Mercantile Bank, a division of Capitec Bank Ltd v Loan Book owned by Grobank Ltd (LM170Dec20) [2021] ZACT 86 (25 February 2021)
The Tribunal found that the merged entity would have minimal market shares in the relevant banking segments, specifically less than 2% in commercial property loans, and less than 1% in both instalment sales agreements and residential home loans. The presence of larger, established competitors such as Nedbank, First...
Source-derived case information.
- Citation
- [2021] ZACT 86
- Parties
- Applicant: Mercantile Bank, a division of Capitec Bank Ltd; Respondent: Loan Book owned by Grobank Ltd
- Court
- Competition Tribunal
- Jurisdiction
- South Africa
- Case Number
- LM170Dec20
- Procedural Posture
- Merger Application / Final Determination
- Outcome
- Unconditional approval of the merger application.
- Judges
- Y Carrim, F Tregenna, I Valodia
- Legal Topics
- Merger Control, Market Share Analysis, Public Interest Assessment
Source-derived case record
Summary, issues, holding and outcome
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Parties
Mercantile Bank, a division of Capitec Bank Ltd
Applicant
Loan Book owned by Grobank Ltd
Respondent
Procedural Posture
Merger Application / Final Determination
Legal Issues
- 1 Whether the proposed acquisition of the Loan Book by Mercantile Bank raises competition concerns in the relevant banking markets.
- 2 Whether the transaction gives rise to any public interest concerns under the Competition Act.
Ratio Decidendi
The Tribunal found that the merged entity would have minimal market shares in the relevant banking segments, specifically less than 2% in commercial property loans, and less than 1% in both instalment sales agreements and residential home loans. The presence of larger, established competitors such as Nedbank, First National Bank, ABSA, and Standard Bank would continue to constrain the merged entity post-merger. No competition or public interest concerns were identified. Accordingly, the Tribunal approved the transaction unconditionally.
Court Disposition
Unconditional approval of the merger application.
Orders
- The proposed transaction is approved unconditionally.
Full Case Text
Judgment text and source record
45 paragraphs
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case no: LM170Dec20
In the matter between:
Mercantile Bank, a division of
Capitec Bank Ltd Primary
Acquiring Firm
And
The Loan Book owned by Grobank
Ltd Primary
Target Firm
Panel : Y Carrim (Presiding Member), F Tregenna (Tribunal Member), I Valodia (Tribunal Member)
Heard on : 24 February 2021
Order Issued on : 24 February 2021
Reasons Issued on : 25 February 2021
REASONS FOR DECISION
Unconditional approval
[1] On 24 February 2021, the Competition Tribunal (“Tribunal”) unconditionally approved the proposed transaction in terms of which Mercantile Bank (“Mercantile”) intends to acquire the Loan Book owned by Grobank Ltd (the “Loan Book”).
[2] The reasons for the approval of the proposed transaction follow.
Parties to the transaction
[3] The acquiring firm is Mercantile, a banking division of Capitec Bank.[1]
Mercantile and its controllers will be referred to as the “Acquiring Group”.
[4] The Acquiring Group is active in the provision of business and commercial banking services in South Africa (SA). These services span from transactional and savings plans, forex services to electronic banking, borrowing solutions and retail banking.
[5] The target asset is the Loan Book owned by Grobank[2] The Loan Book consists of loans owned by Grobank across three product categories, namely, (i) Commercial property loans; (ii) Instalment
sales agreements; and (iii) Residential home loans.
Proposed transaction
[6] Mercantile intends to acquire the Loan Book from Grobank. Post-merger, Mercantile will own the Loan Book.
Competition Analysis
[7] The merger parties are both active in the provision of banking services in SA, particularly in narrower segments being the three product categories identified above. However, the merged entity will have minimal market shares in the implicated market segments, with commercial property <2%, instalment sales agreements <1%, and residential home loans <1%.[3]
[8] The merged entity will be constrained by larger banks like Nedbank Ltd, First National Bank[4], ABSA Bank Ltd and Standard Bank Ltd post-merger. Accordingly, the transaction does not give rise to any competition concerns.
Public interest
[9] The proposed transaction does not give rise to any public interest concerns. [5]
Conclusion
[10] In light of the above, the proposed transaction was approved unconditionally.
Date: 25 February 2021
Ms Yasmin Carrim
Prof. Imraan Valodia and Prof. Fiona Tregenna concurring.
Tribunal Case Manager : Kgothatso Kgobe
For the Merging Parties : M Griffiths of Norton Rose Fulbright
For the Commission : Y Okharedia and R Darji
[1] Capitec Bank Holdings is a public company listed on the JSE, and as such, is not controlled by any firm or individual.
[2] Grobank is wholly owned by GroCapital Holdings which is in turn owned by three shareholders, including the Government Employees
Pension Fund
[3] Merger Record, pages 37-38.
[4] A division of First Rand Ltd.
[5] 5 Merger Record, page 39.