1
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case no: LM188Mar22
In the large merger between:
CFAO Motors South Africa (Pty) Ltd Primary Acquiring Firm
and
William Simpson Cars (Pty) Ltd
Primary Target Firm
REASONS FOR DECISION
[1] On 12 May 2022, the Competition Tribunal unconditionally approved the large merger
between CFAO Motors South Africa (Pty) Ltd (“CFAO Motors”) and William Simpson Cars
(Pty) Ltd (“William Simpson Cars”).
[2] The proposed transaction involves CFAO Motor’s acquisition of the entire issued share
capital of William Simpson Cars. Post-transaction, CFAO Motors will have sole control
over William Simpson Cars.
[3] The primary acquiring firm, CFAO Motors, is 74.9% controlled by CFAO Holdings South
Africa (Pty) Ltd (“CFAO Holdings”).1 The balance, a 25.1% non-controlling shareholding,
is held by Kapela Holdings (Pty) Ltd (“Kapela Holdings”). CFAO Motors does not control
any firm, however, CFAO Holdings controls several firms in South Africa.
[4] The Acquiring Group2 is active in the distribution of pharmaceutical products and in the
retail of motor vehicles. Relevant to the proposed transaction are the activities of the
Acquiring Group in the retail motor industry which include the sale of new and pre-used
vehicles including passenger vehicles (“PVs") and light commercial vehicles (“LCVs”), sale
of parts and accessories, and aftermarket services through their franchised dealerships in
South Africa.3 The Acquiring Group comprises of over 100 franchised dealerships, which
hold a range of Original Equipment Maker (“OEM”) brands. These brands include Audi,
BMW, Ford, Hino, Honda, Kia, Lexus, Mercedes Benz, Mini, Nissan, Renault, Subaru,
Mitsubishi, Toyota and Volkswagen across South Africa.
1 CFAO Holdings is, in turn, wholly controlled by Toyota Tsusho Corporation (“TTC”), a public firm
listed on the Tokyo Stock Exchange and the Nagoya Stock Exchange. TTC’s shares are widely held,
and it is not controlled by any single shareholder. Shareholders with more than 5% of TTC’s issued
share capital are: Toyota Motor Corporation (as to 21.69%); Toyota Industries Corporation (“TICO”, as
to 11.18%); and The Master Trust Bank of Japan, Ltd (as to 10.45%).
2 CFAO Motors, CFAO Holdings, all the firms controlled by CFAO Holdings shall be referred to as the
“Acquiring Group”.
3 The product offering also includes new and used medium commercial vehicles and heavy vehicles.
2
[5] The primary target firm, William Simpson Cars, is 100% controlled by Mr. William
Simpson. William Simpson Cars does not control any firm.
[6] William Simpson Cars is active in the retail motor industry, it operates a Nissan dealership
located in Tokai, Cape Town and does not conduct any business activities in any other
location. The dealership sells new and pre-used LCVs and PVs. It also offers customers
access to financial services related to the purchase of vehicles. In addition, the dealership
sells parts and accessories, and provides aftermarket services.
Competition assessment
[7] In its assessment of the proposed transaction, the Competition Commission (the
“Commission”) found no vertical overlap between the activities of the merging parties but
identified a horizontal overlap in that both are active in the sale of new vehicles, the sale
of used vehicles, and provision of after sale services and products which include workshop
services, repairs, and spare parts.
[8] No further assessment of the effects of the proposed transaction in the market of used or
pre-owned vehicles and provision of after sale services and products was conducted as
the Commission found that these markets do not raise concerns.
[9] The Commission assessed the effects of the proposed transaction in the following
markets:
9.1. The market for the sale of new PVs within a 100km radius of William Simpson Cars
Tokai dealership;
9.2. The market for the sale of new LCVs within a 100km radius of William Simpson Cars
Tokai dealership;
9.3. The sale of new PVs within a 50km radius of William Simpson Cars Tokai dealership;
and
9.4. The sale new LCVs within a 50km radius of the William Simpson Cars Tokai
dealership.4
[10] In each of the abovementioned markets, the Commission found that the merged entity
will have market shares of less than with a market accretion of less than
respectively.5
[11] Furthermore, the Commission found that the merged entity will continue to be
[11] Furthermore, the Commission found that the merged entity will continue to be
constrained post-transaction by several alternative dealerships in each of the relevant
markets.
Public interest
Employment
[12] The merging parties submitted that the employees of William Simpson Cars will be taken
over in terms of Section 197 of the Labour Relations Act, 66 of 1995 and that the
proposed transaction will not result in any retrenchments.
4 The Acquiring Group is not active in the retailing of Nissan branded vehicles in the Western Cape,
an as such there is no intra-brand competition taking place between the merger parties.
5 The Commission’s market share assessment was based off data provided by Lightstone Auto,
published by NAAMSA, for sale volumes of new PVs and LCVs from 1 January 2021 to 30 December
2021 within Cape Town and surrounding areas.
will have market shares of less than with a market accretion of less than will have market shares of less than with a market accretion of less than
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[13] The Commission engaged with the Motor Industry Staff Association (“MISA”) and the
National Union of Metalworkers of South Africa (“NUMSA”) who represent the
employees of William Simpson Cars and the Acquiring Group, and they did not raise
any concerns in relation to the proposed transaction.6
[14] We agree with the Commission’s findings that the proposed transaction is unlikely to
have a negative impact on employment.
Spread of Ownership
[15] The Commission assessed the effect of the merger on greater spread of ownership and
the merger parties submitted that CFAO Motors has an historically disadvantaged
person (“HDP”) shareholding of 25.1% through Kapela Holdings7 while William Simpson
Cars does not have any HDP shareholding pre-transaction.
[16] The Commission is of the view that the proposed transaction does not raise substantial
concerns relating to the promotion of a greater spread of ownership by HDPs as the
proposed transaction will not result in dilution of HDP shareholdings and we concur with
this.
Conclusion
[17] For the above reasons, we find that the proposed transaction is unlikely to substantially
prevent or lessen competition in any relevant market or raise public interest concerns.
12 May 2022
Ms Yasmin Carrim Date
Professor Imraan Valodia and Mr Enver Daniels concurring
Tribunal Case Managers: Makati Seekane and Leila Raffee
For the Merging Parties: Gideon Bothma
For the Commission: Tumiso Loate and Themba Mahlangu
6 See email from the MISA’s Labour Relations Officer dated 8 April 2022 (Merger Record, p199) and
email from the Commission to NUMSA dated 7 April 2022 (Merger Record, p204).
7 Which is a 95.44% HDP owned firm as stated in the Competition Commission’s Large Merger Report
LM188Mar22 at p8 para 4.