On 23 January 2013 the Competition Tribunal gave reasons for its conditional approval of the acquisition of the title and interest to the accounts and receivables relating to the South African private label store card portfolio of Edcon (the Portfolio).
The Portfolio is a wholly owned subsidiary of Edgars Consolidated Stores and forms part of Edcon's Credit and Financial Services Division. Edcon offers qualifying customers private label store cards through which they can purchase various products on credit from any of its stores.
The transaction will complement Absa's interests in similar unsecured credit products. Absa holds a 50 % share in Woolworths Financial Services (WFS), a joint venture with Woolworths.
The Competition Commission found that a horizontal relationship existed between the merging parties in respect of the provision of unsecured credit to individuals in South Africa and that the combined market share of the merging parties would be between 20 and 30 %. Due to the fact that Edcon would continue to operate the Portfolio post-merger, the Commission was also concerned about the potential for collusion between Edcon and Woolworths through Absa.
As a result of these concerns, the Commission and the merging parties agreed to certain behavioural conditions that would result in the ring-fencing of the Portfolio and WFS to ensure that competitively sensitive information would not be shared through Absa. The Tribunal was satisfied that the conditions would eliminate the possibility of anti-competitive conduct post-merger.