Business Venture Investment No. 2182 (Pty) Ltd v Silica Holdings (Pty) Ltd (LM167Dec20) [2021] ZACT 23 (24 March 2021)
- Citation
- [2021] ZACT 23
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Enver Daniels, Yasmin Carrim, Fiona Tregenna
- Case number
- LM167Dec20
More details
- Court
- Competition Tribunal
- Panel
- Enver Daniels, Yasmin Carrim, Fiona Tregenna
- Case number
- LM167Dec20
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that there is no horizontal overlap between the activities of the merging parties, as FNZ SA's platform-as-a-service offering is distinct from Silica Holdings' third party administration services. Both firms provide solutions to Linked Investment Services Providers, but their focus areas differ: Silica Holdings on back-office administration and FNZ SA on market distribution. The merging parties provided an unequivocal undertaking that no existing employees would be terminated or have adverse amendments to their employment terms for 24 months following the merger. The Tribunal concluded that the transaction is unlikely to result in any substantial lessening of competition or raise negative public interest concerns. Accordingly, the merger was unconditionally approved.
Court disposition
Merger unconditionally approved.
Orders
- The large merger between Business Venture Investment No. 2182 (Pty) Ltd and Silica Holdings (Pty) Ltd is unconditionally approved.
- No existing employees shall be terminated or have adverse amendments to their employment terms for a period of 24 months from the merger implementation date.
02
Material facts
Parties
Business Venture Investment No. 2182 (Pty) Ltd
Applicant Counsel: C CharterSilica Holdings (Pty) Ltd
Respondent Counsel: N LoopooAmounts and remedies
- Percentage of Issued Capital Acquired: 100
03
Procedural history
Posture
Large Merger Review / Decision on Approval
04
Questions and positions
Legal issues
- 01
Whether the proposed merger would result in a substantial lessening of competition in the relevant market.
- 02
Whether the merger raises any negative effects on public interest, including employment.
- 03
Whether there is any horizontal overlap between the activities of the merging parties.
Party arguments
- Applicant
- The applicant argued that the merger would not result in any substantial lessening of competition, as the parties operate in distinct segments: FNZ SA provides platform-as-a-service solutions for wealth management, while Silica Holdings offers third party administration services. The applicant further undertook that no existing employees would be terminated or have adverse amendments to their employment terms for 24 months post-merger.
- Respondent
- The respondent, Silica Holdings, concurred with the applicant's position, confirming that its services are distinct from those of FNZ SA and that the merger would not negatively impact competition or public interest. Silica Holdings also indicated that its proprietary systems would continue to be developed with the assistance of two external software vendors.
05
Court’s reasoning
Legal principles
- 01
Competition Act 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
Section 12A, Competition Act 89 of 1998
Public interest considerations include the effect of the merger on employment and the ability of small businesses to compete.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that there is no horizontal overlap between the activities of the merging parties, as FNZ SA's platform-as-a-service offering is distinct from Silica Holdings' third party administration services. Both firms provide solutions to Linked Investment Services Providers, but their focus areas differ: Silica Holdings on back-office administration and FNZ SA on market distribution. The merging parties provided an unequivocal undertaking that no existing employees would be terminated or have adverse amendments to their employment terms for 24 months following the merger. The Tribunal concluded that the transaction is unlikely to result in any substantial lessening of competition or raise negative public interest concerns. Accordingly, the merger was unconditionally approved.
Obiter and limits
- The Tribunal noted that the employees, who are not represented by any trade union, were notified of the merger and expressed no concerns regarding the transaction.
- The continued sourcing of external software vendors for Silica Holdings' proprietary systems was acknowledged as part of the post-merger operational plan.
Court disposition
Merger unconditionally approved.
- The large merger between Business Venture Investment No. 2182 (Pty) Ltd and Silica Holdings (Pty) Ltd is unconditionally approved.
- No existing employees shall be terminated or have adverse amendments to their employment terms for a period of 24 months from the merger implementation date.
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: LM167Dec20
In the large merger between:
Business Venture Investment No. 2182 (Pty) Ltd (Primary Acquiring Firm)
And
Silica Holdings (Pty) Ltd (Primary Target Firm)
Heard on: 03 March 2021
Order Issued on:
03 March 2021
Reasons Issued on: 10 March 2021
Revised Reasons Issued on: 24 March 2021
REASONS
FOR DECISION
[1] On 03 March 2021, the Competition Tribunal unconditionally approved the large merger between Business Venture Investments No. 2182 (Pty) Ltd (âNewCoâ) and Silica Holdings (Pty) Ltd (âSilica Holdingsâ).
[2] The proposed transaction involves NewCo acquiring 100% of the entire issued capital in Silica Holdings from Ninety-One Limited (âNinety-Oneâ). Upon implementation of the transaction, NewCo will have sole control over the business of Silica Holdings.
[3] NewCo is a company incorporated with the laws of the Republic of South Africa, directly and indirectly controlled by various firms that do not have control over any firms in South Africa. The only firm in NewCoâs corporate group that conducts activities in South Africa is FNZ SA Proprietary Limited (âFNZ SAâ). FNZ SA offers wealth management technology through a platform-as-a-service (âPaaSâ) operating model to financial institutions that require a digital wealth management platform (âWMPâ) to distribute their own, or third party, investment offerings.[1]
[4] Silica is directly controlled by Ninety-One Africa Proprietary Limited which is in turn controlled by Ninety-One.[2] Silica is a provider of Third Party Administration Services (âTPA Servicesâ) to savings and investment product providers within the savings and investment industry in South Africa.
[5] The Competition Commission (âCommissionâ) considered the merging partiesâ activities and found no horizontal overlap as the merging parties sells and renders services which are distinct to each other. FNZâs PaaS is different from the TPA services offered by Silica. While these activities are distinct, the merging parties provide services in connection with the platform used by Linked Investment Services Providers (âLISPsâ) to distribute savings and investment products. However, both Silica and FNZ offer a solution to LISPs that assist with the centralised management of a LISP WMP. Silica focuses on the back-office administration services for the LISP platform whereas FNZ is primarily focused on market distribution.
[6] With relation to the public interest consideration, the merging parties have given an unequivocal undertaking that there will be no termination of existing employees or adverse amendments to the terms and conditions of employment for a period of 24 months from the merger implementation date.[3]
[7] The merging parties have indicated that in addition to Silicaâs own in-house team, the services of two software vendors, namely [redacted] will continue to be sourced in the development of its proprietary systems.
[8] We conclude that the proposed transaction is unlikely to result in any substantial lessening of competition or raise any negative effects on public interest.
24 March 2021
Mr Enver Daniels Date
Ms Yasmin Carrim and Prof. Fiona Tregenna concurring.
Tribunal Case Manager: Lumkisa Jordan
For the Merging Parties: C Charter and N Loopoo of Cliffe Dekker Hofmeyr Inc
For the Commission: Boitumelo Makgabo and Ratshidaho Maphwanya
[1] Currently, XXXXXXXX [redacted]
[2] Ninety-One is a publicly listed company on the Johannesburg Stock Exchange and the London Stock Exchanges Ninety-One is not controlled by any single shareholder.
[3] The employees, which are not represented by any trade union were notified of the merger through their employee representative and it was confirmed that the employees have no concerns with the proposed transaction.
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