Invicta Holdings Ltd v Dartcom SA (Pty) Ltd (LM099Oct21) [2021] ZACT 77 (13 December 2021)
- Citation
- [2021] ZACT 77
- Status
- Order
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Y Carrim, M Mazwai, AW Wessels
- Case number
- LM099Oct21
More details
- Court
- Competition Tribunal
- Panel
- Y Carrim, M Mazwai, AW Wessels
- Case number
- LM099Oct21
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that there are no horizontal or vertical overlaps between the activities of Invicta Holdings and Dartcom SA (Pty) Ltd, and that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market. The transaction does not have any adverse effect on employment, and although BBBEE shareholding in Dartcom will decrease, the BBBEE shareholders will gain a stake in a larger entity, Invicta Holdings, with higher total revenue. Employees of Dartcom will benefit from Invicta's employee incentive trust and training initiatives. No other public interest concerns were identified. Accordingly, the merger was approved unconditionally.
Court disposition
Merger approved unconditionally.
Orders
- The merger between Invicta Holdings Ltd and Dartcom SA (Pty) Ltd is approved in terms of section 16(2)(a) of the Competition Act, 1998.
- A Merger Clearance Certificate is to be issued in terms of Competition Tribunal Rule 35(5)(a).
02
Material facts
Parties
Invicta Holdings Ltd
Applicant Counsel: Richardt van RensburgDartcom SA (Pty) Ltd
Respondent03
Procedural history
Posture
Merger Application / Final Determination
04
Questions and positions
Legal issues
- 01
Whether the proposed merger is likely to substantially prevent or lessen competition in any relevant market.
- 02
Whether the transaction raises any public interest concerns, including effects on employment and BBBEE ownership.
Party arguments
- Applicant
- The merging parties argued that there are no horizontal or vertical overlaps between Invicta Holdings and Dartcom SA (Pty) Ltd, and that the transaction would not negatively affect competition. They submitted that the merger would allow BBBEE shareholders of Dartcom to diversify their equity stake through shareholding in Invicta, and that Dartcom employees would benefit from Invicta's employee incentive trust and training initiatives.
- Respondent
- The Competition Commission found no horizontal or vertical relationships between the merging parties and concluded that the transaction is unlikely to substantially prevent or lessen competition. The Commission noted that while BBBEE shareholding in Dartcom would decrease, Tuludi would gain a shareholding in Invicta, and Dartcom employees would benefit from broader group initiatives. No adverse effects on employment or other public interest concerns were identified.
05
Court’s reasoning
Legal principles
- 01
Competition Act, 1998, section 16(2)(a)
A merger may only be prohibited if it is likely to substantially prevent or lessen competition in any relevant market.
- 02
Competition Act, 1998, section 12A
Public interest considerations, including employment and BBBEE ownership, must be assessed in merger proceedings.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that there are no horizontal or vertical overlaps between the activities of Invicta Holdings and Dartcom SA (Pty) Ltd, and that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market. The transaction does not have any adverse effect on employment, and although BBBEE shareholding in Dartcom will decrease, the BBBEE shareholders will gain a stake in a larger entity, Invicta Holdings, with higher total revenue. Employees of Dartcom will benefit from Invicta's employee incentive trust and training initiatives. No other public interest concerns were identified. Accordingly, the merger was approved unconditionally.
Obiter and limits
- The Tribunal noted that the merger would enable Dartcom employees to participate as beneficiaries of the Humulani Employee Incentive Trust.
- The Tribunal observed that Dartcom employees would benefit from Invicta Holdings' SETA accredited training initiatives and mentorship programmes.
Court disposition
Merger approved unconditionally.
- The merger between Invicta Holdings Ltd and Dartcom SA (Pty) Ltd is approved in terms of section 16(2)(a) of the Competition Act, 1998.
- A Merger Clearance Certificate is to be issued in terms of Competition Tribunal Rule 35(5)(a).
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
Order
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No.: LM099Oct21
In the matter between:
Invicta Holdings Ltd
Primary Acquiring Firm
And
Dartcom SA (Pty) Ltd
Primary Target Firm
Panel:
Y Carrim (Presiding Member)
M Mazwai (Tribunal Member)
AW Wessels (Tribunal Member)
Heard on: 13 December 2021
Order Issued on: 13 December 2021
ORDER
Further to the recommendation of the Competition Commission in terms of section 14A(1)(b) of the Competition Act, 1998 (“the Act”) the Competition Tribunal orders that–
1. the merger between the abovementioned parties be approved in terms of section 16(2)(a) of the Act; and
2. a Merger Clearance Certificate be issued in terms of Competition Tribunal Rule 35(5)(a).
13 December 2021
Presiding Member Date
Ms Yasmin Carrim
Concurring: Ms Mondo Mazwai and Mr Andreas Wessels
COMPETITION TRIBUNAL OF
SOUTH AFRICA
Case no: LM099Oct21
Invicta Holdings Limited (Primary Acquiring Firm)
and
Dartcom SA (Pty) Ltd (Primary Target Firm)
REASONS FOR DECISION
[1] On 13 December 2021, the Competition Tribunal unconditionally approved a large merger between the Invicta Holdings Limited (“Invicta”) and Dartcom SA (Pty) Ltd (“Dartcom”).
[2] In terms of this transaction, Invicta Holdings intends to acquire as one indivisible transaction:
a. [….] of the entire issued share capital of Dartcom from Tuludi; and
b. All of the shares in and claims against Kgalauwane 2 (Pty) Ltd (“Kgalauwane 2”) which are held by Kgalauwane Properties.
[3] Dartcom and Kgalauwane 2, are both ultimately controlled by the [….]
prior to the transaction.
[4] Pursuant to the implementation of the transaction, Invicta Holdings will acquire sole control over Dartcom and Kgalauwane 2.
[5] The Competition Commission (“the Commission”) did not find any horizontal overlaps between the activities of the merging parties as Invicta does not sell any products or render any services
that are functionally substitutable with those offered by Dartcom and Kgalauwane 2.
[6] Furthermore, the Commission found no vertical relationship between the activities of the merging parties.
[7] Therefore, the Commission found that the proposed transaction is unlikely to substantially prevent or lessen competition in any of the relevant markets.
[8] The transaction does not have any adverse effect on employment.
[9] As a direct result of the proposed transaction, the BBBEE shareholdings in Dartcom will decrease and Dartcom will move from being a level [….] BBBEE contributor to being a level [….]
BBBEE contributor.
[10] However, the merging parties indicate that as part of the purchase price for the acquisition of share in Dartcom, Tuludi will gain a shareholding in Invicta. Thus, the proposed merger will allow a Historically Disadvantaged Firm, Tuludi (indirectly the [….] to diversify its equity stake in Dartcom through its shareholding in Invicta.
[11] The Commission also notes the BBBEE Shareholders of Dartcom (Tuludi) will now have a shareholding in a bigger firm with a higher total revenue as opposed to the lower total revenue of Dartcom.
[12] With respect to a greater spread of ownership, the merging parties indicate that since the proposed transaction will result in Dartcom forming part of the broader Invicta Group, the merger will enable the employees of the Dartcom to participate as beneficiaries of the Humulani Employee Incentive Trust.
[13] In addition to above, the parties submitted that the employees of Dartcom will benefit from Invicta Holding's SETA accredited training initiatives with online and practical courses and qualifications on offer for free of charge and also the Dartcom‘s employees will benefit from Invicta Holdings mentorship programmes where employees are mentored to ensure they reach their full potential in the workplace.
[14] There are no other public interest concerns.
[15] We concluded that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market, or to have a negative impact on the public interest.
13 December 2021
Ms Yasmin Carrim
Date
Ms Mondo Mazwai and Ms Andreas Wessels concurring
Tribunal Case Manager: Kameel Pancham
For the Merging Parties: Richardt van Rensburg from ENS Africa
For the Commission: Zintle Siyo and Themba Mahlangu
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