ABSA Bank Ltd v Alexander Forbes Homeplan Joint Venture (50/LM/AUG10) [2010] ZACT 90; [2010] 2 CPLR 313 (CT) (23 December 2010)

ABSA Bank Ltd v Alexander Forbes Homeplan Joint Venture (50/LM/AUG10) [2010] ZACT 90; [2010] 2 CPLR 313 (CT) (23 December 2010)

The Tribunal found that, regardless of whether the market is defined broadly as unsecured personal lending or narrowly as the external provision of pension backed home loans (PBLs) by financial institutions, the combined market share of ABSA and Homeplan is low and does not raise competition concerns. The Tribunal accepted the Commission's narrower market definition but noted that several large competitors would remain post-merger. The Tribunal considered the Commission's concern regarding the collaboration agreement between ABSA and Alexander Forbes, which could have incentivised Alexander Forbes to favour ABSA as a PBL provider. However, the parties amended the agreement to remove any...

Citation
[2010] ZACT 90
Parties
Applicant: ABSA Bank Ltd; Respondent: Alexander Forbes Homeplan Joint Venture; Respondent: Competition Commission
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
23 December 2010
Case Number
50/LM/AUG10
Procedural Posture
Merger Approval / Reasons for Decision Following Approval of Merger
Outcome
The proposed transaction is approved unconditionally.
Judges
Y Carrim, A Wessels, M Mokuena
Legal Topics
Merger Control, Pension Backed Home Loans, Collaboration Agreement, Market Definition, Public Interest
Competition Law Banking and Finance Merger Control Pension Backed Home Loans Collaboration Agreement Market Definition Public Interest

Case Brief

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Parties

ABSA Bank Ltd

Applicant

Alexander Forbes Homeplan Joint Venture

Respondent

Competition Commission

Respondent

Procedural Posture

Merger Approval / Reasons for Decision Following Approval of Merger

Legal Issues

  1. 1 Whether the proposed acquisition by ABSA Bank Ltd of the Homeplan PBL book would substantially prevent or lessen competition in any relevant market.
  2. 2 Whether the collaboration agreement between ABSA and Alexander Forbes created an anti-competitive linkage.
  3. 3 Whether any public interest concerns, including retrenchments, arise from the transaction.

Ratio Decidendi

The Tribunal found that, regardless of whether the market is defined broadly as unsecured personal lending or narrowly as the external provision of pension backed home loans (PBLs) by financial institutions, the combined market share of ABSA and Homeplan is low and does not raise competition concerns. The Tribunal accepted the Commission's narrower market definition but noted that several large competitors would remain post-merger. The Tribunal considered the Commission's concern regarding the collaboration agreement between ABSA and Alexander Forbes, which could have incentivised Alexander Forbes to favour ABSA as a PBL provider. However, the parties amended the agreement to remove any...

Court Disposition

The proposed transaction is approved unconditionally.

Orders

  • The merger between ABSA Bank Ltd and Alexander Forbes Homeplan Joint Venture is approved without conditions.