Massmart Holdings Ltd / Jumbo Cash and Carry (Pty) Ltd and Massmart Holdings Ltd / Picardi Liquors (Pty) Ltd - Sip 'n Save division (39/LM/Jul01) [2001] ZACT 39 (10 October 2001)

Massmart Holdings Ltd / Jumbo Cash and Carry (Pty) Ltd and Massmart Holdings Ltd / Picardi Liquors (Pty) Ltd - Sip 'n Save division (39/LM/Jul01) [2001] ZACT 39 (10 October 2001)

The Tribunal found that the merger would not substantially lessen competition in the relevant grocery wholesale and liquor retail/wholesale markets. Although market shares in some provinces were prima facie cause for concern, the presence of robust competition from other national chains and well-established independents, combined with evidence of local price determination and competitive strategies, mitigated these concerns. Entry into the market was deemed relatively easy, and the influence of large retailers on small retailers' pricing acted as a countervailing force against the exercise of market power by wholesalers. The Tribunal accepted the parties' argument that the transactions...

Citation
[2001] ZACT 39
Parties
Applicant: Massmart Holdings Ltd; Respondent: Jumbo Cash and Carry (Pty) Ltd; Respondent: Picardi Liquors (Pty) Ltd - Sip 'n Save division; Respondent: Rebhold Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
10 October 2001
Case Number
39/LM/Jul01
Procedural Posture
Large Merger Review / Merger Clearance Decision
Outcome
Merger approved without conditions.
Judges
D.H. Lewis, F. Fourie, P.E. Maponya
Legal Topics
Large Merger Review, Market Definition, Countervailing Power, Ease of Entry, Failing Firm Defence, Retail and Wholesale Distribution
Competition Law Commercial and Corporate Large Merger Review Market Definition Countervailing Power Ease of Entry Failing Firm Defence Retail and Wholesale Distribution

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Parties

Massmart Holdings Ltd

Applicant

Jumbo Cash and Carry (Pty) Ltd

Respondent

Picardi Liquors (Pty) Ltd - Sip 'n Save division

Respondent

Rebhold Ltd

Respondent

Procedural Posture

Large Merger Review / Merger Clearance Decision

Legal Issues

  1. 1 Does the proposed merger substantially prevent or lessen competition in the relevant grocery wholesale and liquor retail/wholesale markets?
  2. 2 Is there sufficient competitive overlap between the acquiring and target firms to raise competition concerns?
  3. 3 Are there barriers to entry or countervailing power that mitigate potential anti-competitive effects?

Ratio Decidendi

The Tribunal found that the merger would not substantially lessen competition in the relevant grocery wholesale and liquor retail/wholesale markets. Although market shares in some provinces were prima facie cause for concern, the presence of robust competition from other national chains and well-established independents, combined with evidence of local price determination and competitive strategies, mitigated these concerns. Entry into the market was deemed relatively easy, and the influence of large retailers on small retailers' pricing acted as a countervailing force against the exercise of market power by wholesalers. The Tribunal accepted the parties' argument that the transactions...

Court Disposition

Merger approved without conditions.

Orders

  • The acquisition by Massmart Holdings Ltd of Jumbo Cash and Carry (Pty) Ltd and Sip 'n Save, a division of Picardi Liquors (Pty) Ltd, is approved without conditions.
  • A Merger Clearance Certificate is issued.