Guardrisk Insurance Company Limited v RMB Structured Insurance Limited's Personal Lines, Commercial Lines and Smart Device Insurance Business Managed by CIB Proprietary Limited (LM235Mar17) [2017] ZACT 23; [2017] 1 CPLR 292 (CT) (22 June 2017)

Guardrisk Insurance Company Limited v RMB Structured Insurance Limited's Personal Lines, Commercial Lines and Smart Device Insurance Business Managed by CIB Proprietary Limited (LM235Mar17) [2017] ZACT 23; [2017] 1 CPLR 292 (CT) (22 June 2017)

The Tribunal found that the merger would not substantially prevent or lessen competition in the relevant markets for short-term insurance products. The merged entity's market share increase was minimal, and strong competitors remained in the market. Switching costs for customers are low due to legislative facilitation, and the merged entity would be constrained from exercising market power. In none of the narrower markets did the market share accretion exceed 3.5%, and in only two markets did the merged entity possess a market share above 20%, which existed pre-merger. The Tribunal also found no public interest concerns, as the target businesses have no employees and policyholders would...

Citation
[2017] ZACT 23
Parties
Applicant: Guardrisk Insurance Company Limited; Respondent: RMB Structured Insurance Limited's Personal Lines, Commercial Lines and Smart Device Insurance Business Managed by CIB Proprietary Limited; Respondent: Competition Commission
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
22 June 2017
Case Number
LM235Mar17
Procedural Posture
Large Merger Review / Approval and Reasons
Outcome
Merger approved without conditions.
Judges
N Manoim, E Daniels, I Valodia
Legal Topics
Large Merger Review, Market Share Analysis, Public Interest, Short Term Insurance, Unilateral Effects
Competition Law Commercial and Corporate Large Merger Review Market Share Analysis Public Interest Short Term Insurance Unilateral Effects

Case Brief

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Parties

Guardrisk Insurance Company Limited

Applicant

RMB Structured Insurance Limited's Personal Lines, Commercial Lines and Smart Device Insurance Business Managed by CIB Proprietary Limited

Respondent

Competition Commission

Respondent

Procedural Posture

Large Merger Review / Approval and Reasons

Legal Issues

  1. 1 Whether the proposed merger is likely to substantially prevent or lessen competition in the relevant insurance markets.
  2. 2 Whether the merger raises any public interest concerns, including effects on employment and consumers.

Ratio Decidendi

The Tribunal found that the merger would not substantially prevent or lessen competition in the relevant markets for short-term insurance products. The merged entity's market share increase was minimal, and strong competitors remained in the market. Switching costs for customers are low due to legislative facilitation, and the merged entity would be constrained from exercising market power. In none of the narrower markets did the market share accretion exceed 3.5%, and in only two markets did the merged entity possess a market share above 20%, which existed pre-merger. The Tribunal also found no public interest concerns, as the target businesses have no employees and policyholders would...

Court Disposition

Merger approved without conditions.

Orders

  • The large merger between Guardrisk Insurance Company Limited and RMB Structured Insurance Limited's Personal Lines, Commercial Lines and Smart Device Insurance Business Managed by CIB Proprietary Limited is approved without conditions.