Dis-Chem Pharmacies Limited v Kaelo Holdings Proprietary Limited (LM025May21) [2021] ZACT 65 (19 October 2021)

Dis-Chem Pharmacies Limited v Kaelo Holdings Proprietary Limited (LM025May21) [2021] ZACT 65 (19 October 2021)

The Tribunal found that Dis-Chem's acquisition of 25% of Kaelo's share capital, together with minority rights, constitutes control as defined in the Competition Act. The transaction does not result in any horizontal overlaps and only a vertical overlap exists in the provision of healthcare and wellness services to Dis-Chem employees. Kaelo's market share in the affected markets is low, and Dis-Chem does not procure these services from other providers, eliminating concerns of customer foreclosure. No objections were raised by customers or competitors, and no public interest concerns, including employment effects, were identified. The Tribunal approved the transaction subject to the...

Citation
[2021] ZACT 65
Parties
Applicant: Dis-Chem Pharmacies Limited; Respondent: Kaelo Holdings Proprietary Limited
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
19 October 2021
Case Number
LM025May21
Procedural Posture
Merger Review / Tribunal Decision on Conditional Approval
Outcome
The proposed transaction is approved subject to conditions regarding notification of future sole unfettered control.
Judges
AW Wessels, E Daniels, T Vilakazi
Legal Topics
Merger Control, Vertical Overlap, Minority Control, Public Interest, Customer Foreclosure
Competition Law Merger Control Vertical Overlap Minority Control Public Interest Customer Foreclosure

Case Brief

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Parties

Dis-Chem Pharmacies Limited

Applicant

Kaelo Holdings Proprietary Limited

Respondent

Procedural Posture

Merger Review / Tribunal Decision on Conditional Approval

Legal Issues

  1. 1 Whether the acquisition by Dis-Chem of 25% of Kaelo's share capital constitutes control under section 12(2)(g) of the Competition Act.
  2. 2 Whether the proposed transaction is likely to substantially prevent or lessen competition in any relevant market.
  3. 3 Whether the transaction raises any public interest concerns, including employment effects.

Ratio Decidendi

The Tribunal found that Dis-Chem's acquisition of 25% of Kaelo's share capital, together with minority rights, constitutes control as defined in the Competition Act. The transaction does not result in any horizontal overlaps and only a vertical overlap exists in the provision of healthcare and wellness services to Dis-Chem employees. Kaelo's market share in the affected markets is low, and Dis-Chem does not procure these services from other providers, eliminating concerns of customer foreclosure. No objections were raised by customers or competitors, and no public interest concerns, including employment effects, were identified. The Tribunal approved the transaction subject to the...

Court Disposition

The proposed transaction is approved subject to conditions regarding notification of future sole unfettered control.

Orders

  • The merger between Dis-Chem Pharmacies Limited and Kaelo Holdings Proprietary Limited is approved subject to the condition that Dis-Chem must notify the acquisition of sole unfettered control in Kaelo as a merger in terms of section 13A of the Competition Act if such control is acquired after the approval date.
  • No retrenchments shall occur as a result of the transaction.