RTZ Zeply 5504 (Pty) Ltd v Dynamic Bedding (Pty) Ltd and Another (92/LM/Aug08) [2008] ZACT 97 (24 November 2008)
- Citation
- [2008] ZACT 97
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- D Lewis, Y Carrim, N Manoim
- Case number
- 92/LM/Aug08
More details
- Court
- Competition Tribunal
- Panel
- D Lewis, Y Carrim, N Manoim
- Case number
- 92/LM/Aug08
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that there is no product overlap between the merging parties, as RTZ Zeply is a newly formed shelf company with no prior trading activity and is not involved in the product markets of the target firms. The target firms operate in the manufacture and distribution of bed bases and mattresses, sold exclusively to independent franchisees. The acquiring firm is part of a specialist banking group and does not compete in the relevant market. Consequently, the proposed transaction is unlikely to substantially prevent or lessen competition. Furthermore, no significant public interest concerns were identified. The Tribunal therefore approved the merger.
Court disposition
Merger approved without conditions.
Orders
- The acquisition by RTZ Zeply 5504 (Pty) Ltd of Dynamic Bedding (Pty) Ltd and Dyna Mattress (Pty) Ltd is approved.
- No conditions are attached to the approval.
02
Material facts
Parties
RTZ Zeply 5504 (Pty) Ltd
Applicant Counsel: Cliffe Dekker HofmeyrDynamic Bedding (Pty) Ltd
RespondentDyna Mattress (Pty) Ltd
RespondentAmounts and remedies
- RTZ Zeply Post Transaction Shareholding: Corvest 6: ZAR 80
- RTZ Zeply Post Transaction Shareholding: Management: ZAR 20
03
Procedural history
Posture
Merger Control / Approval
04
Questions and positions
Legal issues
- 01
Whether the proposed acquisition would substantially prevent or lessen competition in the relevant markets.
- 02
Whether the transaction raises any significant public interest concerns.
Party arguments
- Applicant
- The applicant argued that the transaction is an ideal opportunity for the owner of the target firms to exit the businesses while ensuring management participation. The acquiring firm, RTZ Zeply, is a newly formed company controlled by Corvest 6, a subsidiary of FirstRand Limited, and has not previously traded. The transaction is viewed as an attractive investment opportunity and does not result in any product overlap, as RTZ Zeply is not involved in the target firms' product markets.
- Respondent
- The respondents, Dynamic Bedding and Dyna Mattress, did not oppose the transaction and confirmed that their businesses are engaged in the manufacture, distribution, and marketing of bed bases and mattresses sold exclusively to independently owned franchisees. They did not raise any competition or public interest concerns.
05
Court’s reasoning
Legal principles
- 01
Competition Act, No. 89 of 1998
A merger may not be approved if it is likely to substantially prevent or lessen competition, unless the Tribunal is satisfied that any technological, efficiency or other pro-competitive gain resulting from that merger outweighs that effect.
- 02
Competition Act, No. 89 of 1998
The Tribunal must consider whether the merger raises any public interest concerns as set out in section 12A(3) of the Competition Act.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that there is no product overlap between the merging parties, as RTZ Zeply is a newly formed shelf company with no prior trading activity and is not involved in the product markets of the target firms. The target firms operate in the manufacture and distribution of bed bases and mattresses, sold exclusively to independent franchisees. The acquiring firm is part of a specialist banking group and does not compete in the relevant market. Consequently, the proposed transaction is unlikely to substantially prevent or lessen competition. Furthermore, no significant public interest concerns were identified. The Tribunal therefore approved the merger.
Obiter and limits
- The transaction structure ensures continued management participation post-acquisition, which may contribute to business continuity.
- The Tribunal noted the absence of any opposition or concerns from the Commission regarding competition or public interest.
Court disposition
Merger approved without conditions.
- The acquisition by RTZ Zeply 5504 (Pty) Ltd of Dynamic Bedding (Pty) Ltd and Dyna Mattress (Pty) Ltd is approved.
- No conditions are attached to the approval.
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: 92/LM/Aug08
In the matter between:
RTZ Zeply 5504 (Pty) Ltd Acquiring Firm
and
Dynamic Bedding (Pty) Ltd Target Firms
Dyna Mattress (Pty) Ltd
Panel : D Lewis (Presiding Member), Y Carrim (Tribunal
Member) and N Manoim (Tribunal Member)
Heard on : 8 October 2008
Order issued on : 8 October 2008
Reasons issued on : 24 November 2008
Reasons for Decision
Introduction
On 8 October 2008 the Tribunal approved the acquisition by RZT Zeply 5504 (Pty) Ltd of Dynamic Bedding (Pty) Ltd and Dyna Matress (Pty) Ltd. The reasons follow below.
The transaction and parties
RTZ Zeply 5504 (Pty) Ltd (“RTZ Zelpy”) is a newly formed company which is controlled by Corvest 6 (Pty) Ltd, a subsidiary of FirstRand Limited.
The primary target firms are Dynamic Bedding (Pty) Ltd (“Dynamic Bedding”) and Dyna Matress (Pty) Ltd (“Dyna Mattress”) which are controlled by Richard Meyer Family Trust.
Post the transaction the shareholding in RTZ Zeply will be:
Covest 6 80 %
Management 20%
Rationale for the transaction
According to the owner of the target firms the transaction presents an ideal opportunity to exit the businesses while ensuring management’s
participation. Corvest regards the transaction as an attractive investment opportunity.
Effect on Competition
There is no product overlap in the activities of the merging parties. Dynamic Bedding and Dyna Mattress are engaged in the manufacture, distribution and marketing of a wide range of bed bases and
mattresses which is sold exclusively to 98 independently owned Bed City and Bed Shop franchisees located throughout South Africa. RTZ Zeply is a newly formed shelf company which has not traded before. It forms part of the FirstRand Group which is a specialist banking group that provides a diverse range of financial products and services. It is not involved in the target firms’ product markets.
The proposed transaction is therefore unlikely to substantially prevent or lessen competition.
PUBLIC
INTEREST
The transaction does not raise any significant public interest concerns.
_______ 24 November 2008
D Lewis Date
N Manoim and Y Carrim concurring.
Tribunal Researcher: R Badenhorst
For the merging parties: Cliffe Dekker Hofmeyr
For the Commission: K Mahlakoane and A Constantinou
2
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