African Equity Empowerment Investment Limited v SAAB Grintek Technologies (Pty) Ltd (LM233Jan19) [2019] ZACT 7 (18 February 2019)
- Citation
- [2019] ZACT 7
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Y Carrim, M Mazwai, I Valodia
- Case number
- LM233Jan19
More details
- Court
- Competition Tribunal
- Panel
- Y Carrim, M Mazwai, I Valodia
- Case number
- LM233Jan19
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed transaction does not give rise to any horizontal or vertical overlaps, as the acquiring group does not have interests in entities providing the same products or services as the target firm, nor is there any pre-existing business relationship between the merging parties. The transaction would not alter the structure of any relevant market or result in accretion of market share. Furthermore, no public interest concerns were identified. Accordingly, the Tribunal concluded that the merger is unlikely to substantially prevent or lessen competition in any relevant market and does not raise public interest issues. The merger was therefore approved unconditionally.
Court disposition
The proposed merger is approved unconditionally.
Orders
- The proposed transaction is approved unconditionally.
02
Material facts
Parties
African Equity Empowerment Investment Limited
Applicant Counsel: B Phillips and R WilsonSAAB Grintek Technologies (Pty) Ltd
Respondent03
Procedural history
Posture
Merger Approval / Decision on Approval
04
Questions and positions
Legal issues
- 01
Whether the proposed merger would substantially prevent or lessen competition in any relevant market.
- 02
Whether the proposed merger raises any public interest concerns.
Party arguments
- Applicant
- The applicant argued that the proposed transaction would not result in any horizontal or vertical overlaps, as the acquiring group does not have interests in entities providing the same products or services as the target firm, nor is there any pre-existing business relationship between the merging parties. Therefore, the merger would not alter market structure or market share.
- Respondent
- The respondent, represented by the Competition Commission, concurred that the transaction would not give rise to competition concerns, as there are no overlaps or accretion in market share, and no public interest issues are raised by the merger.
05
Court’s reasoning
Legal principles
- 01
Competition Act, No. 89 of 1998
A merger may only be prohibited if it is likely to substantially prevent or lessen competition in any relevant market.
- 02
Competition Act, No. 89 of 1998
Public interest considerations must be assessed in all merger proceedings, including effects on employment and the ability of small businesses to compete.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed transaction does not give rise to any horizontal or vertical overlaps, as the acquiring group does not have interests in entities providing the same products or services as the target firm, nor is there any pre-existing business relationship between the merging parties. The transaction would not alter the structure of any relevant market or result in accretion of market share. Furthermore, no public interest concerns were identified. Accordingly, the Tribunal concluded that the merger is unlikely to substantially prevent or lessen competition in any relevant market and does not raise public interest issues. The merger was therefore approved unconditionally.
Obiter and limits
- The Tribunal noted that the acquiring firm is a black-owned investment holding company, but this fact did not affect the competition assessment.
- The Tribunal observed that the target firm operates in three core areas: radio transmission, power technologies, and customer solutions, but these activities do not overlap with those of the acquiring group.
Court disposition
The proposed merger is approved unconditionally.
- The proposed transaction is approved unconditionally.
Source and reliance status
Competition Tribunal
This page organises the available record for research. Confirm quotations, current status, and subsequent treatment against the official source before relying on the case.
Judgment reading view
Judgment text
The complete available source text.
Competition Tribunal
Judgment
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM233Jan19
In the matter between
African Equity Empowerment Investment Limited
Primary Acquiring Firm
And
SAAB Grintek Technologies (Pty) Ltd
Primary Target Firm
Panel
: Y Carrim (Presiding Member)
: M Mazwai (Tribunal Member)
: I Valodia (Tribunal Member)
Heard on
: 6 February 2019
Order Issued on : 6 February 2019Reasons Issued on : 18 February 2019
REASONS
FOR DECISION
Approval
[1] On 6 February 2019, the Tribunal unconditionally approved the proposed transaction in terms of which African Equity Empowerment Investment Ltd ("AEEI") is acquiring control over SAAB Grintek Technologies (Pty) Ltd ("SGT").
[2] The reasons for the approval of the proposed transaction follow.
Parties to the transaction
[3] The acquiring firm, AEEI is a black-owned investment holding company listed on the Johannesburg Stock Exchange. AEEI is controlled by Sekunjalo Investments Holdings (Pty} Ltd (Sekunjalo). Sekunjalo is ultimately controlled by Dr Iqbal Surve. AEEI, its controllers and the firms it controls will collectively be referred to as the acquiring group.
[4] AEEI has investments in a variety of sectors, inter alia, media, events and tourism, health and beauty, and technology.
[5] The target firm, SGT is controlled by SAAB South Africa (Pty} Ltd (SAAB SA).
[6] SGT is a turnkey solutions integrator specialising in the design, supply, deployment, comm1ss1onmg and maintenance of multi-technology
telecommunications system for mobile broadband and converged solutions. SGT's activities can be broadly segmented into three core
areas: (i) Radio transmission; (ii) Power technologies; and (iii) Customer solutions.
Proposed transaction
[7] AEEI intends to acquire the entire issued share capital of SGT from SAAB SA. Post-merger, AEEI will exercise sole control over SGT.
Relevant market and impact on competition
[8] The Competition Commission ("Commission") found that the proposed transaction does not give rise to horizontal overlaps because the acquiring group does not hold any interests in entities that provide the same products/services provided by SGT. Therefore, the proposed transaction is unlikely to change the structure of any relevant market as there is no accretion in the market share. Further, the Commission found that the proposed transaction would not result in any vertical overlaps as there is no pre-existing business relationship between the merging parties.
[9] In light of the above, the Commission is of the view that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market.
Public interest
[10] The proposed transaction does not raise any public interest concerns.
Conclusion
[11] In light of the above, we concluded that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market. In addition, no public interest issues arise from the proposed transaction. Accordingly, we approved the proposed transaction unconditionally.
Ms Yasmin Carrim
Ms Mondo Mazwai and Prof. lmraan Valodia concurring.
18 February 2019
Date
Tribunal Case Manager : Kgothatso Kgobe
For the Merging Parties : B Phillips and R Wilson of Webber Wentzel
For the Commission
: Y Okharedia and W Gumbie
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