Competition Commission and Edgars Consolidated Stores Ltd and Others (95/FN/Dec02) [2003] ZACT 19 (24 March 2003)

Competition Commission and Edgars Consolidated Stores Ltd and Others (95/FN/Dec02) [2003] ZACT 19 (24 March 2003)

The Tribunal found that the acquisition by Edgars Consolidated Stores Ltd of the book debts and ancillary rights from Retail Apparel (Pty) Ltd constituted the acquisition of part of a business, not merely an asset. The transaction provided Edgars with access to the seller's customer base, subsequent debts, and control over debtor management, thereby enhancing its competitive position in the retail apparel market. The structuring of the transaction into two legs was primarily for expediency and did not alter its substantive nature as a merger. The respondents implemented the merger prior to obtaining approval, contravening section 13A(3) of the Competition Act. Although the respondents...

Citation
[2003] ZACT 19
Parties
Applicant: Competition Commission; Respondent: Edgars Consolidated Stores Limited; Respondent: Retail Apparel (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
24 March 2003
Case Number
95/FN/Dec02
Procedural Posture
Administrative Penalty Application / Final Decision and Order
Outcome
The Tribunal found that the respondents contravened section 13A(3) of the Competition Act by implementing a merger prior to approval and imposed an administrative penalty.
Judges
N. Manoim, D. Lewis, P. Maponya
Legal Topics
Merger Notification, Implementation Prior Approval, Administrative Penalty, Definition of Business, Asset Acquisition
Competition Law Commercial and Corporate Merger Notification Implementation Prior Approval Administrative Penalty Definition of Business Asset Acquisition

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Parties

Competition Commission

Applicant

Edgars Consolidated Stores Limited

Respondent

Retail Apparel (Pty) Ltd

Respondent

Procedural Posture

Administrative Penalty Application / Final Decision and Order

Legal Issues

  1. 1 Does the acquisition by Edgars Consolidated Stores Ltd of certain claims against trade creditors of Retail Apparel (Pty) Ltd constitute a merger as defined in section 12 of the Competition Act?
  2. 2 Did the respondents contravene section 13A(3) of the Competition Act by implementing the merger prior to approval?
  3. 3 Is the imposition of an administrative penalty appropriate under section 59(1)(d) of the Competition Act?

Ratio Decidendi

The Tribunal found that the acquisition by Edgars Consolidated Stores Ltd of the book debts and ancillary rights from Retail Apparel (Pty) Ltd constituted the acquisition of part of a business, not merely an asset. The transaction provided Edgars with access to the seller's customer base, subsequent debts, and control over debtor management, thereby enhancing its competitive position in the retail apparel market. The structuring of the transaction into two legs was primarily for expediency and did not alter its substantive nature as a merger. The respondents implemented the merger prior to obtaining approval, contravening section 13A(3) of the Competition Act. Although the respondents...

Court Disposition

The Tribunal found that the respondents contravened section 13A(3) of the Competition Act by implementing a merger prior to approval and imposed an administrative penalty.

Orders

  • The respondents are ordered to pay an administrative penalty of R 250 000 in terms of section 59(d)(iv) of the Competition Act.
  • The respondents are jointly and severally liable for payment of the fine; payment by one absolves the other.