Curro Holdings Ltd v Rudell Holdings Trust (Pty) Ltd (109/LM/Dec11) [2012] ZACT 43 (29 June 2012)
- Citation
- [2012] ZACT 43
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Yasmin Carrim, Medi Mokuena, Takalani Madima
- Case number
- 109/LM/Dec11
More details
- Court
- Competition Tribunal
- Panel
- Yasmin Carrim, Medi Mokuena, Takalani Madima
- Case number
- 109/LM/Dec11
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that although there is a horizontal overlap in the provision of independent education between Curro Holdings Ltd and Woodhill College, the parties operate at different levels of the market, with Woodhill College at the upper end and Curro at the middle end. The average difference in school fees is approximately 44%. Even under a worst-case scenario, the combined post-merger market shares (24% for primary schools, 15% for secondary schools, and 25% for combined schools) do not result in a substantial lessening of competition, as significant competitors remain in the Pretoria East area. Parents have countervailing power and can switch schools, and no concerns were raised by competitors or parents. The transaction does not raise public interest concerns, particularly regarding employment. Therefore, the merger is approved unconditionally.
Court disposition
Merger approved unconditionally.
Orders
- The acquisition by Curro Holdings Ltd of the Rudell Holdings Trust, in respect of Woodhill College (Pty) Ltd and Woodhill College Property Holdings (Pty) Ltd, is approved unconditionally.
02
Material facts
Parties
Curro Holdings Ltd
Applicant Counsel: Natalie Von EyRudell Holdings Trust (Pty) Ltd
RespondentAmounts and remedies
- Average Difference in School Fees Between Curro and Woodhill College (%): 44
- Post Merger Market Share: Primary Schools (%): 24
- Post Merger Market Share: Secondary Schools (%): 15
- Post Merger Market Share: Combined Schools (%): 25
03
Procedural history
Posture
Merger Control / Approval
04
Questions and positions
Legal issues
- 01
Whether the proposed acquisition will substantially prevent or lessen competition in the market for independent education in Pretoria East.
- 02
Whether the transaction raises any public interest concerns, particularly regarding employment.
Party arguments
- Applicant
- Curro Holdings Ltd argued that the acquisition would allow it to expand its network by adding a reputable school, Woodhill College, to its portfolio. The applicant submitted that the transaction would not negatively affect competition, as Woodhill College operates at the upper end of the private school market while Curro operates at the middle end. Curro also stated that the transaction would not have any significant effect on employment.
- Respondent
- The Rudell Holdings Trust submitted that it wished to sell its interest in Woodhill College and that Curro Holdings Ltd was an appropriate purchaser focused on education. The Trust did not raise any concerns regarding competition or public interest and supported the transaction.
05
Court’s reasoning
Legal principles
- 01
Section 12A, Competition Act 89 of 1998
A merger may not be approved if it is likely to substantially prevent or lessen competition, unless the parties can show that technological, efficiency or other pro-competitive gains outweigh the anti-competitive effects.
- 02
Section 12A(3), Competition Act 89 of 1998
Public interest considerations, including the effect on employment, must be assessed in merger proceedings.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that although there is a horizontal overlap in the provision of independent education between Curro Holdings Ltd and Woodhill College, the parties operate at different levels of the market, with Woodhill College at the upper end and Curro at the middle end. The average difference in school fees is approximately 44%. Even under a worst-case scenario, the combined post-merger market shares (24% for primary schools, 15% for secondary schools, and 25% for combined schools) do not result in a substantial lessening of competition, as significant competitors remain in the Pretoria East area. Parents have countervailing power and can switch schools, and no concerns were raised by competitors or parents. The transaction does not raise public interest concerns, particularly regarding employment. Therefore, the merger is approved unconditionally.
Obiter and limits
- The Tribunal noted that the ability of parents to switch schools in the area acts as a significant constraint on the market power of private schools.
- No objections were received from competitors or parents regarding the transaction, indicating a lack of concern about anti-competitive effects.
Court disposition
Merger approved unconditionally.
- The acquisition by Curro Holdings Ltd of the Rudell Holdings Trust, in respect of Woodhill College (Pty) Ltd and Woodhill College Property Holdings (Pty) Ltd, is approved unconditionally.
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:109/LM/Dec11
[013771]
In the matter between:
Curro Holdings Ltd ….................................................................................Acquiring Firm
And
The Rudell Holdings Trust (Pty) Ltd, in
respect of Woodhill College (Pty) Ltd and
Woodhill College Property Holdings (Pty) Ltd …..................................Target Firm
Panel : Yasmin Carrim (Presiding Member) Medi Mokuena (Tribunal Member)
Takalani Madima (Tribunal Member)
Heard on : 14 March 2012
Order issued on : 14 March 2012
Reasons issued on : 29 June 2012
Reasons for Decision
Approval
On 14 March 2012 the Competition Tribunal (“Tribunal”) unconditionally approved the acquisition by Curro Holdings Ltd of the Rudell Holdings Trust, in respect of Woodhill College (Pty) Ltd and Woodhill College Property Holdings (Pty) Ltd. The reasons for the approval follow below.
Parties and their activities
The primary acquiring firm is Curro Holdings Ltd (“Curro”), a public company listed on the Johannesburg Securities Exchange (“JSE”). Curro is controlled by PSG Financial Services Ltd (“PSG”). PSG is a wholly owned subsidiary of PSG Group Ltd. Curro has the following wholly owned subsidiaries: Curro Langebaan (Pty) Ltd, Florauna Akademie (Pty) Ltd, Aurora College (Pty) Ltd and Point 100 Bush Hill (Pty) Ltd.
Curro provides services in relation to private education. It has six schools In Gauteng, two in Mpumalanga, one in Limpopo and four in the Western Cape. These schools accommodate pupils from Grade RR to Grade 12. Curro also caters for early childhood development centres for children from six months to four years (play schools) and offers aftercare facilities.
The primary target firm is the Rudell Holdings Trust (the “Trust”), a trust registered in terms of the laws of the Republic of South Africa. The Trust is controlled by these trustees: Mr. Martin Christo van Breda, Ms Teresa Jacoba van Breda and Mr. Daniel Athol Bosman. The only business of the Trust that will be acquired by Curro is in relation to Woodhill College (Pty) Ltd and Woodhill College Property Holdings (Pty) Ltd.
Woodhill College operates a co-educational, independent, non-denominational Christian school for learners from Grade 0 to Grade 12. It consists of three schools namely, Woodhill College Foundation School (Grade 0 to one), Woodhill College Preparatory School (Grade 1 to Grade 6) and Woodhill College High School (Grade 7 to Grade 12).
Woodhill College Property is the company vehicle which owns the immovable property on which Woodhill College is operated. Woodhill College and Woodhill College Property are hereinafter referred to as “Woodhill College”.
Description of the transaction
Curro intends to acquire the entire issued ordinary capital of Woodhill College. Upon completion, Woodhill College will be solely controlled by Curro.
Rationale for the transaction
Curro submitted that the proposed transaction will assist it in extending its footprint by adding another reputable school to its network. The Trust submitted that it wants to sell its interest in Woodhill and Curro represents an educational-focused purchaser.
The relevant markets and impact on competition
The Commission identified a horizontal overlap in the activities of the merging parties in respect of the provision of independent education (primary, secondary and combined schools) in Pretoria East, Pretoria. Although both parties offer independent education, the Commission found that they do not constrain each other because they operate at different levels of the market i.e. Woodhill College operates at the upper end of the private school market whereas Curro operates at the middle end and that the average difference between school fees paid at the two schools is approximately 44%.
The Commission, however, adopted a worst case scenario and assessed the effects of the proposed transaction on the broader private schools market within the Pretoria East area. The combined post-merger market shares of the merging parties are as follows:
Primary schools – 24%;
Secondary schools – 15%; and
Combined schools – 25%.
The merging parties will still continue to face competition from schools such as Cornerstone College, Cornwall Hill College, Crawford College, Abbot College, Loreto School, St Albans College, Waterkloof House, Eduplex and Tuksport High School.
The Commission found that parents of learners have some degree of countervailing power as they are able to switch to other schools (such as those mentioned above) which are situated within close proximity of Woodhill and Curro. Further, schools competing with those of the merging parties as well as parents of the learners at Woodhill and Curro did not raise any concerns about this transaction.
Public interest
The merging parties submitted to the Commission that the proposed transaction will not have any significant effect on employment.
Conclusion
In light of the above, we conclude that the proposed transaction is unlikely to substantially prevent or lessen competition in the market for the provision of independent education. Furthermore, the proposed transaction raises no public interest concerns. Accordingly we approve the transaction unconditionally.
____ 29 June 2012
Yasmin Carrim Date
Medi Mokuena and Takalani Madima concurring.
Tribunal researcher: Ipeleng Selaledi
For the merging parties: Natalie Von Ey of Cliffe Dekker Hofmeyr Inc.
For the Commission: Lerato Monareng
5
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