Investec Bank Limited and DCD Dorbyl (Pty) Ltd (13/LM/Jan07) [2007] ZACT 31 (8 May 2007)
- Citation
- [2007] ZACT 31
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- N Manoim, M Holden, M Mokuena
- Case number
- 13/LM/Jan07
More details
- Court
- Competition Tribunal
- Panel
- N Manoim, M Holden, M Mokuena
- Case number
- 13/LM/Jan07
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that there is no overlap in the activities of Investec Bank Limited and DCD Dorbyl (Pty) Ltd, as Investec operates in financial services and DCD Dorbyl in heavy engineering, rail, and marine sectors. The transaction involves Investec acquiring a minority stake in Newco, which will own the transferred business. The Tribunal concluded that the merger is unlikely to substantially prevent or lessen competition in any relevant market. Furthermore, there are no significant public interest concerns that would warrant conditions or prohibition. Accordingly, the merger was approved without conditions.
Court disposition
Merger approved without conditions.
Orders
- The merger between Investec Bank Limited and DCD Dorbyl (Pty) Ltd is approved without conditions.
02
Material facts
Parties
Investec Bank Limited
Applicant Counsel: Andries le Grange and Janine Simpson (Hofmeyr Herbstein & Gihwala)DCD Dorbyl (Pty) Ltd
Respondent Counsel: Tsakani Mhlanga (Cliffe Dekker Inc)03
Procedural history
Posture
Merger Control / Merger Approval
04
Questions and positions
Legal issues
- 01
Whether the proposed merger between Investec Bank Limited and DCD Dorbyl (Pty) Ltd is likely to substantially prevent or lessen competition in any relevant market.
- 02
Whether there are any significant public interest concerns arising from the transaction.
Party arguments
- Applicant
- Investec Bank Limited argued that the transaction is a pure investment opportunity, motivated by anticipated returns due to increased government spending on infrastructure. The parties submitted that there is no overlap in their activities, as Investec is a specialist banking group and DCD Dorbyl operates in heavy engineering, rail, and marine sectors. They contended that the merger would not affect competition or public interest negatively.
- Respondent
- DCD Dorbyl (Pty) Ltd supported the position that the transaction would not result in anti-competitive effects, emphasizing that the transferred business would be controlled by Newco, with Investec holding a minority stake and minority protection rights. The respondent maintained that the merger would benefit from large capital expenditure projects and would not raise public interest concerns.
05
Court’s reasoning
Legal principles
- 01
Competition Act, No. 89 of 1998
A merger may only be prohibited if it is likely to substantially prevent or lessen competition in any relevant market.
- 02
Competition Act, No. 89 of 1998
Public interest considerations must be assessed in merger proceedings, including the effect on employment and the ability of small businesses to compete.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that there is no overlap in the activities of Investec Bank Limited and DCD Dorbyl (Pty) Ltd, as Investec operates in financial services and DCD Dorbyl in heavy engineering, rail, and marine sectors. The transaction involves Investec acquiring a minority stake in Newco, which will own the transferred business. The Tribunal concluded that the merger is unlikely to substantially prevent or lessen competition in any relevant market. Furthermore, there are no significant public interest concerns that would warrant conditions or prohibition. Accordingly, the merger was approved without conditions.
Obiter and limits
- The Tribunal noted that government infrastructure spending is expected to benefit DCD Dorbyl's business divisions.
- The Tribunal observed that minority protection rights held by Investec do not confer control over the target business.
Court disposition
Merger approved without conditions.
- The merger between Investec Bank Limited and DCD Dorbyl (Pty) Ltd is approved without conditions.
Source and reliance status
Competition Tribunal
This page organises the available record for research. Confirm quotations, current status, and subsequent treatment against the official source before relying on the case.
Judgment reading view
Judgment text
The complete available source text.
Competition Tribunal
Judgment
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 13/LM/Jan07
In the matter between:
Investec Bank Limited Acquiring firm
And
DCD Dorbyl (Pty) Ltd Target firm
Panel: N Manoim (Presiding Member), M Holden (Tribunal Member) and M Mokuena (Tribunal Member)
Heard on: 14 March 2007
Order issued on: 14 March 2007
Reasons issued on: 08 May 2007
Reasons for Decision
APPROVAL
On 14 March 2007, the Tribunal approved the merger between Investec Bank Limited and DCD Dorbyl (Pty) Ltd. The reasons for approval follow.
THE
TRANSACTION
The acquiring firm is Investec Bank Ltd (âInvestecâ) which is controlled by Investec Limited. Investec Limited is listed on the JSE and according to the parties, no single shareholder controls Investec Limited. 1 The target firm is the business of DCD Dorbyl (âDCD Dorbylâ) which is jointly controlled by DCD Investment Trust, Calshelf Investments 116 (Pty) Ltd (âCalshelfâ) and Mediro Industrial Holdings (Pty) Ltd (âMediroâ). DCD Investment Trust also holds 51% of Calshelf. 2
The proposed transaction involves the sale and transfer of the target business to Clidet No. 74 (Pty) Ltd (âNewcoâ) by shareholders of DCD Dorbyl, as a going concern. Investec Bank is to acquire 43% of the shares of Newco with minority protection rights. Therefore, post merger, the transferred business will be directly owned and controlled by Newco and indirectly by the Investec group.
For Investec, the transaction is purely an investment opportunity with a potential for good returns, in light of governmentâs increased spending on infrastructural development. DCD-Dorbyl is expected to benefit from the abovementioned large capital expenditure projects which have already begun through its three operating divisions in the heavy engineering, rail and marine sectors.
COMPETITION ANALYSIS
Newco has not yet commenced trading as it is to acquire the transferred business after completion of the proposed transaction. The Investec group is a global specialist banking group involved in the provision of a diverse range of financial products and services. DCD Dorbyl is a multi-faceted engineering company offering a wide range of products and services in the heavy engineering, rail and marine ship industries.3
In light of the fact that there is no overlap in the activities of the merging parties, we are of the view that the proposed transaction is unlikely to substantially prevent or lessen competition in any of the markets in which the parties are active.
There are no other significant public interests issues which would alter our view and we accordingly approve the transaction without conditions.
______
N Manoim
M Holden and M Mokuena concurring.
Tribunal Researcher: M Murugan-Modise
For the merging parties: Andries le Grange and Janine Simpson (Hofmeyr
Herbstein & Gihwala)
Tsakani Mhlanga (Cliffe Dekker Inc)
For the Commission: L Lamola (Mergers and Acquisitions)
1 Please refer to pages 72-94 of the Commissionâs record for the Investec group structure.
2 Please refer to page 95 of the Commissionâs record for a diagram of the DCD Dorbyl group.
3Please see the parties competitiveness report for more detail on the activities.
3
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