Rockwood Private Equity Fund I v Bravo Group (Pty) Ltd (019760) [2015] ZACT 9 (23 January 2015)
- Citation
- [2015] ZACT 9
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Norman Manoim, Yasmin Carrim, Mondo Mazwai
- Case number
- 019760
More details
- Court
- Competition Tribunal
- Panel
- Norman Manoim, Yasmin Carrim, Mondo Mazwai
- Case number
- 019760
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that Rockwood's acquisition of Bravo Group would not result in any increase in market concentration, as Rockwood does not have interests in other firms operating in Bravo's market. The transaction merely shifts control from joint to sole, without raising competition concerns. Furthermore, the parties confirmed that there would be no adverse effect on employment or other public interest concerns. Accordingly, the Tribunal approved the transaction unconditionally.
Court disposition
The proposed transaction is approved unconditionally.
Orders
- The merger between Rockwood Private Equity Fund I and Bravo Group (Pty) Ltd is approved without conditions.
02
Material facts
Parties
Rockwood Private Equity Fund I
Applicant Counsel: Graeme WickinsBravo Group (Pty) Ltd
Respondent03
Procedural history
Posture
Merger Control / Approval
04
Questions and positions
Legal issues
- 01
Whether the proposed acquisition by Rockwood of Bravo Group raises any competition concerns.
- 02
Whether the transaction has any adverse public interest effects, including on employment.
Party arguments
- Applicant
- Rockwood argued that the transaction is intended to align Bravo's interests with its own as a private equity investor. Rockwood holds no other interests in firms operating in Bravo's market, and the acquisition will not increase market concentration. The transaction is necessary to provide Bravo with additional funding and support.
- Respondent
- Bravo's sellers submitted that they are unable to provide the required funding and support for Bravo. They decided to sell their interest to Rockwood, a financially suitable shareholder, to ensure Bravo's continued viability. The transaction will not result in any retrenchments or adverse public interest effects.
05
Court’s reasoning
Legal principles
- 01
Competition Act, 89 of 1998
A merger that does not result in an increase in market concentration and does not raise competition concerns may be approved unconditionally.
- 02
Competition Act, 89 of 1998
The Tribunal must consider public interest factors, including the effect on employment, when assessing mergers.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that Rockwood's acquisition of Bravo Group would not result in any increase in market concentration, as Rockwood does not have interests in other firms operating in Bravo's market. The transaction merely shifts control from joint to sole, without raising competition concerns. Furthermore, the parties confirmed that there would be no adverse effect on employment or other public interest concerns. Accordingly, the Tribunal approved the transaction unconditionally.
Obiter and limits
- The Tribunal noted that the rationale for the transaction was to provide Bravo with necessary funding and support, which the sellers could not provide.
- The Tribunal emphasized that the transaction would not result in any retrenchments or negative impact on employment.
Court disposition
The proposed transaction is approved unconditionally.
- The merger between Rockwood Private Equity Fund I and Bravo Group (Pty) Ltd 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: 019760
In the matter between:
Rockwood Private Equity Fund I ….................................................................................Acquiring Firm
and
Bravo Group (Pty) Ltd..............................................................................................................Target Firm
Panel: Norman Manoim (Presiding Member)
Yasmin Carrim (Tribunal Member)
Mondo Mazwai (Tribunal Member)
Heard on: 27 November 2014
Order issued on : 27 November 2014
Reasons issued on : 23 January 2015
Reasons for Decision
Approval
1. On 27 November 2014 the Competition Tribunal (the “Tribunal”) unconditionally approved an acquisition by Rockwood Private Equity Fund I (“Rockwood”) of Bravo Group (Pty) Ltd (“Bravo”).
2. The reasons for the approval of the proposed transaction follow.
3. The primary acquiring firm is Rockwood, a South African en commandite partnership comprised of investors in the form of limited partners and a general partner.1 Rockwood controls the following firms: Safripol Holdings (Pty) Ltd, Tsebo Holdings (Pty) Ltd, Enviroserv Holdings (Pty) Ltd and Kwikspace Modular Buildings Holdings (Pty) Ltd.
4. These firms are inter alia involved in the manufacturing of plastics, facilities and infrastructure, catering, cleaning and hygiene services, third party procurement and energy management. None of these firms operate in markets that are relevant to the present transaction.
5. The primary target firm is Bravo, a firm incorporated in terms of the laws of the Republic of South Africa. Bravo is jointly controlled by Rockwood -49% shareholding and Bravo Manco (Pty) Ltd (“Bravo Manco”) - 30% shareholding. The remaining shares are held by New Gx Investments (Pty) Ltd. Bravo controls these firms in South Africa: Bravo Group Manufacturing (Pty) Ltd and Bravo Group Properties.
6. Bravo manufactures, imports and sells a wide range of household furniture products in South Africa. It conducts its business through these three main divisions: (i) Sleep products Division - this division manufactures a wide range of bedding products including
inner-spring mattresses and timber-based sets under brand names Sealy, Edblo, Siumberland and King Koil, (ii) Foil Case Goods Division - this division produces a range of foiled particle board case goods comprising of inter alia wardrobe, kitchen and wall units under the brand names High Point, Pat Cornick, Valenti and Victoria Lewis and (iii) Lounge Furniture Division - this division produces a range of fabric and leather lounge furniture under the brand names Alpine Lounge, Grafton Everest, GoimmaGomma and Milano Décor.
Proposed transaction and rationale
7. In terms of the proposed transaction Rockwood intends to increase its shareholding in Bravo from 49% to 100%. Post-merger, Rockwood will have sole control over Bravo.
8. From Rockwood’s perspective the proposed transaction is intended to align the interests of Bravo with that of its own as a private equity investor.
9. Bravo’s sellers submitted that Bravo needs additional funding and support and as they are not able to provide this funding, they have decided to sell their interest in Bravo in order to make way for a more financially suitable shareholder who is capable of providing the required funding.
Competition Analysis
10. In this transaction Rockwood is increasing its stake from one of joint control to sole control. As Rockwood holds no other interests in firms in the market that Bravo operates in, the merger does not bring about any increase in concentration, only an increment in its ability to control the target firm. This in itself does not raise any competition concerns.
Public interest
11. The merging parties confirmed that the proposed transaction will have no adverse effect on employment and will not result in any retrenchments in South Africa.2 The proposed transaction raises no other public interest concerns.
Conclusion
12. For the reasons mentioned above, we approve the proposed transaction unconditionally.
23 January 2015
Date
Mr. Norman Manoim
Ms. Yasmin Carrim and Ms. Mondo Mazwái concurring
Tribunal Researcher: Ipeleng Selaiedi
For the merging parties: Graeme Wickins of Werksmans
For the Commission : Zanele Hadebe
1Rockwood is controlled by its general named the General Partnership (“GP Partner”), a South African en commandite partnership. The GP Partner is in turn controlled by a trust named the Equity investment Trust (“El Trust”) and Main Street 1267 (Pty) Ltd (“Main Street”). The E! Trust is not controlled by any firm. Main Street is a wholly-owned subsidiary of Rockwood Private Equity (Pty) Ltd (“Rockwood PE”). Rockwood PE is not controlled by any firm.
2 See merger record, pages 9. Also see paragraph 7.1 of the Commission’s merger report.
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