SPE Mid-Market Fund I Partnership v S Bacher and Company Proprietary Limited (LM158Dec23) [2024] ZACT 40 (7 March 2024)
- Citation
- [2024] ZACT 40
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- A Kessery, F Tregenna, A Ndoni
- Case number
- LM158Dec23
More details
- Court
- Competition Tribunal
- Panel
- A Kessery, F Tregenna, A Ndoni
- Case number
- LM158Dec23
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that there are no horizontal or vertical overlaps between the activities of the acquiring and target firms, as none of the portfolio companies of the SPE Fund supply products or services substitutable with those of Bacher. There is no pre-existing relationship between the parties. The transaction will not result in any retrenchments, and employees have raised no concerns. The merger introduces historically disadvantaged persons shareholding into Bacher, which previously had none. The Tribunal concluded that the merger is unlikely to substantially prevent or lessen competition and does not raise any public interest concerns. Accordingly, the merger was approved unconditionally.
Court disposition
Merger approved unconditionally.
Orders
- The large merger between SPE Mid-Market Fund I Partnership and S Bacher and Company Proprietary Limited is approved unconditionally.
02
Material facts
Parties
SPE Mid-Market Fund I Partnership
Applicant Counsel: Richardt van Rensburg and Tayla TheronS Bacher and Company Proprietary Limited
RespondentAmounts and remedies
- Sanlam Shareholding by Public Investment Corporation SOC Limited: ZAR 14.21
- Sanlam Shareholding by Ubuntu Botho Investments (pty) Ltd: ZAR 13.13
03
Procedural history
Posture
Large Merger / Approval
04
Questions and positions
Legal issues
- 01
Whether the proposed merger will substantially prevent or lessen competition in any relevant market.
- 02
Whether the transaction raises any public interest concerns, including employment and spread of ownership.
Party arguments
- Applicant
- The applicant submitted that the merger would not result in any retrenchments and that there are no horizontal or vertical overlaps between the acquiring and target firms. The applicant further argued that the transaction would introduce historically disadvantaged persons shareholding into the target firm, which previously had none.
- Respondent
- The respondent did not oppose the merger and confirmed that employees had raised no concerns regarding the transaction. The respondent's controlling shareholder sought to realise his investment in the company.
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
Public interest considerations, including employment and the spread of ownership, must be assessed in merger proceedings.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that there are no horizontal or vertical overlaps between the activities of the acquiring and target firms, as none of the portfolio companies of the SPE Fund supply products or services substitutable with those of Bacher. There is no pre-existing relationship between the parties. The transaction will not result in any retrenchments, and employees have raised no concerns. The merger introduces historically disadvantaged persons shareholding into Bacher, which previously had none. The Tribunal concluded that the merger is unlikely to substantially prevent or lessen competition and does not raise any public interest concerns. Accordingly, the merger was approved unconditionally.
Obiter and limits
- The Tribunal noted the importance of increasing historically disadvantaged persons shareholding in South African firms as a positive public interest outcome.
- The Tribunal observed that the absence of employee concerns and retrenchments further supports the approval of the merger.
Court disposition
Merger approved unconditionally.
- The large merger between SPE Mid-Market Fund I Partnership and S Bacher and Company Proprietary Limited is approved unconditionally.
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: LM158Dec23
In the matter between: SPE Mid-Market Fund I Partnership (represented Primary Acquiring Firm by the general partner, SPE Mid-Market Fund I General Partner Proprietary Limited) And S Bacher and Company Proprietary Limited Primary Target Firm
Panel:
A Kessery (Presiding Member)
F Tregenna (Tribunal Member)
A Ndoni (Tribunal Member)
Heard on:
19 February 2024
Order issued on: 19 February 2024
Reasons issued on: 07 March 2024
REASONS FOR DECISION
Approval
[1]
On 19 February 2024, the Competition Tribunal ("Tribunal") unconditionally approved the large merger whereby SPE Mid-Market Fund I Partnership (the "SPE Fund"), represented by The General Partner, SPE Mid-Market Fund I General Partner Proprietary Limited (the "SPE Fund General Partner") will acquire […]% of the issued share capital of S Bacher and Company Proprietary Limited ("Bacher"). Post-merger, SPE Fund will have sole control over Bacher.
Parties to the transaction and their activities
Primary acquiring firm
[2]
The primary acquiring firm is the SPE Fund represented by the SPE Fund General Partner, a private company incorporated in terms of the laws of South Africa. The SPE Fund operates as a private equity investment firm.
[3]
The SPE Fund is managed by Sanlam Investment Management (Pty) Ltd (“Sanlam Investment Management”), which wholly controls the SPE Fund General Partner. In turn, Sanlam Investment Management is wholly controlled by Sanlam Investment Holdings (Pty) Ltd (“Sanlam Investment Holdings”).
[4]
Sanlam Investment Holdings is controlled by SIH Capital Holdings (Pty) Ltd (“SIH”) as to […]%, with the remaining shareholding held by ABSA Financial Services Ltd. SIH is controlled by Sanlam Ltd (“Sanlam”) as to […]
[5]
Sanlam is a company listed on the Johannesburg Stock Exchange (“JSE”), with a secondary listing on the Namibia Stock Exchange. Firms with a shareholding greater than 5% in Sanlam include Public Investment Corporation SOC Limited as to 14.21% and Ubuntu-Botho
Investments (Pty) Ltd as to 13.13%.[1]
[6]
Sanlam and its related subsidiaries operate as a financial services group in South Africa and has further interests globally.
[7]
The SPE Fund controls a number of firms in different industries which include meat production, financial services, property, and vehicle automotive parts, amongst others.
[8]
Sanlam, the SPE Fund and all its subsidiaries will be referred to as “the Acquiring Group”.
Primary target firm
[9]
The primary target firm is Bacher, a private company incorporated in terms of the laws of South Africa.
[10] Bacher does not control any other firm.
[11] Bacher is controlled by Mr Shaun Bacher as to […] Mr Shaun Bacher does not control any other firm.
[12] Bacher is a wholesaler and distributor of branded products which comprise of watches[2], fragrances[3], jewellery and cosmetics,[4] and food and baby[5] products. Bacher's brand range targets customers at living standard measure ("LSM") 5 - 7 as well as more affluent LSM 8 - 10 consumers.
[13] Bacher distributes its products nationally to South African retailers including Dis-Chem, Clicks, Truworths, Foschini, Woolworths and Edgars (in relation to fragrances and cosmetics) as well as NWJ and Cajees Time Zone (in relation to watches and jewellery). Products are also distributed to independent retailers and e-commerce channels such as Takealot, Bash (The Foschini Group) and OneDayOnly.
Proposed transaction and rationale
Transaction
[14] In terms of the Sale of Shares Agreement, the SPE Fund will acquire […]% of the issued share capital in Bacher, […] Post-merger, the SPE Fund will have sole control over Bacher.
Rationale
[15] […]
[16] From the target firm's perspective, the controlling shareholder of Bacher, Mr Shaun Bacher, wishes to realise his investment in Bacher.
Competition assessment
[17] The Competition Commission ("Commission") considered the activities of the merging parties and found that no products or services supplied by any portfolio company of the SPE Fund in South Africa (or elsewhere) are substitutable with the products sold or services rendered by Bacher. Furthermore, the merging parties do not have any pre existing relationship, nor do they supply any products or services to each other.
[18] Accordingly, the Commission found that the proposed transaction does not present any horizontal or vertical overlaps.
[19] Having regard to the above, we are satisfied that the proposed transaction is unlikely to result in a substantial prevention or lessening of competition in any relevant market.
Public interest assessment
Employment
[20] The merging parties submitted that there will be no retrenchments as a result of the proposed transaction.
[21] Employee representatives of the merging parties confirmed to the Commission that employees had raised no concerns with the proposed transaction.
Spread of ownership
[22] According to the Commission, the SPE Fund General Partner and the SPE Fund have a shareholding by historically disadvantaged persons ("HDP") of […]%.
[23] Prior to the proposed transaction, Bacher has no HDP shareholding.
[24] By virtue of the SPE […]% HDP shareholding and pursuant to its acquisition of […]% of the issued share capital of Bacher , the proposed transaction will result in Bacher having a […]% HDP shareholding.
[25] Having regard to the above, we are satisfied that the proposed transaction does not raise any public interest concerns.
Conclusion
[26] Considering the above, we conclude that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market
and does not raise any public interest concerns.
[27] We therefore approve the proposed merger unconditionally.
Signed by:Anisa Kessery
Signed at:2024-03-07 14:33:12 +02:00
Reason:Witnessing Anisa Kessery
Adv. Anisa Kessery
7 March 2024
Date
Prof. Fiona Tregenna and Ms Andiswa Ndoni concurring
Tribunal case manager: Leila Raffee For the merging parties: Richardt van Rensburg and Tayla Theron of Edward Nathan Sonnenbergs Inc. For the Commission: Tarryn Sampson, Raksha Darji and Grashum Mutizwa
[1] As of 31 December 2022.
[2] Branded watches distributed by Bacher include Tomato, Lacoste, Tommy Hilfiger, Scuderia Ferrari and Boss.
[3] Bacher holds licence agreements for over 50 fragrance brands. Branded fragrances distributed by Bacher include Lanvin, Guess, Mont Blanc, Kate Spade, Bently and Dunhill, amongst others.
[4] Branded jewellery and cosmetics distributed by Bacher include Guess, Gosh, and Ariana Grande.
[5] Branded food and baby products distributed by Bacher include Nanobebe and True Citrus.
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