Net1 Applied Technologies South Africa (Pty) Ltd v Ovobix (RF) (Pty) Ltd and Luxiano 227 (Pty) Ltd (LM121Nov21) [2022] ZACT 51; [2022] 1 CPLR 11 (CT) (7 April 2022)

Net1 Applied Technologies South Africa (Pty) Ltd v Ovobix (RF) (Pty) Ltd and Luxiano 227 (Pty) Ltd (LM121Nov21) [2022] ZACT 51; [2022] 1 CPLR 11 (CT) (7 April 2022)

The Tribunal found that the proposed merger between Net1 SA and the target firms would not substantially prevent or lessen competition in any relevant market. The horizontal overlaps in value-added services and bill payments were not significant due to low combined market shares and differentiated customer bases. Vertical overlaps in the supply and distribution of POS devices were also not problematic, as the merged entity would continue to face competition from major banks and other suppliers, and the target group does not procure POS devices from the acquiring group. The Tribunal accepted the Commission's assessment that the merger would not result in anticompetitive bundling or...

Citation
[2022] ZACT 51
Parties
Applicant: Net1 Applied Technologies South Africa (Pty) Ltd; Respondent: Ovobix (RF) (Pty) Ltd; Respondent: Luxiano 227 (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
7 April 2022
Case Number
LM121Nov21
Procedural Posture
Large Merger Application / Reasons for Decision
Outcome
Merger conditionally approved subject to public interest conditions.
Judges
Andreas Wessels, Yasmin Carrim, Liberty Mncube
Legal Topics
Large Merger Review, Public Interest Conditions, B Bbee Ownership Dilution, Employee Share Ownership Scheme, Vertical and Horizontal Overlap, Supplier and Enterprise Development
Competition Law Commercial and Corporate Large Merger Review Public Interest Conditions B Bbee Ownership Dilution Employee Share Ownership Scheme Vertical and Horizontal Overlap Supplier and Enterprise Development

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Parties

Net1 Applied Technologies South Africa (Pty) Ltd

Applicant

Ovobix (RF) (Pty) Ltd

Respondent

Luxiano 227 (Pty) Ltd

Respondent

Procedural Posture

Large Merger Application / Reasons for Decision

Legal Issues

  1. 1 Whether the proposed merger is likely to substantially prevent or lessen competition in any relevant market.
  2. 2 Whether the transaction raises public interest concerns under section 12A(3) of the Competition Act, including employment and spread of ownership.
  3. 3 Whether the imposed conditions adequately address any dilution of B-BBEE ownership and promote worker participation.

Ratio Decidendi

The Tribunal found that the proposed merger between Net1 SA and the target firms would not substantially prevent or lessen competition in any relevant market. The horizontal overlaps in value-added services and bill payments were not significant due to low combined market shares and differentiated customer bases. Vertical overlaps in the supply and distribution of POS devices were also not problematic, as the merged entity would continue to face competition from major banks and other suppliers, and the target group does not procure POS devices from the acquiring group. The Tribunal accepted the Commission's assessment that the merger would not result in anticompetitive bundling or...

Court Disposition

Merger conditionally approved subject to public interest conditions.

Orders

  • Net1 Inc must establish an employee share ownership scheme (ESOP) for workers of the merged entity within 36 months, with at least 3% shareholding, or 5% if profitability targets are met.
  • Net1 Inc must consult with the Commission on ESOP design principles prior to establishment.