Ompe GP IV Proprietary Limited v Middle Road Packers Proprietary Limited (LM170Nov15) [2015] ZACT 75 (7 December 2015)
- Citation
- [2015] ZACT 75
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Yasmin Carrim, lmraan Valodia, Fiona Tregenna
- Case number
- LM170Nov15
More details
- Court
- Competition Tribunal
- Panel
- Yasmin Carrim, lmraan Valodia, Fiona Tregenna
- Case number
- LM170Nov15
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed transaction does not result in a substantial lessening of competition because there is no overlap between the activities of the acquiring and target groups. The Commission's assessment was accepted, confirming that neither party operates in markets where their products or services are substitutable. Furthermore, the merging parties confirmed that the transaction would not adversely affect employment or raise other public interest concerns. Accordingly, the Tribunal approved the merger unconditionally.
Court disposition
Merger approved unconditionally.
Orders
- The proposed transaction between Ompe GP IV Proprietary Limited and Middle Road Packers Proprietary Limited is approved without conditions.
02
Material facts
Parties
Ompe GP IV Proprietary Limited
Applicant Counsel: Nkonzo HlatshwayoMiddle Road Packers Proprietary Limited
RespondentAmounts and remedies
- Percentage of Shares Acquired: 31
03
Procedural history
Posture
Merger Approval / Final Determination
04
Questions and positions
Legal issues
- 01
Does the proposed merger result in a substantial lessening of competition in any relevant market?
- 02
Are there any adverse public interest effects, including on employment, arising from the transaction?
Party arguments
- Applicant
- The acquiring firm argued that the transaction is based on its prior experience in the sector and presents an opportunity for good returns. The target firm submitted that the transaction would enable it to consolidate its market position. Both parties confirmed that there would be no adverse impact on employment or other public interest concerns.
- Respondent
- The Competition Commission found that the activities of the merging parties do not overlap, as no entity in the acquiring group provides products or services reasonably substitutable for those of the target group. The Commission concluded that the merger would not substantially lessen competition or raise public interest concerns.
05
Court’s reasoning
Legal principles
- 01
Competition Act, No. 89 of 1998
A merger may only be prohibited if it is likely to substantially prevent or lessen competition in any relevant market.
- 02
Competition Act, No. 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 transaction does not result in a substantial lessening of competition because there is no overlap between the activities of the acquiring and target groups. The Commission's assessment was accepted, confirming that neither party operates in markets where their products or services are substitutable. Furthermore, the merging parties confirmed that the transaction would not adversely affect employment or raise other public interest concerns. Accordingly, the Tribunal approved the merger unconditionally.
Obiter and limits
- The Tribunal noted that the rationale for the transaction was based on the acquiring group's prior experience and expectation of good returns.
- It was observed that the target firm sought to consolidate its market position through the transaction.
Court disposition
Merger approved unconditionally.
- The proposed transaction between Ompe GP IV Proprietary Limited and Middle Road Packers Proprietary Limited 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: LM170Nov15
In the matter between:
OMPE GP IV Proprietary Limited
Primary Acquiring Firm
and
Middle Road Packers Proprietary Limited
Primary Target Firm
Panel
: Yasmin Carrim (Presiding Member)
: lmraan Valodia (Tribunal Member)
: Fiona Tregenna (Tribunal Member)
Heard on
: 2 December 2015
Order Issued on
: 2 December 2015
Reasons issued on :
7 December 2015
Reasons for Decision
Approval
[1] On 2 December 2015, the Competition Tribunal ("Tribunal") unconditionally approved the merger between OMPE GP IV Proprietary
Limited ("OMPE") and Middle Road Packers Proprietary Limited ("Middle Road").
[2] The reasons for approving the proposed transaction follow.
Parties to transaction
Primary acquiring firm
[3] primary acquiring firm OMPE is a private equity company which is acting in its capacity as the ultimate general parent of OMPE Fund IV Partnership ("OMPE Fund IV"). OMPE is advised by Old Mutual Private Equity which is a division of Old Mutual Alternative Investment Holdings Proprietary Limited. These companies are ultimately controlled by Old Mutual Group Holdings (South Africa) Limited ("OMSA"). OMSA is a wholly owned subsidiary of Old Mutual (Netherlands) B.V which is in turn a wholly owned subsidiary of OM Group (UK) Limited ("OMUK"). OMUK is a wholly owned subsidiary of Old Mutual pie. All the above funds/firms as well as the firms controlled by them will be cumulatively referred to as the "Acquiring Group."
[4] The Acquiring Group is an international long-term savings, insurance, banking and investment group which offers a range of financial
products and services. OMPE Fund IV is a private equity fund that comprises various limited partners while its parent OMPE is a private equity manager.
Primary target firm
[5] The primary target firm, Middle Road is controlled by lnterfruit Holdings Ltd. Middle Road holds 52.5% of the issued share capital of ln2Food Group (Pty) Ltd ("ln2Food") which in turn controls several subsidiaries. Cumulatively, Middle Road, ln2Food and its subsidiaries will be referred to as the "Target Group".
[6] Middle Road is an investment holding company which does not trade but provides management services to its subsidiaries. ln2Food is a food processing company involved in the processing of a number of pre- packaged foods, juices and confectionary items including but not limited to the following; pizza, meal solutions and snacking items.
Proposed transaction and rationale
[7] The proposed transaction involves OMPE acquiring 31% of the issued share capital of Middle Road. As a result of the proposed
transaction OMPE will directly control Middle Road and indirectly control ln2Food.
[8] The Acquiring Group submitted that the proposed transaction was based on previous experience in the sector which led to the conclusion that the acquisition of shares would present an opportunity for it to achieve good returns. Middle Road submitted that the proposed transaction would enable it to consolidate its position in the market.
Impact on competition
[9] According to the Competition Commission's ("the Commission") findings the proposed transaction does not result in a substantial lessening of competition in any market because the activities of the merging parties do not overlap as no entity in the Acquiring Group provides products or services that could be reasonably substitutable to products or services provided by the Target Group.[1]
[10] We concur with the Commission's competition assessment that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market as there is no overlap present.
Public interest
[11] The merging parties confirmed that the proposed transaction will not result in an adverse impact on employment and raises no other public interest concerns.[2]
Conclusion
[12] In light of the above, we conclude that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market. In addition, no public interest issues arise from the proposed transaction. Accordingly, we approve the proposed transaction unconditionally.
07 December 2015
DATE
_______
Ms Yasmin Carrim
Prof lmraan Valodia and Prof Fiona Tregenna concurring
Tribunal Researcher: Aneesa Raval
For the merging parties: Nkonzo Hlatshwayo of Webber Wentzel
For the Commission: Rakgole Mokolo, Seema Nunkoo and Xolela Nokele
[1] Inter alia merger record page 449
[2] Inter alia merger record page 414.
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