Business Venture Investments No 1953 (Pty) Ltd v Afrit Group (Pty) Ltd (LM022Apr17) [2017] ZACT 13 (29 June 2017)
The Tribunal found that there is no overlap between the activities of the merging parties, as the acquiring group is active in industrial equipment and services, while Afrit is involved in trailer manufacturing and related financial and rental services. The Commission's investigation confirmed that the proposed...
Source-derived case information.
- Citation
- [2017] ZACT 13
- Parties
- Applicant: Business Venture Investments No 1953 (Pty) Ltd; Respondent: Afrit Group (Pty) Ltd; Respondent: Competition Commission
- Court
- Competition Tribunal
- Jurisdiction
- South Africa
- Case Number
- LM022Apr17
- Procedural Posture
- Merger Approval / Final Determination
- Outcome
- The proposed merger is approved unconditionally.
- Judges
- AW Wessels, Mondo Mazwai, lmraan Valodia
- Legal Topics
- Merger Control, Public Interest, Market Overlap, Employment Effects
Source-derived case record
Summary, issues, holding and outcome
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Parties
Business Venture Investments No 1953 (Pty) Ltd
Applicant
Afrit Group (Pty) Ltd
Respondent
Competition Commission
Respondent
Procedural Posture
Merger Approval / Final Determination
Legal Issues
- 1 Whether the proposed merger between Business Venture Investments No 1953 (Pty) Ltd and Afrit Group (Pty) Ltd is likely to substantially prevent or lessen competition in any market in South Africa.
- 2 Whether the proposed transaction raises any public interest concerns, including employment effects.
Ratio Decidendi
The Tribunal found that there is no overlap between the activities of the merging parties, as the acquiring group is active in industrial equipment and services, while Afrit is involved in trailer manufacturing and related financial and rental services. The Commission's investigation confirmed that the proposed transaction would not substantially prevent or lessen competition in any market in South Africa. Furthermore, the merging parties demonstrated that the transaction would not result in employment overlaps or redundancies, and no other public interest concerns were identified. The Tribunal therefore approved the merger unconditionally.
Court Disposition
The proposed merger is approved unconditionally.
Orders
- The proposed transaction between Business Venture Investments No 1953 (Pty) Ltd and Afrit Group (Pty) Ltd is approved without conditions.
Full Case Text
Judgment text and source record
59 paragraphs
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM022Apr17
In the matter between:
BUSINESS VENTURE INVESTMENTS Primary
Acquiring Firm
NO 1953 (PTY) LTD
and
AFRIT GROUP (PTY) LTD Primary
Target Firm
Panel
: AW Wessels (Presiding Member)
: Mondo Mazwai (Tribunal Member)
: lmraan Valodia (Tribunal Member)
Heard on
: 14 June 2017
Order Issued on
: 14 June 2017
Reasons Issued on : 29 June 2017
Reasons for Decision
Approval
[1] On 14 June 2017, the Competition Tribunal (“Tribunal”) approved the proposed transaction involving Business Venture
Investments No 1953 (Pty) Ltd and Afrit Group (Pty) Ltd.
[2] The reasons for approving the proposed transaction follow.
Parties to proposed transaction
Primary acquiring firm
[3] The primary acquiring firm is Business Venture Investments No 1953 (Pty) Ltd (to be renamed Industrial Services Holdings) ("lnServe"),
a recently formed private company duly incorporated in accordance with the company laws of the Republic of South Africa.
[4] lnServe is a subsidiary of IEP Portfolio 1 (Pty) Ltd ("IEP"). IEP is controlled by Investec Bank Limited.
[5] lnServe is the holding company for four operating entities: Uvundlu Investments (Pty) Ltd, Concord Cranes (Pty) Ltd, Prowalco (Pty) Ltd and Uni-Span Holdings (Pty) Ltd.
Primary target firm
[6] The primary target firm is Afrit Group (Ply) Ltd ("Afrit"), the holding company for the Afrit group of companies ("the Afrit Group").
[7] Afrit is jointly controlled by Hulisani Consortium RF (Pty) Ltd ("Hulisani") which holds 51.02% of the issued share capital in Afrit and Van de Wetering lndustriee Holdings (Pty) Ltd ("VDWH"), which holds 48.98% of the issued share capital in Afrit.
[8] We note that IEP has a 46.4% existing shareholding in Hulisani.[1]
Proposed transaction and rationale
[9] The proposed transaction entails the Afrit Group's shareholders swapping their respective shares into lnServe through a series of interrelated transactional steps. According to the Competition Commission ("Commission") the proposed transaction
ultimately results in Afrit and Afrit Propco (Pty) Ltd becoming subsidiaries of lnServe.
[10] The merging parties submitted that Afrit will be a good fit within the existing industrial services group.
[11] The shareholders in Afrit submitted that they have agreed to merge into lnServe, with the benefit of exposure to a more diversified
holding company.
Impact on competition
[12] The Commission found no overlap between the activities of the merging parties. The acquiring group is active in the supply of industrial equipment such as lifting equipment, compact construction equipment, industrial cleaning products and equipment, mobile cranes, scaffolding services and liquid fuel dispensing equipment. Afrit manufactures and sells a wide range of standard and bespoke trailers for large commercial vehicles. Afrit also provides short-term finance for trailer sales through Phuma Finance and provides short- and long-term trailer rental solutions through Phuma Rentals.
[13] Given the above, the Commission concluded that the proposed transaction is unlikely to substantially prevent or lessen competition in any market in South Africa. We concur with this finding.
Public interest
[14] In relation to employment the merging parties submitted that the target firm will continue to operate as a separate entity
post-merger and that the proposed transaction will not result in post-merger employment overlaps or redundancies.[2]
[15] Furthermore, the proposed transaction raises no other public interest concerns.
Conclusion
[16] In light of the above, we conclude 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 approve the proposed transaction unconditionally.
29 June 2017
DATE
_____________________
Mr AW Wessels
Ms Mondo Mazwai and Prof lmraan Valodia concurring
Tribunal Case Manager: Busisiwe Masina
For the merging parties: Mr Chris Charter of Cliffe Dekker Hofmeyr
For the Commission:
Ms Lindiwe Khumalo
[1] Merger Record, page 31.
[2] Merger Record, page 8.