IVY 2 Investments VCC v New Holdco, a new company formed for the purposes of this transaction (LM184Jan21) [2021] ZACT 11 (24 February 2021)
- Citation
- [2021] ZACT 11
- Status
- Order
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Enver Daniels, Mondo Mazwai, Halton Cheadle
- Case number
- LM184Jan21
More details
- Court
- Competition Tribunal
- Panel
- Enver Daniels, Mondo Mazwai, Halton Cheadle
- Case number
- LM184Jan21
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed transaction would not result in any horizontal or vertical overlaps, as the acquiring group is not active in South Africa and the target is a newly formed holding company with no business activities. The Commission's concern regarding an ongoing cartel investigation involving a related entity was considered, but it was determined that the merger would not alter the market structure or facilitate further coordination in the shipping and container market. No public interest concerns were raised, and no third parties objected to the transaction. Accordingly, the Tribunal concluded that the merger is unlikely to substantially prevent or lessen competition or negatively affect the public interest.
Court disposition
Merger unconditionally approved.
Orders
- The large merger between IVY 2 Investments VCC and New Holdco is unconditionally approved.
- No conditions are imposed on the approval of the merger.
02
Material facts
Parties
IVY 2 Investments VCC
Applicant Counsel: P Gounden and S MeyerNew Holdco, a new company formed for the purposes of this transaction
Respondent03
Procedural history
Posture
Large Merger / Approval
04
Questions and positions
Legal issues
- 01
Whether the proposed merger would substantially prevent or lessen competition in any relevant market.
- 02
Whether the merger would negatively impact the public interest.
- 03
Whether the merger would affect ongoing cartel investigations involving related entities.
Party arguments
- Applicant
- The applicant argued that the acquisition would not result in any horizontal or vertical overlaps, as IVY 2 Investments VCC is not active in South Africa and New Holdco is a newly formed holding company with no business activities. The transaction would not alter the competitive dynamics of any market nor raise public interest concerns.
- Respondent
- The respondent, represented by the Competition Commission, noted that PIL SA, related to New Holdco, is a respondent in an ongoing cartel investigation in the shipping and container market. However, the Commission concluded that the merger would not change the market structure or strengthen coordination in the affected market, and no public interest concerns were identified.
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, or if it has a negative impact on the public interest.
- 02
Competition Act, No. 89 of 1998
The absence of horizontal or vertical overlaps between the activities of the merging parties is a relevant factor in assessing the competitive effects of a merger.
- 03
Competition Commission Merger Guidelines
Ongoing cartel investigations involving related entities do not, in themselves, justify prohibition of a merger unless the transaction strengthens coordination or alters market structure.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed transaction would not result in any horizontal or vertical overlaps, as the acquiring group is not active in South Africa and the target is a newly formed holding company with no business activities. The Commission's concern regarding an ongoing cartel investigation involving a related entity was considered, but it was determined that the merger would not alter the market structure or facilitate further coordination in the shipping and container market. No public interest concerns were raised, and no third parties objected to the transaction. Accordingly, the Tribunal concluded that the merger is unlikely to substantially prevent or lessen competition or negatively affect the public interest.
Obiter and limits
- The Tribunal noted that the mere existence of an ongoing cartel investigation does not automatically render a merger anticompetitive.
- The absence of business activities by the target company was a significant factor in the assessment of competitive effects.
Court disposition
Merger unconditionally approved.
- The large merger between IVY 2 Investments VCC and New Holdco is unconditionally approved.
- No conditions are imposed on the approval of the merger.
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: LM184Jan21
IVY 2 Investments VCC (Primary Acquiring Firm)
and
New Holdco, a new company formed for the purposes of this transaction (Primary Target Firm)
Heard on: 24 February 2021
Order Issued on: 24 February 2021
REASONS FOR DECISION
[1] On 24 February 2021, the Competition Tribunal unconditionally approved a large merger between IVY 2 Investments VCC (âIVYâ or âthe Acquiring Groupâ) and New Holdco, a newly formed company for the purposes of this transaction (âNewCoâ or âthe Target Groupâ).
[2] The transaction involves the Acquiring Groupâs acquisition of the convertible preference shares in NewCo, such that the Acquiring Group will have sole control over NewCo post-merger.
[3] IVY is not active in South Africa, however, the Acquiring Group has a global portfolio in financial services; telecommunications, media and technology; transportation and industrials; consumer and real estate; life sciences and agribusiness, as well as energy and resources.
[4] NewCo operates as a holding company and does not conduct any business activities. However, NewCoâs controlling entity, PIL Holdings Pte. Ltd[1] (ââPIL Holdingsâ) is engaged in ship-owning and operating activities, shipping agency services and container sales.
[5] There are no horizontal or vertical overlaps in the activities of the merger parties. The Competition Commission, however, noted that PIL SA is currently a respondent in an on-going cartel investigation in the shipping and container market. It concluded that the merger was unlikely to change the existing market structure nor strengthen existing coordination in the shipping and container market, where the alleged collusive conduct is taking place.
[6] The proposed merger raises no public interest concerns.
[7] No third party raised any concern.
[8] 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.08 March 2021
Mr Enver Daniels Date
Ms Mondo Mazwai and Mr Halton Cheadle concurring
Tribunal Case Manager: C Mathonsi
For the Merging Parties: P Gounden and S Meyer
For the Commission: G Mutizwa, Z Hadebe and N Msiza
[1] Incorporated according to the laws of Singapore.
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