Santam Limited and Allianz Risk Transfer Limited (28/LM/May02) [2002] ZACT 39 (6 June 2002)

Santam Limited and Allianz Risk Transfer Limited (28/LM/May02) [2002] ZACT 39 (6 June 2002)

The Tribunal found that the relevant market is the provision of Alternative Risk Transfer (ART) products, which is distinct from traditional short-term insurance. Post-merger, Santam would hold a 10.5% share of the national ART market, making it the second largest provider after Guard Risk, which holds 50%. The Tribunal determined that barriers to entry are not insurmountable, as cell captive insurers can use client funds to meet solvency requirements, despite additional administrative requirements. Furthermore, the Tribunal was persuaded that the clients in this market—large multinational corporates—possess sufficient countervailing power to negotiate prices and terms, mitigating any...

Citation
[2002] ZACT 39
Parties
Applicant: Santam Limited; Respondent: Allianz Risk Transfer Limited
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
6 June 2002
Case Number
28/LM/May02
Procedural Posture
Large Merger / Merger Approval
Outcome
Merger approved unconditionally.
Judges
N. Manoim, D. H. Lewis, U. Bhoola
Legal Topics
Merger Control, Market Definition, Barriers to Entry, Countervailing Power
Competition Law Commercial and Corporate Merger Control Market Definition Barriers to Entry Countervailing Power

Case Brief

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Parties

Santam Limited

Applicant

Allianz Risk Transfer Limited

Respondent

Procedural Posture

Large Merger / Merger Approval

Legal Issues

  1. 1 Whether the merger between Santam Limited and Allianz Risk Transfer Limited will substantially lessen or prevent competition in the relevant market.
  2. 2 Whether there are any public interest concerns that would affect the approval of the merger.

Ratio Decidendi

The Tribunal found that the relevant market is the provision of Alternative Risk Transfer (ART) products, which is distinct from traditional short-term insurance. Post-merger, Santam would hold a 10.5% share of the national ART market, making it the second largest provider after Guard Risk, which holds 50%. The Tribunal determined that barriers to entry are not insurmountable, as cell captive insurers can use client funds to meet solvency requirements, despite additional administrative requirements. Furthermore, the Tribunal was persuaded that the clients in this market—large multinational corporates—possess sufficient countervailing power to negotiate prices and terms, mitigating any...

Court Disposition

Merger approved unconditionally.

Orders

  • The merger between Santam Limited and Allianz Risk Transfer Limited is approved without conditions.