Commission concluded that the proposed merger is unlikely to result in a
substantial prevention or lessening of competition in any of the affected markets. We
concur with this finding.
Public interest
[13] The merging parties confirmed that the proposed transaction will not have an adverse
impact on employment in South Africa and that there will be no retrenchments in South
Africa as a result of the proposed transaction .1 Furthermore, the employees of the
merging parties did not raise any objections or concerns regarding the proposed
transaction.
[14] With regards to ownership, we note that APMM and APMH are not owned or controlled
by historically disadvantaged persons (“HDPs”).
[15] The merging parties submitted that the proposed transaction will not adversely affect
the public interest since is an international transaction, with both merger parties being
based outside of South Africa. Senator International is based in Germany and ha s
more than 1,700 employees working in 65 locations in Europe, Asia, Africa, and North
more than 1,700 employees working in 65 locations in Europe, Asia, Africa, and North
and South America. Only employees are based in South Africa. Furthermore, the
merging parties submitted that t he proposed merger is not taking place in, and has
only a limited nexus to, South Africa, and no assets, shares or interests in South Africa
will be directly affected by the proposed transaction . Senator International’s main
operations relevant to South Africa ( i.e., air freight fo rwarding) are limited to two
inbound flights per week from Germany to Johannesburg. Furthermore, the operations
of Senator International in South Africa account for less than % of the total global
operations of the target firms.
[16] Given the above, t he Commission recommended an unconditional approval of the
1 See Form CC4(1), page 9 of the Merger Record, as well as the merging parties’ Joint
Competitiveness Report, pages 83 and 104 of the Merger Record.
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Conclusion
[17] We conclude that the proposed transaction is unlikely to result in a substantial
prevention or lessening of competition in any relevant market or raise public interest
concerns.
15 March 2022
Mr Andreas Wessels Date
Ms Yasmin Carrim and Dr. Liberty Mncube concurring
Tribunal Case Manager: Leila Raffee and Juliana Munyembate
For the Merging Parties: Xolani Nyali, Sivuyise Lutshiti, Kayla Abrahams of
Bowmans Law
For the Commission: Nolubabalo Myoli and Grashum Mutizwa