Bank of America Corporation v Merrill Lynch & CO Inc (119/LM/Nov08) [2008] ZACT 105 (3 December 2008)
The Tribunal found that although both merging parties are active in investment banking globally, there is no geographic overlap in South Africa as Bank of America has no physical presence or reported revenues in the country. Merrill Lynch operates in South Africa through its subsidiary, but the activities do not...
Source-derived case information.
- Citation
- [2008] ZACT 105
- Parties
- Applicant: Bank of America Corporation; Respondent: Merrill Lynch & CO Inc
- Court
- Competition Tribunal
- Jurisdiction
- South Africa
- Case Number
- 119/LM/Nov08
- Procedural Posture
- Merger Clearance / Decision on Unconditional Approval
- Outcome
- Merger unconditionally approved.
- Judges
- D Lewis, Y Carrim, T Orleyn
- Legal Topics
- Merger Clearance, Investment Banking Services, Public Interest Assessment
Source-derived case record
Summary, issues, holding and outcome
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Parties
Bank of America Corporation
Applicant
Merrill Lynch & CO Inc
Respondent
Procedural Posture
Merger Clearance / Decision on Unconditional Approval
Legal Issues
- 1 Whether the proposed merger between Bank of America Corporation and Merrill Lynch & CO Inc is likely to substantially prevent or lessen competition in any market in South Africa.
- 2 Whether there are any public interest concerns arising from the transaction.
Ratio Decidendi
The Tribunal found that although both merging parties are active in investment banking globally, there is no geographic overlap in South Africa as Bank of America has no physical presence or reported revenues in the country. Merrill Lynch operates in South Africa through its subsidiary, but the activities do not overlap with those of Bank of America. The Commission's investigation confirmed that the transaction would not substantially prevent or lessen competition in any South African market. Furthermore, no public interest concerns were identified. On this basis, the Tribunal unconditionally approved the merger.
Court Disposition
Merger unconditionally approved.
Orders
- The merger between Bank of America Corporation and Merrill Lynch & CO Inc is unconditionally approved.
Full Case Text
Judgment text and source record
40 paragraphs
COMPETITION TRIBUNAL SOUTH AFRICA
Case No: 119/LM/Nov08
In the matter between:
Bank of America Corporation Acquiring firm
And
Merrill Lynch & CO Inc Target firm
Panel : D Lewis (Presiding Member), Y Carrim (Tribunal Member) and T Orleyn (Tribunal Member)
Heard on : 26 November 2008
Decided on : 26 November 2008
Reasons Issued : 03 December 2008
Reasons for Decision
Approval
[1] On 26 November 2008 the Competition Tribunal issued a Merger Clearance Certificate unconditionally approving the merger between Bank of America Corporation and Merrill Lynch & Co Inc. The reasons appear below.
Parties
[2] The primary acquiring firm is MER Merger Corporation (âMerger Subâ) a company incorporated in terms of the laws of the State of Delaware in the United States of America. Merger Sub is a special purpose vehicle created specifically for the purposes of this transaction and it is a wholly owned subsidiary of Bank of America Corporation (âBank of Americaâ).1
[3] The primary target firm is Merrill Lynch & Co Inc (âMerrill Lynchâ), a company incorporated in terms of the laws of the State of Delaware in the United States of America. Merrill Lynch is a publicly owned corporation listed on the New York Stock Exchange and it is not controlled by any undertaking or person.2
Transaction
[4] In terms of the proposed transaction, Merger Sub will acquire the entire issued capital of Merrill Lynch. Post merger Merrill Lynch will be a wholly owned subsidiary of Bank of America.
Rationale
[5] From the Bank of Americaâs perspective, the proposed transaction provides an opportunity to diversify its business mix and, therefore, reduce the potential impact on the parties of further dislocations in the financial markets post merger. From the target firmâs perspective, the proposed transaction will enable it to be better placed to offer the full breadth of financial services to its customers globally, with significantly enhanced investment banking capabilities.
Partiesâ Activities
[6] Merger Sub is a special purpose vehicle created specifically for the purposes of this transaction and it is a wholly owned subsidiary of Bank of America Corporation.3
[7] Merrill Lynch provides a wide range of services worldwide to a diversified client base that includes corporations, financial institutions, governments and high-net worth individuals. Merrill Lynch divides its activities into two core business segments namely: global markets and investment banking and wealth management.4
Competition Analysis
[8] The Commission found that there is an overlap in the activities of the merging firms in the provision of investment banking. According to the Commission there is no geographic overlap as the primary acquiring firm is not active in South Africa. The Commission thus concludes that the proposed transaction is therefore unlikely to substantially prevent or lessen competition in any market. We agree with the Commissionâs conclusions.
Conclusion
[9] There are no public interest issues. Accordingly the transaction is unconditionally approved.
___________________ 03 December 2008
D Lewis Date
Tribunal Member
Y Carrim and T Orleyn concurring
Tribunal Researcher : Jabulani Ngobeni
For the merging parties : Webber Wentzel
For the Commission : Kwena Mahlakoana (Mergers and Acquisitions)
1 Bank of America is a company incorporated in terms of the State of Delaware in the United State of America. It is a publicly owned
corporation listed on the New York Stock Exchange and it is not controlled by any undertaking or person.
2 In South Africa Merrill Lynch indirectly controls Merrill Lynch South Africa (Pty) Ltd (âMerrill Lynch SAâ), a private company.
3 Bank of America has no physical presence and does not report revenues in South Africa
4 In South Africa, Merrill Lynch is active only in two years, namely financial markets services (comprising, for example, trading in securities on own account and on an agency basis for customers) and investment banking (comprising, for example, M&A advisory services).
3