Clicks Retailers v H Mallach and Associates (LM183Feb23) [2023] ZACT 20 (12 April 2023)

Clicks Retailers v H Mallach and Associates (LM183Feb23) [2023] ZACT 20 (12 April 2023)

The Tribunal found that the proposed transaction creates both horizontal and vertical overlaps in the retail and wholesale pharmaceutical markets. However, the presence of numerous alternative competitors within a 5km radius, including national chains and independent pharmacies, ensures that the merged entity will not have market power sufficient to substantially prevent or lessen competition. Price competition is further constrained by regulatory controls under the Medicines Act. In the vertical market, alternative upstream distributors are available, and M-Kem's limited market share means foreclosure is unlikely. The transaction will not result in negative employment effects, and...

Citation
[2023] ZACT 20
Parties
Applicant: Clicks Retailers (Pty) Ltd; Respondent: H Mallach & Associates (Pty) Ltd t/a M-Kem Pharmacy
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
12 April 2023
Case Number
LM183Feb23
Procedural Posture
Large Merger / Approval and Reasons
Outcome
The proposed merger is approved unconditionally.
Judges
Sha’ista Goga, Imraan Valodia, Andiswa Ndoni
Legal Topics
Large Merger Review, Horizontal Overlap, Vertical Overlap, Input Foreclosure, Customer Foreclosure, Public Interest Employment
Competition Law Commercial and Corporate Large Merger Review Horizontal Overlap Vertical Overlap Input Foreclosure Customer Foreclosure Public Interest Employment

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Parties

Clicks Retailers (Pty) Ltd

Applicant

H Mallach & Associates (Pty) Ltd t/a M-Kem Pharmacy

Respondent

Procedural Posture

Large Merger / Approval and Reasons

Legal Issues

  1. 1 Whether the proposed acquisition of H Mallach & Associates t/a M-Kem Pharmacy by Clicks Retailers will substantially prevent or lessen competition in any relevant market.
  2. 2 Whether the transaction raises any public interest concerns, including employment and spread of ownership.
  3. 3 Whether the transaction gives rise to horizontal or vertical competition concerns, including input or customer foreclosure.

Ratio Decidendi

The Tribunal found that the proposed transaction creates both horizontal and vertical overlaps in the retail and wholesale pharmaceutical markets. However, the presence of numerous alternative competitors within a 5km radius, including national chains and independent pharmacies, ensures that the merged entity will not have market power sufficient to substantially prevent or lessen competition. Price competition is further constrained by regulatory controls under the Medicines Act. In the vertical market, alternative upstream distributors are available, and M-Kem's limited market share means foreclosure is unlikely. The transaction will not result in negative employment effects, and...

Court Disposition

The proposed merger is approved unconditionally.

Orders

  • The large merger between Clicks Retailers (Pty) Ltd and H Mallach & Associates (Pty) Ltd t/a M-Kem Pharmacy is approved without conditions.
  • No retrenchments or negative employment effects shall result from the transaction.