Fidelity Security Services (Pty) Ltd v ADT Security Ltd (LM100Sep16) [2017] ZACT 38; [2017] 1 CPLR 248 (CT) (6 April 2017)

Fidelity Security Services (Pty) Ltd v ADT Security Ltd (LM100Sep16) [2017] ZACT 38; [2017] 1 CPLR 248 (CT) (6 April 2017)

The Tribunal found that the proposed merger between Fidelity and ADT is unlikely to substantially prevent or lessen competition in any relevant market, primarily because Fidelity is a small player in monitoring and response services and there is limited overlap with ADT. The Tribunal concurred with the Commission's assessment that barriers to entry are low in the residential segment but higher in the commercial segment, and that customers possess some countervailing power. However, due to Fidelity's history of 'small' acquisitions and its stated growth strategy through further acquisitions, the Tribunal imposed a condition requiring Fidelity to voluntarily notify future 'small' mergers in...

Citation
[2017] ZACT 38
Parties
Applicant: Fidelity Security Services (Pty) Ltd; Respondent: ADT Security (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
6 April 2017
Case Number
LM100Sep16
Procedural Posture
Merger Application / Conditional Approval
Outcome
Conditional approval of the merger subject to notification of future 'small' mergers in the monitoring and response services market for 36 months.
Judges
Norman Manoim, AW Wessels, Andiswa Ndoni
Legal Topics
Merger Control, Conditional Approval, Notification of Small Mergers, Horizontal Overlap, Market Definition, Public Interest
Competition Law Commercial and Corporate Merger Control Conditional Approval Notification of Small Mergers Horizontal Overlap Market Definition Public Interest

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Parties

Fidelity Security Services (Pty) Ltd

Applicant

ADT Security (Pty) Ltd

Respondent

Procedural Posture

Merger Application / Conditional Approval

Legal Issues

  1. 1 Whether the proposed merger between Fidelity and ADT is likely to substantially prevent or lessen competition in any relevant market.
  2. 2 Whether the merger raises public interest concerns, including employment.
  3. 3 Whether a condition requiring notification of future 'small' mergers is justified.

Ratio Decidendi

The Tribunal found that the proposed merger between Fidelity and ADT is unlikely to substantially prevent or lessen competition in any relevant market, primarily because Fidelity is a small player in monitoring and response services and there is limited overlap with ADT. The Tribunal concurred with the Commission's assessment that barriers to entry are low in the residential segment but higher in the commercial segment, and that customers possess some countervailing power. However, due to Fidelity's history of 'small' acquisitions and its stated growth strategy through further acquisitions, the Tribunal imposed a condition requiring Fidelity to voluntarily notify future 'small' mergers in...

Court Disposition

Conditional approval of the merger subject to notification of future 'small' mergers in the monitoring and response services market for 36 months.

Orders

  • The proposed merger between Fidelity Security Services (Pty) Ltd and ADT Security (Pty) Ltd is approved subject to the following condition: Fidelity must, for a period of 36 months from the date of implementation, voluntarily notify 'small' mergers in the monitoring and response services market in terms of section...
  • The above obligation does not affect the notification requirements for transactions that meet the statutory thresholds for merger notification under the Competition Act.