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Statement on the latest decisions by the Competition Commission

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Statement on the latest decisions by the Competition Commission

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29th October 2021

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/ MEDIA STATEMENT / The content on this page is not written by Polity.org.za, but is supplied by third parties. This content does not constitute news reporting by Polity.org.za.

The Competition Commission of South Africa (CCSA) held its ordinary meeting on Tuesday 26 October 2021, to review and take decisions on matters brought before the Commission by members of the public and corporate applicants, in terms of the Competition Act (89 of 1998) as amended. These matters include but are not limited to complaints, mergers and acquisitions.

MERGERS AND ACQUISITIONS

1.1 Sun Valley Estates (Pty) Ltd (Sun Valley) / Ascendis Vet Proprietary Limited (Ascendis Vet), Ascendis Animal Health (Pty) Ltd (Ascendis Animal), Kyron Laboratories (Pty) Ltd (Kyron Laboratories), and Kyron Prescriptions (Pty) Ltd (Kyron Prescriptions)

The Commission has recommended that the Competition Tribunal (Tribunal) approve the proposed transaction whereby Sun Valley intends to acquire Ascendis Vet, Ascendis Animal, Kyron Laboratories, and Kyron Prescriptions (“Primary Target Firms”), with conditions.

Sun Valley, AAF and all its other subsidiaries will be referred to as the “Acquiring Group”.

The Acquiring Group is a vertically integrated agricultural services and food group. The group operates within four main business segments, namely: (i) agricultural inputs and services; (ii) fresh fruit; (iii) food processing; and (iv) health foods, and is active throughout South Africa, with a focus on the Western Cape. Relevant to the proposed transaction are the Acquiring Group’s activities in the provision of agricultural inputs and services, carried out through Overberg Agri. Overberg Agri is a supplier of goods and services to agricultural producers in the Western Cape and Eastern Cape. Overberg Agri distributes agricultural and general supplies through 24 retail stores.

The Primary Target Firms comprise of the constituent businesses that form part of Ascendis’ Animal Health division. The activities of the Primary Target Firms include the development, importation, manufacturing, warehousing, distribution, and marketing, primarily of medication, across both the production and companion animal markets.

The Commission found that the proposed transaction is unlikely to result in a substantial prevention or lessening of competition in any relevant market. The Commission is of the view that the proposed transaction is unlikely to raise employment concerns.

Regarding the impact of the merger on public interest, the merging parties and the Commission have agreed to a condition that will ensure that a B-BBEE transaction is implemented post-merger.

1.2 Bonitas Medical Fund (Bonitas) / Nedgroup Medical Aid Scheme (NMAS)

The Commission has recommended that the Tribunal approve the proposed transaction whereby Bonitas intends to acquire NMAS, without conditions.

Bonitas is an open medical scheme which offers 14 (fourteen) benefit options. In addition to medical aid cover, Bonitas offers a number of services to its members. These include administration, managed care services, capitation arrangements, and actuarial services.

NMAS operates as a restricted medical scheme with membership restricted to employees and retirees of Nedbank and Old Mutual Insure. NMAS is administered by Medscheme. NMAS also provides administration, managed care services, capitation arrangements, and actuarial services through third parties.

The Commission found that the proposed transaction is unlikely to result in a substantial prevention or lessening of competition in any relevant market. The Commission further found that the proposed transaction does not raise any public interest concerns.

1.3 Deutsche Post AG (DP AG) / Hillebrand AG (Hillebrand AG)

The Commission has conditionally approved the proposed transaction whereby DP AG intends to acquire Hillebrand AG, without conditions.

DP AG controls several firms including DHL Supply Chain (South Africa) (Pty) Ltd and DHL Global Forwarding SA (Pty) Ltd. DP BH, DP AG and all the firms it controls directly or indirectly are collectively referred to as the “Acquiring Group” and/or the “Acquiring Group”.

The Acquiring Group is a global logistics company that provides express logistics services, contract logistics and freight forwarding services in South Africa.

The primary target firm is Hillebrand AG, a company incorporated in accordance with the company laws of Belgium. Hillebrand AG is controlled by COBEPA S.A. Hillebrand AG controls the following firms in South Africa, (i) Braid Logistics Africa (Pty) Ltd, (ii) JF Hillebrand South Africa (Pty) Ltd, (iii) JFH Capital (Pty) Ltd and (iv)Trans Ocean Liquid Technologies (Pty) Ltd. Hillebrand AG and all the firms they control, shall be referred to as the “Target Group”.

The Target Group is an international logistics group that provides airfreight, ocean freight, inland transport, warehousing, and inventory management.

However, given that the merging parties have recently retrenched several employees, the Commission and the merging parties agreed to an employment condition. For a period of two years following the merger, the merged entity undertakes to inform previously retrenched employees of vacancies that arise and will consider suitable employees for re-employment.

1.4 Corruseal Group (Pty) Ltd (Corruseal Group) / CanSmart (Pty) Ltd (CanSmart)

The Commission has conditionally approved the proposed merger whereby Corruseal Group intends to acquire additional shareholding in CanSmart from Sachi Holdings.

Corruseal Group is a packaging company. It owns varying interests in several businesses, most of which operate in the market for the manufacture and supply of corrugated packaging products. The Corruseal Group has operations upstream as a producer of paper and corrugated sheet board and operates downstream as a manufacturer and distributor of corrugated boxes.

Sachi Holdings wholly owns Everest Packaging Group. Everest Packaging Group operates through three companies namely, Pride Pak, Boxlee and Everest Corrugated.

CanSmart operates in the market for the manufacturing and supply of tin cans commonly used for food. More specifically, its cans are commonly used for canning of foods such as a meat, fish, vegetables, condensed milk, fruit, fish, jam, and dried food.

The Commission notes that pre-merger, Corruseal Group does not have any representation on CanSmart’s board. Post-merger, Corruseal will have the ability to appoint directors to CanSmart’s board while Sachi Holdings will also remain represented on the CanSmart board. The Commission however notes that the directors on the board of Sachi Holdings also serve as directors on the boards of Everest Packaging Group, which competes with Corruseal. This means that, post-merger, competing companies (Corruseal Group and Sachi Holding) will both have directors on the board of CanSmart. This introduces the risk of anti-competitive information exchange between Corruseal Group and Sachi Holdings via CanSmart.

To address the concern, the Commission and the merging parties agreed to a condition which will ensure that the directors serving on the board of CanSmart on behalf of Sachi Holdings are not the same directors serving on the board of Sachi Holdings’ corrugated packaging businesses. In other words, for as long as Sachi Holdings can appoint or nominate individuals to the board of CanSmart as directors, they shall ensure that their nominees to the board of CanSmart are not the same individuals serving, nominated and/or appointed on any board or management committees or sub-committee of the competing businesses.

The Commission and the merging parties also agreed on employment conditions. In short, the conditions require the merging parties not to retrench employees for a period of 3 (three) years as a result of the merger and to ensure that the merging parties do not change the terms and conditions of CanSmart’s employees as a result of the merger.

1.5 Vuna Partners Fund I (Vuna Fund) / Sligo Investments (Pty) Ltd (Sligo)

The Commission has unconditionally approved the proposed merger whereby Vuna Fund intends to acquire Sligo.

Vuna Partners is a South African based private equity firm which was established in 2020. Sligo is a special acquisition vehicle formed specifically for the purposes of this transaction. At the time of the acquisition, Sligo will hold 100% of the issued share capital of SA Steel Solutions (Pty) Ltd (‘SASS’).

SASS supplies a wide array of cans, pails and aerosol cans into the paints, lubricants, and chemicals industries. SASS’ products are a form of industrial packaging made from tin plate imported from China.

The Commission found that the proposed transaction is unlikely to result in a substantial prevention or lessening of competition in any relevant markets. The Commission further found that the proposed transaction does not raise any public interest concerns.

1.6 Refinery Property Investments (Pty) Ltd (Refinery) / Redefine Properties Limited (Redefine)

The Commission has unconditionally approved the proposed merger whereby Refinery intends to acquire Redefine.

The Refinery Group has a diversified portfolio of light industrial, office and retail properties in the Gauteng province.

The primary target firm is a property letting enterprise known as Wingfield Park. Wingfield Park is controlled by Redefine. Wingfield Park is a light industrial property with a Gross Lettable Area (“GLA”) of 56,486m2 situated at No. 3 Geertsma Road, Jet Park, Gauteng.

1.7 Plennegy (Pty) Ltd and the Hildesheim Trust (Plennegy) / Triton Express (Pty) Ltd (Triton)

The Commission has conditionally approved the proposed merger whereby Plennegy intends to acquire joint control in Triton.

Plennegy is involved in research of vegetable seed, printing services, aviation charter services for passengers, investing in unlisted trading companies, and investment in commercial and residential property.

Triton is involved in the provision of road freight transport services. It is also engaged in cross border and air freight logistics services.

Given that Plennegy intends to acquire sole control of Triton in 24 months’ time, the Commission and the merging parties agreed to a condition that Plennegy will notify the Commission of the acquisition of sole control as a separate merger if said merger takes place after the 24 month period.

1.8 Zebra Worldwide Media South Africa Proprietary Limited (“Zebra”)/ King James Group (“KJG”)

The Commission has unconditionally approved the proposed merger whereby Zebra intends to acquire KJG.

The Acquiring Firm, Zebra, is a subsidiary of Accenture. Accenture is a global management consulting and professional service firm, which operates through primary business streams, namely, (i) Strategy and Consulting; (ii) Interactive (iii) Technology; and Operations.

The Target Group, King James Group, performs various activities including multiple platform advertising, digital marketing and advertising creativity, data and media, print production and procurement, public relations, shopper marketing and content publishing.

1.9 Valmet OYJ (Valmet) / Neles Corporation (Neles)

The Commission has unconditionally approved the proposed merger whereby Valmet intends to acquire Neles.

Valmet is a global developer and supplier of technologies, automation systems and services for the pulp, paper and energy industries. The technology offering includes pulp mills, tissue, board and paper production lines, as well as power plants for bio-energy production. In South Africa, Valmet is active through its subsidiary, Valmet SA, which acts as a local sales and service office for Valmet in South Africa. Valmet has no manufacturing plant in South Africa.

Neles is a global flow control solutions and services provider to the oil and gas refining, pulp and paper, chemicals, marine and other process industries. Neles designs and manufactures industrial valves (including actuators and valve automation/control products) and valve automation solutions. Neles also offers spare parts and maintenance services, to some extent on a stand-alone basis, but mainly servicing its own valve products. In South Africa, Neles controls Neles SA, which acts as a local sales and service office for Neles.

2. COMPLAINTS (REFERRALS & NON-REFERRALS)

Mr Thabo May v Foodzone Store (Roodewal Bloemfontein)