K2023645019 (South Africa) (Pty) Ltd v Clicks Investments (Pty) Ltd and Another (LM206Mar23) [2023] ZACT 49 (2 June 2023)
The Tribunal found that the proposed merger would not substantially prevent or lessen competition in the relevant markets for healthcare, beauty, and toiletry products, nor in the franchising of beauty salons and retail outlets. However, the Tribunal determined that public interest considerations required the...
Source-derived case information.
- Citation
- [2023] ZACT 49
- Parties
- Applicant: K2023645019 (South Africa) (Pty) Ltd; Respondent: Clicks Investments (Pty) Ltd; Respondent: Sorbet Holdings (Pty) Ltd; Respondent: Aurex Holdings (RF) (Pty) Ltd
- Court
- Competition Tribunal
- Jurisdiction
- South Africa
- Case Number
- LM206Mar23
- Procedural Posture
- Large Merger / Approval With Conditions
- Outcome
- Merger approved subject to conditions.
- Legal Topics
- Merger Control, Public Interest Conditions, Employee Share Ownership, Hdp Ownership, Smmes Promotion, Localisation Requirements
Source-derived case record
Summary, issues, holding and outcome
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Parties
K2023645019 (South Africa) (Pty) Ltd
Applicant
Clicks Investments (Pty) Ltd
Respondent
Sorbet Holdings (Pty) Ltd
Respondent
Aurex Holdings (RF) (Pty) Ltd
Respondent
Procedural Posture
Large Merger / Approval With Conditions
Legal Issues
- 1 Whether the proposed merger should be approved under the Competition Act.
- 2 Whether the transaction promotes a greater spread of ownership by historically disadvantaged persons and SMMEs.
- 3 Whether the merger raises any competition concerns in the relevant markets.
Ratio Decidendi
The Tribunal found that the proposed merger would not substantially prevent or lessen competition in the relevant markets for healthcare, beauty, and toiletry products, nor in the franchising of beauty salons and retail outlets. However, the Tribunal determined that public interest considerations required the imposition of conditions to promote a greater spread of ownership by historically disadvantaged persons and SMMEs, support localisation, and establish an employee share ownership programme. The merger was therefore approved subject to these conditions, which were deemed necessary to ensure compliance with the Competition Act's public interest provisions.
Court Disposition
Merger approved subject to conditions.
Orders
- The proposed merger is approved subject to conditions relating to the promotion of HDP and SMME ownership, localisation, and training.
- The acquiring parties must establish an employee share ownership programme as a condition of approval.
Full Case Text
Judgment text and source record
31 paragraphs
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM206Mar23
Merger Alert
Date of release: 2 June 2023
OUTCOME OF MERGERS DECIDED BY THE TRIBUNAL - 2 JUNE 2023
Type of matter Large merger
Parties involved Clicks Investments (Pty) Ltd And Sorbet Holdings (Pty) Ltd
Tribunal decision Approved with conditions
Large merger K2023645019 (South Africa) (Pty) Ltd, a SPV Controlled by RMB Ventures Eight (Pty) Ltd and Bopa Moruo Fund 2 (Pty) Ltd, And Aurex Holdings (RF) (Pty) Ltd
Clicks Investments (Pty) Ltd And Sorbet Holdings (Pty) Ltd
The Tribunal has conditionally approved the proposed merger whereby Clicks Investments (Pty) Ltd (“Clicks Investments”)
intends to acquire Sorbet Holdings (Pty) Ltd (“Sorbet Holdings”). The Tribunal has approved the transaction subject
to conditions that relate to: promoting a greater spread of ownership by historically disadvantaged persons (“HDPs”) and small and medium sized businesses (“SMMEs”); localisation; and training.
The Clicks Group conducts several activities. Its activities as a retailer of healthcare, beauty and toiletry products are of relevance
to this transaction.
The Sorbet group sells a variety of skin care and cosmetics products through standalone Sorbet salons (including retail spaces)
nationwide. It is a franchisor of the Sorbet brand and enters into franchise agreements with third party operators, being franchisees,
in terms of which these individual franchisees are licensed to operate a beauty salon, nail bar and/or professional skin care retail
outlet under the name “Sorbet”.
The Tribunal has conditionally approved the proposed merger in terms of which RMB Ventures Eight (Pty) Ltd (“RMBV”) and Bopa Moruo Fund 2 (Pty) Ltd (“Bopa Moruo”) intend to acquire a controlling minority interest in Aurex Holdings (RF) (Pty) Ltd (“Aurex”) through a special purpose vehicle, K2023645019 (South Africa) (Pty) Ltd (the SPV”).
The Tribunal has imposed conditions on the proposed transaction which relate to the establishment of an employee share ownership programme (“ESOP”).
The SPV is the primary acquiring firm and does not control any other firm. It is controlled by RMBV and Bopa Moruo. RMBV is ultimately
controlled by FirstRand Limited, a public company listed on the Johannesburg Stock Exchange. The Bopa Moruo Group comprises private
equity firms and Aurex is an investment holding company.
Issued by:
Gillian de Gouveia, Communications Manager
On behalf of the Competition Tribunal of South Africa
Tel: +27 (0) 12 394 1383
Cell: +27 (0) 82 410 1195
E-Mail: GillianD@comptrib.co.za
Twitter: @comptrib