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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case no: LM171Jan22
Synergy Investment Partnership, an en commandite partnership (Primary Acquiring
Firm)
and
Synergy Contact Centre Proprietary Limited (Primary Target Firm)
Heard on:
04 April 2022
Order Issued on: 05 April 2022
REASONS FOR DECISION
[1] On 5 April unconditionally approved a large
merger in terms of which Synergy Investment Partnership, an en commandite
intends to acquire shares in Synergy
Contact Centre Propr issued share capital.
Proposed transaction
[2] In terms of the proposed transaction, Synergy Investment Partnership intends to
acquire control over Synergy by acquiring 65% of Synergy's entire issued share
capital.
Our assessment and decision only relates to the transaction before us,
which is the acquisition of 65% issued share capital.
Primary acquiring firm
[3] Synergy Investment Partnership TC Corporate
Ventures GP
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controlled by Transaction Capital Limited TC , an investor in and operator of credit-
orientated alternative assets.
[4] hree divisions are Transaction Capital Risk Services Proprietary Limited
TCRS, which holds 90% of the partnership interest in the Synergy Investment
Partnership, SA Taxi and Transaction
TCMH.
[5] Synergy Investment Partnership conducts its business activities through various firms
wherein it has invested, which it distributes its products and renders its services across
South Africa.
Primary target firm
[6] Synergy is a contact centre firm that operates in the worldwide Business Process
diverse variety of blue-chip customers situated in the United K and the
United State and working in the retail, telecommunications, and
utility sectors.
[7] Synergy is not controlled by any individual firm and shall be referred to as the primary
target firm.
Competition assessment
[8] The Commission considered the activities of the merging parties and found that the
proposed transaction results in a horizontal overlap in relation to the provision of the
: (i) call centre
services, (ii) debt management services, and (iii) debt collection services in the open
market. However, the Commission found that Synergy exclusively serves consumers
in the UK and the USA and Synergy does not render any services to any customers in
South Africa.
[9] Based on this evidence, there is no geographic overlap between the activities of the
merging parties. Therefore, there is no horizontal overlap in the activities of the parties.
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[10] The Commission found that post-merger, the merged entity will have a market share
of less than 30% in the provision of debt collection services to South African
consumers. As a result, following the implementation of the merger, the merged entity
will continue to compete with well-established competitors.
[11] In the supply of call centre services to South African customers, the merged entity will
have less than 1% of the share in the market. In relation to the supply of debt collection
services from South Africa to customers outside of South Africa, the merged entity will
have a market share of about less than 40%. Lastly, the merged entity will have less
than 5% market share in the supply of call centre services from South Africa to
customers outside of South Africa.
[12] No third party raised any concerns with the proposed transaction.
[13] Based on the above, the Tribunal conclude that the proposed transaction is unlikely to
substantially prevent or lessen competition in any relevant market.
Public interest
Effect on employment
[14] The merging parties confirmed that the proposed transaction will not adversely affect
employment. In particular, the merging parties submitted that they have no plans to
retrench any employees because of the proposed transaction.
Effect of a particular sector or region
[15] The merging parties submitted that the Department of Trade, Industry and Competition
dtic has recognised the BPO industry as an employment growth vehicle with a target
of 500 000 more BPO jobs by 2030 and it has in recent year been promoting South
Africa as a preferred offshoring destination to international geographies and
companies. As a result, by broadening its business services offerings beyond debt
collection, TCRS is well positioned to contribute to the national growth objectives.
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Effect on the greater spread of ownership
[16] The merging parties noted that pre-merger, Synergy is not Broad-based Black
Economic Empowerment B-BBEE empowered, while TC is currently classified as a
level 3 B-BBEE firm. Further, that several shareholders of the TC are members of HDP
and given that the TC is required to be rated in accordance with the Johannesburg
Securities Exchange Listings Requirements, the primary target firm will ensure that
Synergy is rated accordingly following the implementation of the proposed transaction.
[17] The merging parties submit that independent of the proposed transaction, TC group of
companies is committed to transformation by (i) the sale of 25% of SA Taxi to a B-
BBEE entity incorporated by the South African National Taxi Council (which was partly
funded by TC); (ii) the recent issue of shares by TC to Royal Bafokeng Holdings; (iii)
t -BBEE score by two levels in the last year with further initiatives
under consideration to further improve its score; and (iv) SA Taxi increasing its B-BBEE
rating from a Level 7 to Level 3 in the past two years.
[18] The Tribunal notes the merging parties commitments to transformation. As a result,
the proposed transaction is unlikely to result in a negative impact on the empowerment
status of any of the primary acquiring firms since the B-BBEE shareholders will
continue to hold the same percentage of shares in TC, SA Taxi, and TCR post-merger.
Other public interest issues
[19] The proposed transaction raises no other public interest concerns.
Conclusion
[20] For reasons set out above, we conclude that the proposed transaction is unlikely to
substantially prevent or lessen competition in any relevant market. Furthermore, the
proposed transaction does not raise any public interest concerns.
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31 May 2022
Professor Liberty Mncube
Date
Professor Imraan I. Valodia and Ms Mondo Mazwai
concurring
Tribunal Case Managers: Sinethemba Mbeki and Camilla Mathonsi
For the Merging Parties: Hayle Layle and Ryan Goodman of ENSafrica
Attorneys
For the Commission: Busisiwe Ntshingila and Themba Mahlangu