South Africa Judgment

Competition Tribunal

AMB Holdings Ltd and AMB Private Equity Partners Ltd (49/LM/Sep01) [2001] ZACT 45 (19 November 2001)

Competition Law Commercial and Corporate Large Merger Control Acquisition Public Interest Market Structure

Citation: [2001] ZACT 45
Status: Judgment
Jurisdiction: South Africa
Court: Competition Tribunal
Panel: D. Lewis, N. Manoim, D. Terblanche
Case number: 49/LM/Sep01

More details

Court: Competition Tribunal
Panel: D. Lewis, N. Manoim, D. Terblanche
Case number: 49/LM/Sep01

On this page

Professional case brief

Research organized from the available case record

Source document

Holding and result

The Tribunal found that there are no substitutable products or services between AMB Holdings and AMB Partners. AMB Holdings operates through subsidiaries in banking and advisory services, while AMB Partners is involved in private equity investment. The transaction does not result in any change to the competitive dynamics of the relevant markets. Furthermore, no public interest grounds are affected by the acquisition. Accordingly, the merger does not raise competition or public interest concerns and was approved without conditions.

Court disposition

Merger approved without conditions.

Orders

The merger between AMB Holdings Ltd and AMB Private Equity Partners Ltd is approved without conditions.
A Merger Clearance Certificate is issued.

Material facts

Parties

AMB Holdings Ltd

Applicant

AMB Private Equity Partners Ltd

Respondent

Procedural history

Posture

Merger Clearance / Decision on Approval

Questions and positions

Legal issues

01
Whether the proposed merger would substantially lessen or prevent competition in any market.
02
Whether any public interest grounds are affected by the acquisition.

Party arguments

Applicant: AMB Holdings argued that increasing its shareholding in AMB Partners would address concerns of major unit holders regarding the discount at which units traded to the underlying net asset value. The transaction would provide liquidity for those wishing to sell and potentially result in a higher unit price. AMB Holdings also identified private equity as an area for future growth.
Respondent: AMB Partners did not oppose the transaction and its shareholders, none of whom currently control the company, were given the opportunity to sell their shares. No arguments were raised against the merger and no public interest concerns were identified.

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, unless justified on public interest grounds.
02
Competition Act, No. 89 of 1998

The assessment of a merger includes consideration of substitutability of products and services and the effect on market structure.

Ratio, limits and disposition

Ratio decidendi

The Tribunal found that there are no substitutable products or services between AMB Holdings and AMB Partners. AMB Holdings operates through subsidiaries in banking and advisory services, while AMB Partners is involved in private equity investment. The transaction does not result in any change to the competitive dynamics of the relevant markets. Furthermore, no public interest grounds are affected by the acquisition. Accordingly, the merger does not raise competition or public interest concerns and was approved without conditions.

Obiter and limits

The Tribunal noted that the creation of liquidity for unit holders may have positive effects on the unit price, but this is not a competition concern.
The Tribunal observed that private equity is identified as an area for future growth by AMB Holdings, but this does not affect the merger assessment.

Court disposition

Merger approved without conditions.

The merger between AMB Holdings Ltd and AMB Private Equity Partners Ltd is approved without conditions.
A Merger Clearance Certificate is issued.

Source and reliance status

Competition Tribunal

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Source document

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Judgment text

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Source document

Competition Tribunal

Judgment

[2001] ZACT 45

COMPETITION

TRIBUNAL

REPUBLIC

OF SOUTH AFRICA

Case No: 49/LM/Sep01

In the large merger between

AMB Holdings Ltd

and

AMB Private Equity Partners Ltd

REASONS FOR THE TRIBUNALâS DECISION

Approval

The Competition Tribunal issued a Merger Clearance Certificate on 2 November 2001 approving the merger between AMB Holdings Ltd and AMB Private Equity Partners Ltd (âAMB Paartnersâ) without conditions. The reasons for approving the merger are set out below.

The Transaction

AMB Holdings intends to increase its shareholding in AMB Partners from 29.69% to 50% by purchasing shares in AMB Partners on an ongoing basis, thereby gaining control of the target company.

AMB Holdings indicated that the reasons for the transaction were, inter alia, that certain of the major unit holders in AMB Partners were concerned about the continuing discount at which the units traded to the underlying net asset value of AMB Partners. The repurchasing of the shares will provide those who wish to sell their shares in AMB Partners the opportunity to do so while simultaneously creating liquidity, which in turn should result in a higher unit price. The parties hope that this will address the concerns of unit holders regarding the discount at which the unit currently trades. AMB Holdings also wishes to increase its share holding because it has identified private equity as an area for future growth.

The Parties

AMB Holdings is a holding company, which provides banking and non-banking services through its subsidiary companies.

AMB Partners who is managed by AMB Capital Management Ltd is involved in private equity and was listed in the Private Equity Funds sector of the JSE in May 1999. Its largest shareholders are AMB Holdings Ltd, Nedcor Nominees, Standard Bank Nominees, CMB Nominees and Iscor Pension Fund. None of the shareholders currently control AMB Partners.

Evaluating the merger transaction

There are no products or services that are substitutable between the two companies. AMB Holdings provides various financial services, through its subsidiaries, in the form of banking and non-banking (i.e. advisory) activities while AMB Partners is involved in private equity and invests, through a fund, capital on behalf of its shareholders.

The transaction will, therefore, not affect competition substantially.

Public Interest

None of the public interest grounds are affected by the acquisition.

19 November 2001

D. Lewis Date

Concurring: N. Manoim and D. Terblanche

Authorities

Authorities used by the court

Cases, legislation, regulations, and constitutional provisions identified in the available record.

Competition Act, No. 89 of 1998

Legislation

Legislation referenced in the available case record.

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