Imperial Holdings Limited and Cold Chain (Pty) Ltd (41/LM/Mar00) [2000] ZACT 25 (12 June 2000)

Imperial Holdings Limited and Cold Chain (Pty) Ltd (41/LM/Mar00) [2000] ZACT 25 (12 June 2000)

The Tribunal found that although both Imperial and The Cold Chain operate in the transportation of products at controlled temperatures, their services are not substitutable. Imperial provides long haul, bulk transportation, while The Cold Chain offers bundled, short-haul distribution and merchandising services. The parties do not compete in the same relevant product market. The Tribunal considered the vertical aspect of the merger and the risk of tying service markets, but determined that strong countervailing power exists at both the manufacturing and retail ends, and that brokers ensure sufficient competition in long haul transport. The preferential right clause in the Sale of Shares...

Citation
[2000] ZACT 25
Parties
Applicant: Imperial Holdings Limited; Respondent: The Cold Chain (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
12 June 2000
Case Number
41/LM/Mar00
Procedural Posture
Large Merger Review / Merger Clearance With Conditions
Outcome
Merger approved with conditions.
Judges
D.H. Lewis, N.M. Manoim, D.R. Terblanche
Legal Topics
Large Merger Review, Vertical Integration, Bundled Services, Preferential Rights, Public Interest
Competition Law Commercial and Corporate Large Merger Review Vertical Integration Bundled Services Preferential Rights Public Interest

Case Brief

Summary, issues, holding and outcome

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Parties

Imperial Holdings Limited

Applicant

The Cold Chain (Pty) Ltd

Respondent

Procedural Posture

Large Merger Review / Merger Clearance With Conditions

Legal Issues

  1. 1 Whether the merger between Imperial Holdings Limited and The Cold Chain (Pty) Ltd would substantially prevent or lessen competition in the relevant markets.
  2. 2 Whether the merger raises any public interest concerns under section 16(3) of the Competition Act.
  3. 3 Whether the preferential right clause in the Sale of Shares Agreement creates anti-competitive effects.

Ratio Decidendi

The Tribunal found that although both Imperial and The Cold Chain operate in the transportation of products at controlled temperatures, their services are not substitutable. Imperial provides long haul, bulk transportation, while The Cold Chain offers bundled, short-haul distribution and merchandising services. The parties do not compete in the same relevant product market. The Tribunal considered the vertical aspect of the merger and the risk of tying service markets, but determined that strong countervailing power exists at both the manufacturing and retail ends, and that brokers ensure sufficient competition in long haul transport. The preferential right clause in the Sale of Shares...

Court Disposition

Merger approved with conditions.

Orders

  • The merger between Imperial Holdings Limited and The Cold Chain (Pty) Ltd is approved subject to the removal of clause 17.1 (preferential right) from the Sale of Shares Agreement.
  • No public interest concerns under section 16(3) are identified.