Old Mutual Capital Holding (Pty) Ltd v Old Mutual Finance (Pty) Ltd (RF) (019232) [2014] ZACT 97 (30 September 2014)
- Citation
- [2014] ZACT 97
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Norman Manoim, Yasmin Carrim, Anton Roskam
- Case number
- 019232
More details
- Court
- Competition Tribunal
- Panel
- Norman Manoim, Yasmin Carrim, Anton Roskam
- Case number
- 019232
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed merger would not substantially prevent or lessen competition in the market for unsecured loans. The post-merger market share would remain moderate, and the parties would continue to face strong competition from other market participants, notably Capitec Bank and African Bank. The Tribunal accepted the Commission's market share assessment as more reliable due to its access to market information. Furthermore, the Tribunal was satisfied that Nedbank and OMF would continue to operate independently post-merger, as assured by the applicant. No adverse public interest concerns, including employment effects, were identified. Accordingly, the merger was approved unconditionally.
Court disposition
Merger approved unconditionally.
Orders
- The large merger between Old Mutual Capital Holding (Pty) Ltd and Old Mutual Finance (Pty) Ltd (RF) is approved without conditions.
02
Material facts
Parties
Old Mutual Capital Holding (Pty) Ltd
Applicant Counsel: Nkonzo HlatshwayoOld Mutual Finance (Pty) Ltd (RF)
RespondentAmounts and remedies
- Post Merger Market Share (commission Estimate): 12
- Post Merger Market Share (applicant Estimate): 17
03
Procedural history
Posture
Merger Approval / Final Determination
04
Questions and positions
Legal issues
- 01
Whether the proposed merger would substantially prevent or lessen competition in the market for unsecured loans.
- 02
Whether the transaction raises any adverse public interest concerns, including employment effects.
- 03
Whether post-merger control would affect the independence of Nedbank and OMF.
Party arguments
- Applicant
- The applicant argued that the merger would not result in a substantial lessening of competition, as the combined market share post-merger would remain moderate and the parties would continue to face strong competition from other market participants such as Capitec Bank and African Bank. The applicant also assured that Nedbank and OMF have always operated independently and would continue to do so after the merger.
- Respondent
- The respondent, represented by the Competition Commission, submitted that the post-merger market share would be approximately 12%, and that the merging parties would continue to face fierce competition from established competitors. The Commission further confirmed that the transaction would have no adverse effect on employment and raised no other public interest concerns.
05
Court’s reasoning
Legal principles
- 01
Section 12A, Competition Act 89 of 1998
A merger may only be prohibited if it is likely to substantially prevent or lessen competition in the relevant market.
- 02
Section 12A(3), Competition Act 89 of 1998
Public interest considerations, including employment effects, must be assessed in merger proceedings.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed merger would not substantially prevent or lessen competition in the market for unsecured loans. The post-merger market share would remain moderate, and the parties would continue to face strong competition from other market participants, notably Capitec Bank and African Bank. The Tribunal accepted the Commission's market share assessment as more reliable due to its access to market information. Furthermore, the Tribunal was satisfied that Nedbank and OMF would continue to operate independently post-merger, as assured by the applicant. No adverse public interest concerns, including employment effects, were identified. Accordingly, the merger was approved unconditionally.
Obiter and limits
- The Tribunal noted that African Bank's curatorship was unlikely to affect its market share in the short term, and the competitive dynamics would remain unchanged.
- The Tribunal emphasized the importance of reliable market share data in merger assessments, preferring the Commission's figures over the merging parties' estimates.
Court disposition
Merger approved unconditionally.
- The large merger between Old Mutual Capital Holding (Pty) Ltd and Old Mutual Finance (Pty) Ltd (RF) is approved without conditions.
Source and reliance status
Competition Tribunal
This page organises the available record for research. Confirm quotations, current status, and subsequent treatment against the official source before relying on the case.
Judgment reading view
Judgment text
The complete available source text.
Competition Tribunal
Judgment
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: 019232
In the matter between:
Old Mutual Capital Holding (Pty) Ltd...............................................................................Acquiring Firm
And
Old Mutual Finance (Pty) Ltd (RF).........................................................................................Target Firm
Panel: Norman Manoim (Presiding Member),
Yasmin Carrim (Tribunal Member)
and Anton Roskam (Tribunal Member)
Heard on: 10 September 2014
Order issued on: 10 September 2014
Reasons issued on : 30 September 2014
Reasons for Decision
Approval
[1] On 10 September 2014 the Competition Tribunal (“Tribunal”) unconditionally approved the large merger between Old Mutual Capital Holding (Pty) Ltd (“OMCH”) and Old Mutual Finance (Pty) Ltd (RF) (“OMF”). The reasons for approving the proposed transaction follow.
Parties to transaction
[2] The primary acquiring firm is OMCH, a company incorporated in accordance with the company laws of the Republic of South Africa. OMCH is a wholiy-owned subsidiary of Old Mutual Emerging Markets Limited (“OMEML”), a public company fisted on the Johannesburg Securities Exchange (“JSE”). OMCH is ultimately controlled by Old Mutual pic ("OM pic”), a public company listed on the London, Johannesburg, Malawi, Namibia and Zimbabwe Securities Exchange. OM pic controls a number of firms in South Africa and throughout the world. For purposes of this transaction, it is worth noting that OM pic has a 58% shareholding in Nedbank Group Limited and a 58% shareholding in Nedbank Limited,(herein collectively referred to as “Nedbank”)
[3] OMCH falls under the emerging markets unit of OM pic. Its primary activity is acting as an investment holding company. The emerging market unit is involved in providing long-term savings products solutions which address both investment protection and retirement needs.
[4] The primary target firm is OMF, a firm incorporated in accordance with the laws of the Republic of South Africa. OMF is jointly controlled by OMCH, Business Doctor Consortium Ltd (“BDCL”) and Business Doctor South Africa Trust No.1 (“BDSAT1”).
[5] OMF operates in the Old Mutual Retail Mass Foundation Cluster as a credit provider which provides unsecured loans, comprising of personal and consolidation loans to the South African market. OMF also offers certain development loans funded by the Masisizane Fund at the request of the Old Mutual Group. Although OMF was previously active in the home loan market, for the past five years it has not provided any mortgage loans.
Proposed transaction
[6] The proposed transaction emanates from a previous transaction between BDCL which provided OMCH with the option to require BDSL and BDSAT1 to sell their entire shareholding in OMF.
OMCH is thus partially exercising this option. The proposed transaction will result in OMCH increasing its shareholding in OMF from 50% to 75% by acquiring a 17% shareholding from BDCL and 8% from BDSAT1. Post-merger, OMCH will thus solely control OMF.
Competition assessment
[7] The proposed transaction gives rise to a horizontal overlap in the activities of the merging parties since Nedbank and OMF offer unsecured loans to individual customers. After consultation with market participants the Commission estimated that the postmerger market shares would be approximately 12%. The merging parties submitted the post-merger market shares would be approximately 17%; however they conceded that the Commission’s market share submissions were likely to be more reliable, as it had access to market participants’ information during its investigation, which they did not have.
[8] In addition to this, the Commission submitted that the merging parties are still likely to continue to face fierce competition from competitors such as Capitec Bank and African Bank, inter alia. The Tribunal raised African Bank’s recent demise with the merging parties given that the largest share of this market was attributed to it. The merging parties submitted that even though African Bank was now under curatorship it was still continuing to operate in the market. Therefore African Bank’s market share in the relevant product market was unlikely to change significantly in the short term. share common directors.1 in addition to this Mr McLeod stated that Nedbank and OMF have always operated independently of each other, and would continue to do so post-merger.
[9] During the hearing, Craig McLeod a senior legal advisor at Old Mutual gave an assurance that Nedbank and OMF have always operated
independently of each other, and would continue to do so post-merger.
Public Interest
[10] The Commission confirmed that the proposed transaction will have no adverse effect on employment2 and raises no other public interest concerns.
CONCLUSION
[11] We agree with the Commission that the proposed transaction is unlikely to substantially prevent or lessen competition and thus approve the transaction without conditions.
30 September 2014
DATE
Mr Norman Manoim
Ms Yasmin Carrim and Mr Anton Roskam concurring.
Tribunal Researcher: Caroline Sserufusa
For the merging parties: Nkonzo Hlatshwayo of Webber Wentzel
For the Commission: Relebohile Thabane
1See page 6 of the Transcript of the hearing.
2See paragraph 7 page 14 of the Commission's Report.
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