Imperial Holdings Limited v Itumelo Bus Lines Proprietary Limited (LM105Sep16) [2016] ZACT 119 (21 December 2016)

Imperial Holdings Limited v Itumelo Bus Lines Proprietary Limited (LM105Sep16) [2016] ZACT 119 (21 December 2016)

The Tribunal found that the proposed merger would not result in a substantial lessening or prevention of competition in any relevant market, as there was no product overlap between the parties. However, the restraint of trade agreement was found to be unjustified in its original form due to its excessive geographic scope, inclusion of activities beyond the target firm's business, and an unreasonable duration of five years. The Tribunal approved the merger subject to conditions that limited the restraint to the target firm's activities, reduced the duration to three years, and confined the geographic scope to the areas where the target firm operates at the commencement of the restraint. No...

Citation
[2016] ZACT 119
Parties
Applicant: Imperial Holdings Limited; Respondent: Itumelo Bus Lines Proprietary Limited
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
21 December 2016
Case Number
LM105Sep16
Procedural Posture
Merger Application / Conditional Approval
Outcome
Merger conditionally approved subject to amendments to the restraint of trade agreement.
Judges
Norman Manoim, AW Wessels, Medi Mokuena
Legal Topics
Merger Control, Restraint of Trade, Public Interest, Conditional Approval
Competition Law Merger Control Restraint of Trade Public Interest Conditional Approval

Case Brief

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Parties

Imperial Holdings Limited

Applicant

Itumelo Bus Lines Proprietary Limited

Respondent

Procedural Posture

Merger Application / Conditional Approval

Legal Issues

  1. 1 Whether the proposed merger between Imperial Holdings Limited and Itumelo Bus Lines Proprietary Limited is likely to substantially prevent or lessen competition in any relevant market.
  2. 2 Whether the restraint of trade agreement entered into by the merging parties is justified in terms of its geographic scope, activities, and duration.
  3. 3 Whether the proposed transaction raises any public interest concerns, including adverse impact on employment.

Ratio Decidendi

The Tribunal found that the proposed merger would not result in a substantial lessening or prevention of competition in any relevant market, as there was no product overlap between the parties. However, the restraint of trade agreement was found to be unjustified in its original form due to its excessive geographic scope, inclusion of activities beyond the target firm's business, and an unreasonable duration of five years. The Tribunal approved the merger subject to conditions that limited the restraint to the target firm's activities, reduced the duration to three years, and confined the geographic scope to the areas where the target firm operates at the commencement of the restraint. No...

Court Disposition

Merger conditionally approved subject to amendments to the restraint of trade agreement.

Orders

  • The merging parties shall reduce the restraint period from five years to three years.
  • The merging parties shall limit the restraint area to the geographic area in which the target firm conducts business activities at the commencement of the restraint period.