Santam Limited v Emerald Insurance Company Limited and Another (57/LM/Aug09) [2010] ZACT 5; [2009] 2 CPLR 453 (CT) (27 January 2010)

Santam Limited v Emerald Insurance Company Limited and Another (57/LM/Aug09) [2010] ZACT 5; [2009] 2 CPLR 453 (CT) (27 January 2010)

The Tribunal found no evidence that the proposed merger would substantially prevent or lessen competition in any relevant market, including the overall short term corporate insurance market and the potential lead and follow markets. Although the merged entity would be the largest player post-merger, sufficient competitors remain, and new entrants have been identified. The Tribunal rejected the failing firm argument, finding that Emerald was not commercially failing, that alternative purchasers existed, and that reorganisation was a realistic option. Concerns about reduced capacity and loss of innovative underwriting were unfounded, as the merged entity would preserve and enhance these...

Citation
[2010] ZACT 5
Parties
Applicant: Santam Limited; Respondent: Emerald Insurance Company Limited; Respondent: Emerald Risk Transfer (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
27 January 2010
Case Number
57/LM/Aug09
Procedural Posture
Merger Application / Reasons for Decision After Approval
Outcome
Merger approved without conditions.
Judges
N Manoim, A Ndoni, A Wessels
Legal Topics
Merger Control, Failing Firm Doctrine, Market Definition, Countervailing Power, Solvency Requirements
Competition Law Commercial and Corporate Merger Control Failing Firm Doctrine Market Definition Countervailing Power Solvency Requirements

Case Brief

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Parties

Santam Limited

Applicant

Emerald Insurance Company Limited

Respondent

Emerald Risk Transfer (Pty) Ltd

Respondent

Procedural Posture

Merger Application / Reasons for Decision After Approval

Legal Issues

  1. 1 Whether the proposed merger between Santam Limited and Emerald Insurance Company Limited and Emerald Risk Transfer (Pty) Ltd is likely to substantially prevent or lessen competition in any relevant market.
  2. 2 Whether Emerald Insurance Company Limited qualifies as a failing firm under competition law principles.
  3. 3 Whether there are viable alternative purchasers for the target firms that would pose less anticompetitive risk than Santam.

Ratio Decidendi

The Tribunal found no evidence that the proposed merger would substantially prevent or lessen competition in any relevant market, including the overall short term corporate insurance market and the potential lead and follow markets. Although the merged entity would be the largest player post-merger, sufficient competitors remain, and new entrants have been identified. The Tribunal rejected the failing firm argument, finding that Emerald was not commercially failing, that alternative purchasers existed, and that reorganisation was a realistic option. Concerns about reduced capacity and loss of innovative underwriting were unfounded, as the merged entity would preserve and enhance these...

Court Disposition

Merger approved without conditions.

Orders

  • The proposed transaction between Santam Limited and Emerald Insurance Company Limited and Emerald Risk Transfer (Pty) Ltd is approved without conditions.