Motus Group Limited v North Motor Group (Pty) Ltd`s Kia Bryanston Motor Dealership and Another (LM012Apr21) [2021] ZACT 39 (7 June 2021)

COMPETITION TRIBUNAL OF SOUTH AFRICA

Case No.: LM012Apr21

In the matter between:

Matus Group Limited Primary

Acquiring Firm

And

North Motor Group (Pty) Ltd's Kia Bryanston Primary

Target Firms

and Honda Sandton Motor Dealerships

Panel: Y Carrim (Presiding Member)

AW Wessels (Tribunal Panel Member) I Valodia (Tribunal Panel Member)

Heard on: 07 June 2021

Order issued on: 07 June 2021

Reasons issued on: 07 June 2021

ORDER

Further to the recommendation of the Competition Commission in terms of section 14A(1)(b) of the Competition Act, 1998 ("the

Act") the Competition Tribunal orders that-

the merger between the abovementioned parties be approved in terms of section 16(2)(a) of the Act; and

a Merger Clearance Certificate be issued in terms of Competition Tribunal rule 35(5)(a).

Presiding Member Date:

07 June 2021

Ms Yasmin Carrim

Concurring: Mr. Andreas W. Wessels and Prof. lmraan I. Valodia

COMPETITION TRIBUNAL OF SOUTH AFRICA

Case no: LM012Apr21

Motus Group Limited (Primary Acquiring Firm)

North Motor Group (Pty) Ltd's Kia Bryanston (Primary Target Firms)

REASONS FOR DECISION

[1] On 7 June 2021, the Competition Tribunal unconditionally approved the large merger between Motus Group Limited ("Motus Group") and North Motor Group Proprietary Limited's Kia Bryanston and Honda Sandton Motor Dealerships ("Target Dealerships").

[2] The proposed transaction involves Motus Group acquiring control of the Target Dealerships from North Motor Group Proprietary Limited.

[3] Motus Group is controlled by JSE-listed company, Motus Holdings Limited ("Motus Holdings"). Motus Holdings and its

subsidiaries are active in the import and distribution of motor vehicles; retail and rental of motor vehicles; motor­ related

financial services; and the sale of original equipment manufacturer (OEM) spare parts and aftermarket parts.

[4] The Target Dealerships are active in the sale of new and used Honda and Kia passenger vehicles ("PVs") and Kia light commercial vehicles ("LCVs"), and the supply of scheduled maintenance and aftersale services and parts in respect of Kia PVs and Honda PVs. Only the Honda Sandton Motor Dealership is, in addition, active in the sale of new Honda motorcycles, the sale of used motorcycles of Honda and other brands, and the supply of scheduled maintenance and after-sale services and parts in respect of Honda motorcycles.

[5] The Competition Commission identified horizontal overlaps in the activities of the merging parties and assessed the impact of the proposed transaction on the following markets:

(i) sale of new PVs within Bryanston and surrounding areas;

(ii) sale of new LCVs within Bryanston and surrounding areas;

(iii) sale of new motorcycles in Bryanston and the greater Johannesburg area; and

(iv) provision of scheduled maintenance and after-sale services and parts within Bryanston and surrounding areas.

[6] The Commission did not provide market shares in the affected relevant markets. However, the Commission found that post-merger the merged entity will continue to compete with multiple dealerships within Bryanston and surrounding areas.

[7] The Commission further found that the merger does not raise any concerns regarding the market for the provision of scheduled

maintenance and after-sale services and parts, since the cost of scheduled maintenance and after-sale services and parts in respect of new PVs, LCVs and motorcycles is included in the purchase price and as such, customers would not be at risk of any unilateral effects post-merger.

[8] The effect of the proposed transaction on intra-brand competition was assessed and the Commission found that the proposed transaction is unlikely to lead to a substantial loss of intra-brand competition due to the number of alternative Kia dealerships1 and Honda dealerships2 within the surrounding areas of the merging parties.

[9] No third parties raised concerns regarding the effects of the proposed transaction on competition.

[10] Accordingly, we conclude that the proposed transaction does not substantially prevent or lessen competition in any relevant market.

[11] The merger parties made an unequivocal undertaking that there shall be no retrenchments as a result of the proposed transaction. The employees of the Target Dealerships will transfer to the Matus Group in terms of Section 197 of the Labour Relations Act, 66 of 1995 as amended.

[12] The transaction does not give rise to any other public interest concerns.

Signed by:Yasmin Tayob Carrim Signed at:2021-06-07 12:17:35 +02:00

Reason:I approve this document

Ms Yasmin Carrim

Date:

7 June 2021

Mr. Andreas W. Wessels and Prof. lmraan I. Valodia concurring

Tribunal Case Manager: D Mogapi

For the Merging Parties: H Irvine and M Samba of Bowman Gilfillan

For the Commission: T Loate and W Gumbie

1 In respect of Kia PVs and LCVs, the merged entity will be constrained by alternative Kia dealerships such as CMH Kia Bryanston, Kia Motors Midrand, Kia Randburg (Malibongwe) and Kia Goldreef (Johannesburg).

2 In respect of new Honda PVs and motorcycles, the merged entity will be constrained by alternative Honda dealerships such as NMG Honda and Mitsubishi Rivonia, CMH Honda The Glen and Honda Auto Johannesburg South.