RCS Cards Proprietary Limited v Consumer Finance Business of the JD Group Limited (LM193Feb15/020644) [2015] ZACT 50; [2015] 1 CPLR 267 (CT) (11 June 2015)

RCS Cards Proprietary Limited v Consumer Finance Business of the JD Group Limited (LM193Feb15/020644) [2015] ZACT 50; [2015] 1 CPLR 267 (CT) (11 June 2015)

The Tribunal found that the proposed merger would not substantially prevent or lessen competition in the relevant market for unsecured credit, as the merging parties' post-merger market shares were nominal and the market remained competitive with several dominant banks. The restraint of trade clause restricting the JD Group from offering credit life insurance for three years was deemed reasonable and justifiable to protect the purchaser's investment. Regarding public interest, the Tribunal accepted undertakings from the merging parties not to retrench employees taken over by RCS or those in the JDGI business as a result of the merger. The Tribunal allocated the burden of proof for...

Citation
[2015] ZACT 50
Parties
Applicant: RCS Cards Proprietary Limited; Respondent: Consumer Finance Business of the JD Group Limited; Respondent: JD Group Limited
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
11 June 2015
Case Number
LM193Feb15/020644
Procedural Posture
Merger Application / Conditional Approval
Outcome
The merger is conditionally approved subject to the conditions set out in the order.
Judges
Norman Manoim, Andiswa Ndoni, Medi Mokuena
Legal Topics
Merger Control, Restraint of Trade, Public Interest Conditions, Employee Retrenchment
Competition Law Commercial and Corporate Merger Control Restraint of Trade Public Interest Conditions Employee Retrenchment

Case Brief

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Parties

RCS Cards Proprietary Limited

Applicant

Consumer Finance Business of the JD Group Limited

Respondent

JD Group Limited

Respondent

Procedural Posture

Merger Application / Conditional Approval

Legal Issues

  1. 1 Whether the proposed merger would substantially prevent or lessen competition in the national market for unsecured credit.
  2. 2 Whether the restraint of trade clause in the Sale of Business Agreement is reasonable and justifiable.
  3. 3 Whether the merger would have a negative impact on employment and public interest, particularly regarding retrenchments.

Ratio Decidendi

The Tribunal found that the proposed merger would not substantially prevent or lessen competition in the relevant market for unsecured credit, as the merging parties' post-merger market shares were nominal and the market remained competitive with several dominant banks. The restraint of trade clause restricting the JD Group from offering credit life insurance for three years was deemed reasonable and justifiable to protect the purchaser's investment. Regarding public interest, the Tribunal accepted undertakings from the merging parties not to retrench employees taken over by RCS or those in the JDGI business as a result of the merger. The Tribunal allocated the burden of proof for...

Court Disposition

The merger is conditionally approved subject to the conditions set out in the order.

Orders

  • The merger between RCS Cards Proprietary Limited and the Consumer Finance Business of the JD Group Limited is approved subject to conditions.
  • No employees taken over by RCS or in the JDGI business may be retrenched as a result of the merger unless the employer proves the retrenchment is not merger-specific.