The Competition Tribunal (Tribunal) unconditionally approved a merger between the Land and Agricultural Development Bank of South Africa (Landbank) and Corporate Lending Book, an operating division of Gro Capital Financial Services (Proprietary) Limited, on 30 May 2012. On 10 July 2012 the Tribunal published its reasons for the decision.
The transaction involves the acquisition by the Land Bank of Gro Cap's Corporate Lending Book, consisting mostly of sale book debts. The transaction will allow the Land Bank to increase its capacity and better fulfil its developmental mandate as defined in the Land and Agricultural Development Bank Act, No. 15 of 2002.
The Competition Commission (Commission) found that a horizontal and vertical overlap exists between the activities of the merging parties. The horizontal overlap relates to the provision of retail financing to agro-processing clients. The vertical overlap relates to the Land Bank's provision of wholesale agricultural financing to Corporate Lending Book for on-lend to agricultural clients.
The Commission found that the proposed transaction is unlikely to substantially prevent or lessen competition on the downstream market for the provision of retail financing to the agricultural sector, as the merging parties' post-merger market share will remain below 30%.
The Tribunal concluded that the transaction raises no significant public interest issues.