EOH Mthombo (Pty) Limited v Cornastone Enterprise Systems (Pty) Ltd (LM170Nov16) [2017] ZACT 2 (22 February 2017)

EOH Mthombo (Pty) Limited v Cornastone Enterprise Systems (Pty) Ltd (LM170Nov16) [2017] ZACT 2 (22 February 2017)

The Tribunal found that the proposed merger would result in horizontal overlaps in several IT-related markets, but post-merger market shares and accretion would remain low, with EOH not exceeding a 10% market share in any relevant market and accretion not exceeding 1%. The presence of at least 50 competitors in each market would constrain EOH's actions, and previous mergers by EOH did not result in unique market power. The Tribunal concluded that the transaction is unlikely to substantially prevent or lessen competition. Furthermore, there were no planned rationalisations or negative effects on employment, and no other public interest concerns were raised. Accordingly, the merger was...

Citation
[2017] ZACT 2
Parties
Applicant: EOH Mthombo (Pty) Ltd; Respondent: Cornastone Enterprise Systems (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
22 February 2017
Case Number
LM170Nov16
Procedural Posture
Merger Application / Approval
Outcome
Merger approved unconditionally.
Judges
Andiswa Ndoni, Enver Daniels, lmraan Valodia
Legal Topics
Large Merger, Market Share Analysis, Horizontal Overlap, Public Interest, Employment Effects
Competition Law Commercial and Corporate Large Merger Market Share Analysis Horizontal Overlap Public Interest Employment Effects

Case Brief

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Parties

EOH Mthombo (Pty) Ltd

Applicant

Cornastone Enterprise Systems (Pty) Ltd

Respondent

Procedural Posture

Merger Application / Approval

Legal Issues

  1. 1 Whether the proposed merger between EOH Mthombo and Cornastone Enterprise Systems is likely to substantially prevent or lessen competition in any relevant market.
  2. 2 Whether the transaction raises any public interest concerns, including effects on employment.

Ratio Decidendi

The Tribunal found that the proposed merger would result in horizontal overlaps in several IT-related markets, but post-merger market shares and accretion would remain low, with EOH not exceeding a 10% market share in any relevant market and accretion not exceeding 1%. The presence of at least 50 competitors in each market would constrain EOH's actions, and previous mergers by EOH did not result in unique market power. The Tribunal concluded that the transaction is unlikely to substantially prevent or lessen competition. Furthermore, there were no planned rationalisations or negative effects on employment, and no other public interest concerns were raised. Accordingly, the merger was...

Court Disposition

Merger approved unconditionally.

Orders

  • The large merger between EOH Mthombo (Pty) Ltd and Cornastone Enterprise Systems (Pty) Ltd is approved without conditions.