SM Holdco (Pty) Ltd v SmartMatta (Pty) Ltd (LM246Jan19) [2019] ZACT 16 (25 March 2019)
- Citation
- [2019] ZACT 16
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Norman Manoim, Enver Daniels, Mondo Mazwai
- Case number
- LM246Jan19
More details
- Court
- Competition Tribunal
- Panel
- Norman Manoim, Enver Daniels, Mondo Mazwai
- Case number
- LM246Jan19
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the acquiring group is not active in the service-based waste management and recycling business, and there is no pre-existing business relationship with SmartMatta. Therefore, the proposed transaction does not result in any horizontal or vertical overlaps. The Commission's investigation concluded that the merger is unlikely to substantially prevent or lessen competition in any market, and the Tribunal agreed with this assessment. Furthermore, no public interest concerns were identified. Consequently, the Tribunal approved the proposed transaction unconditionally.
Court disposition
The proposed transaction was approved unconditionally.
Orders
- The merger between SM Holdco (Pty) Ltd and SmartMatta (Pty) Ltd is approved without conditions.
02
Material facts
Parties
SM Holdco (Pty) Ltd
Applicant Counsel: L OdendaalSmartMatta (Pty) Ltd
Respondent03
Procedural history
Posture
Merger Control / Approval
04
Questions and positions
Legal issues
- 01
Whether the proposed merger would substantially prevent or lessen competition in any relevant market.
- 02
Whether the proposed merger raises any public interest concerns.
Party arguments
- Applicant
- The applicant submitted that SM Holdco is a newly established entity for the purpose of acquiring SmartMatta and does not conduct any business activities. The acquiring group is not active in the service-based waste management and recycling business, and there is no pre-existing business relationship with SmartMatta. Therefore, the merger does not result in any horizontal or vertical overlaps and will not negatively impact competition.
- Respondent
- The respondent, SmartMatta, did not oppose the merger and did not raise any concerns regarding competition or public interest. The Commission also found no evidence of horizontal or vertical overlaps and concluded that the transaction is unlikely to substantially prevent or lessen competition or raise public interest concerns.
05
Court’s reasoning
Legal principles
- 01
Competition Act, No. 89 of 1998
A merger may only be prohibited if it is likely to substantially prevent or lessen competition in any relevant market.
- 02
Competition Act, No. 89 of 1998
The Tribunal must consider public interest factors in assessing mergers, including the effect on employment and the ability of small businesses to compete.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the acquiring group is not active in the service-based waste management and recycling business, and there is no pre-existing business relationship with SmartMatta. Therefore, the proposed transaction does not result in any horizontal or vertical overlaps. The Commission's investigation concluded that the merger is unlikely to substantially prevent or lessen competition in any market, and the Tribunal agreed with this assessment. Furthermore, no public interest concerns were identified. Consequently, the Tribunal approved the proposed transaction unconditionally.
Obiter and limits
- The Tribunal noted that SmartMatta operates throughout South Africa except in the Northern Cape and North-West provinces, and occasionally exports recyclable waste depending on demand.
- The acquiring group is ultimately controlled by First Rand Ltd, but none of its subsidiaries are active in the relevant market for waste management and recycling services.
Court disposition
The proposed transaction was approved unconditionally.
- The merger between SM Holdco (Pty) Ltd and SmartMatta (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: LM246Jan19
In the matter between
SM Holdco (Pty) Ltd
Primary Acquiring Firm
And
SmartMatta (Pty) Ltd
Primary Target Firm
Panel
: Norman Manoim (Presiding Member)
: Enver Daniels (Tribunal Member)
: Mondo Mazwai (Tribunal Member)
Heard on : 27 February 2019
Order Issued on : 27 February 2019
Reasons Issued on : 25 March 2019
REASONS
FOR DECISION
Approval
[1] On 27 February 2019, the Competition Tribunal ("Tribunal") unconditionally approved the proposed transaction in terms of which SM Holdco (Pty) Ltd ("SM Holdco") is acquiring control over SMartMatta (Pty) Ltd ("SmartMatta").
[2] The reasons for the approval of the proposed transaction follow.
Parties to the transaction
[3] The primary acquiring firm, SM Holdco is a new entity established specifically for the proposed transaction, and as such does not
conduct any business activities. SM Holdco is jointly controlled by Corvest 12 (Pty) Ltd (Corvest) and Anthill Mid Cap Fund I (Pty)
(Anthill). Anthill is jointly controlled by Corvest and Anthill Capital Fund Manager (Pty) Ltd, a BEE private equity firm that has partnered with First Rand Ltd.[1] Apart from SM Holdco and Anthill, Corvest does not control any firm. Corvest is ultimately controlled by First Rand. First Rand and all its subsidiaries, including SM Holdco, will be collectively referred to as the acquiring group.
[4] The primary target firm is SmartMatta, which is wholly-owned by SmartMatta Holdings (Pty) Ltd. SmartMatta Holdings is in turn wholly-owned by Barloworld Logistics Africa (Pty) Ltd, which is ultimately controlled by Barloworld Ltd, a company listed on the Johannesburg Stock Exchange.
[5] SmartMatta provides on-site waste management solutions, off-site recycling facilities, supply chain and logistics and advisory services to a diversified and blue-chip customer base. SmartMatta is active throughout South Africa, except in the Northern Cape and North-West
provinces. SmartMatta also exports unprocessed recyclable waste from time to time to various countries depending on demand.
Proposed transaction
[6] SM Holdco intends to acquire the entire issued share capital in SmartMatta. Post-merger, SM Holdco will solely control SmartMatta.
Relevant market and impact on competition
[7] The Commission found that the proposed transaction does not result in a horizontal overlap because the acquiring group is not active in the service based waste management and recycling business. Further, the Commission found that the proposed transaction does not raise any vertical overlaps as there is no pre-existing business relationship between SmartMatta and the acquiring group. In view of the above, the Commission concluded that the proposed transaction is unlikely to substantially prevent or lessen competition in any market. We find no reason to disagree with the Commission.
Public interest
[8] The proposed transaction does not raise any public interest concerns.
Conclusion
[9] In view of the above, we concluded that the proposed transaction is unlikely to substantially prevent or lessen competition in any
relevant market. In addition, no public interest issues arise from the proposed transaction. Accordingly, we approved the proposed
transaction unconditionally.
Mr Norman Manoim
Mr Enver Daniels and Ms Mondo Mazwai concurring.
25 March 2019
Date
Tribunal Case Manager : Kgothatso Kgobe
For the Merging Parties : L Odendaal of Falcon & Hume
For the Commission
: Z Siyo
[1] See Transcript, Page 5.
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