Imperial Holdings Limited and Magnis Pretoria (Pty) Ltd (63/LM/Nov01) [2002] ZACT 3 (17 January 2002)
The Tribunal found that the relevant geographic market was Pretoria/Centurion, as Magnis only operated in this area. The product overlap between Imperial and Magnis was limited to passenger vehicles and light commercial vehicles. The merged entity's market share would be approximately 20% for passenger vehicles and...
Source-derived case information.
- Citation
- [2002] ZACT 3
- Parties
- Applicant: Imperial Holdings Limited; Respondent: Magnis Pretoria (Pty) Ltd
- Court
- Competition Tribunal
- Jurisdiction
- South Africa
- Case Number
- 63/LM/Nov01
- Procedural Posture
- Large Merger / Merger Approval
- Outcome
- Merger approved without conditions.
- Judges
- D.L. Lewis, M. Moerane, N. Manoim
- Legal Topics
- Large Merger Review, Market Definition, Public Interest, Market Share Analysis
Source-derived case record
Summary, issues, holding and outcome
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Parties
Imperial Holdings Limited
Applicant
Magnis Pretoria (Pty) Ltd
Respondent
Procedural Posture
Large Merger / Merger Approval
Legal Issues
- 1 Does the proposed merger between Imperial Holdings Limited and Magnis Pretoria (Pty) Ltd substantially lessen competition in the relevant market?
- 2 Are there any public interest concerns arising from the merger as contemplated by section 26(3) of the Competition Act?
Ratio Decidendi
The Tribunal found that the relevant geographic market was Pretoria/Centurion, as Magnis only operated in this area. The product overlap between Imperial and Magnis was limited to passenger vehicles and light commercial vehicles. The merged entity's market share would be approximately 20% for passenger vehicles and 7% for light commercial vehicles, which does not confer market dominance. There remained substantial intra-brand competition from other Nissan and Fiat dealers, as well as inter-brand competition from multi-franchise and independent dealers of other brands. The merger did not raise any public interest concerns under section 26(3) of the Competition Act. Accordingly, the merger...
Court Disposition
Merger approved without conditions.
Orders
- The merger between Imperial Holdings Limited and Magnis Pretoria (Pty) Ltd is approved without conditions.
- A Merger Clearance Certificate is issued.
Full Case Text
Judgment text and source record
41 paragraphs
COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 63/LM/Nov01
In the large merger between:
Imperial Holdings Limited
and
Magnis Pretoria (Pty) Ltd
_______________________________________________________________________
Reasons for the Competition Tribunalâs decision
Approval
The Competition Tribunal issued a Merger Clearance Certificate on 14 December 2001 approving without conditions the merger between Imperial Holdings Limited and Magnis Pretoria (Pty) Ltd. The reasons for our decision to approve the merger are set out below.
The Merger Transaction
Intercity Motors (Pty) Ltd, a wholly owned subsidiary of Imperial Holdings Limited (âImperialâ), is acquiring assets and shares of Magnis Pretoria (Pty) Ltd (âMagnisâ). Magnis is a fully owned subsidiary of Beehive Investment (Pty) Ltd, which in turn is wholly owned by Nedcor Bank Limited.
Nedcor is selling Magnis because it is not part of its core business.
Evaluating the Merger
The relevant market
Both Imperial and Magnis conducts businesses as dealers of passenger and commercial vehicles. Although Imperial has dealerships all over South Africa the geographic market is Pretoria/Centurion because Magnis only trades in the Pretoria/Centurion1.
The following table sets out the dealerships both parties have in the Pretoria/Centurion area:
PRODUCT IMPERIAL MAGNIS Passenger vehicles dealerships in Pretoria Fiat Fiat Nissan Nissan Renault - Kia - Hyundai - Light Commercial Vehicle dealerships in Pretoria Nissan Nissan Fiat Medium Commercial Vehicles dealerships in Pretoria - Nissan - - - - Heavy Commercial Vehicle dealerships in Pretoria - Nissan - Renault
It is only in the sale of passenger vehicles and light commercial vehicles where products of the merging parties overlap.
Both parties are also involved in the forklift market. Imperial only rents forklifts and Magnis only sells forklifts. Since these are regarded as different markets2there are no product overlap in the forklift market.
Imperial and Magnisâ share of the passenger vehicle market in Pretoria/Centurion are as follows:
Category A&B (entry level cars): 3.95%
Category C (small cars): 4.11%
Category D (middle cars): 0.48%
Category E (large cars): 0.58%
Luxury Category: 12.47%
The merged party will have a total market share of approximately 20% of the passenger vehicle market3and 7% of the market for light commercial vehicles in the Pretoria/Centurion area.
The effect on competition
Other Nissan and Fiat dealers that are represented in Pretoria are:
Toits Nissan Terrano Motors Pretoria Nissan McCarthy Nissan Atlantis Nissan
From the above it is clear that there is still substantial intra-brand competition left in this market post the merger. Moreover, the parties experience sufficient inter-brand competition from multi-franchise and other independent dealers of products such as Volkswagen, Toyota, Opel, BMW and Mercedes Benz in this geographic market.
The merger would therefore not substantially lessen competition in the relevant market.
Public Interest
The merger does not raise any of the public interest concerns enumerated in section 26(3).
_____________ 17 January 2002
D.L. Lewis Date
Concurring: M. Moerane and N. Manoim
1 See geographic market analysis in DaimlerChrysler Case, Competition Tribunal Case No: 44/LM/Jul01.
2 The market for forklifts is split between rentals and sales. Rentals account for approximately 70% of demand and sales the balance.
3 The figure does not include Kia, Hyundai and Daihatsu sales, all imported by Imperial dealers, because these are not available for the Pretoria area. In any event, only 6.7% of the total passenger vehicles are imported of which 5 % are Renault motors. It should, therefore, not have a material affect on the market share.