KWV LTD and NMK SCHULZ FINE WINE AND SPIRITS (PTY) LTD (74/LM/Sep06) [2006] ZACT 78 (14 September 2006)

KWV LTD and NMK SCHULZ FINE WINE AND SPIRITS (PTY) LTD (74/LM/Sep06) [2006] ZACT 78 (14 September 2006)

The Tribunal found that the proposed merger would not result in a substantial accretion of market shares, with the merged entity holding only 6% of the distribution market for alcoholic beverages. The distribution services market is competitive and fragmented, with numerous alternative distributors available. Barriers to entry are low, as obtaining a wholesaler liquor licence is not onerous and capital requirements are minimal. The possibility of foreclosure of other manufacturers from NMK's distribution services is remote, given that most manufacturers self-distribute or can easily switch distributors. No public interest grounds, such as job losses or negative employment effects, were...

Citation
[2006] ZACT 78
Parties
Applicant: KWV LTD; Respondent: NMK SCHULZ FINE WINE AND SPIRITS (PTY) LTD
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
14 September 2006
Case Number
74/LM/Sep06
Procedural Posture
Merger Application / Merger Clearance Decision
Outcome
The merger is approved unconditionally.
Judges
N Manoim, Y Carrim, U Bhoola
Legal Topics
Horizontal Merger, Vertical Integration, Market Definition, Barriers to Entry, Public Interest, Distribution Services
Competition Law Commercial and Corporate Horizontal Merger Vertical Integration Market Definition Barriers to Entry Public Interest Distribution Services

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Parties

KWV LTD

Applicant

NMK SCHULZ FINE WINE AND SPIRITS (PTY) LTD

Respondent

Procedural Posture

Merger Application / Merger Clearance Decision

Legal Issues

  1. 1 Whether the proposed merger between KWV Ltd and NMK Schulz Fine Wine and Spirits (Pty) Ltd is likely to substantially lessen or prevent competition in the relevant markets.
  2. 2 Whether any public interest grounds justify prohibiting or imposing conditions on the merger.

Ratio Decidendi

The Tribunal found that the proposed merger would not result in a substantial accretion of market shares, with the merged entity holding only 6% of the distribution market for alcoholic beverages. The distribution services market is competitive and fragmented, with numerous alternative distributors available. Barriers to entry are low, as obtaining a wholesaler liquor licence is not onerous and capital requirements are minimal. The possibility of foreclosure of other manufacturers from NMK's distribution services is remote, given that most manufacturers self-distribute or can easily switch distributors. No public interest grounds, such as job losses or negative employment effects, were...

Court Disposition

The merger is approved unconditionally.

Orders

  • The proposed merger between KWV Ltd and NMK Schulz Fine Wine and Spirits (Pty) Ltd is approved without conditions.
  • No public interest conditions are imposed.