Standard Bank of South Africa Limited v Competition Commission Of South Africa (LM227Nov17) [2018] ZACT 5 (26 February 2018)
The Tribunal found that the proposed merger would not substantially prevent or lessen competition in the relevant markets, as the combined market shares of the merging parties were low and other competitors remained active. The only public interest concern identified was potential employment loss, which was...
Source-derived case information.
- Citation
- [2018] ZACT 5
- Parties
- Applicant: Sanlam Life Insurance Limited; Respondent: Absa Consultants and Actuaries (Pty) Ltd; Respondent: Competition Commission Of South Africa
- Court
- Competition Tribunal
- Jurisdiction
- South Africa
- Case Number
- LM227Nov17
- Procedural Posture
- Merger Application / Conditional Approval
- Outcome
- Merger conditionally approved subject to employment protection measures.
- Judges
- Yasmin Carrim, Medi Mokuena, Andiswa Ndoni
- Legal Topics
- Merger Control, Public Interest Conditions, Market Share Analysis, Employment Protection
Source-derived case record
Summary, issues, holding and outcome
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Parties
Sanlam Life Insurance Limited
Applicant
Absa Consultants and Actuaries (Pty) Ltd
Respondent
Competition Commission Of South Africa
Respondent
Procedural Posture
Merger Application / Conditional Approval
Legal Issues
- 1 Whether the proposed merger between Sanlam Life Insurance Limited and Absa Consultants and Actuaries (Pty) Ltd is likely to substantially prevent or lessen competition in the relevant markets.
- 2 Whether the merger raises public interest concerns, particularly regarding employment.
Ratio Decidendi
The Tribunal found that the proposed merger would not substantially prevent or lessen competition in the relevant markets, as the combined market shares of the merging parties were low and other competitors remained active. The only public interest concern identified was potential employment loss, which was adequately addressed by imposing a condition prohibiting retrenchments of ACA employees for two years following the merger. The Tribunal therefore approved the merger subject to these conditions.
Court Disposition
Merger conditionally approved subject to employment protection measures.
Orders
- The proposed transaction is approved subject to the condition that no ACA employees may be retrenched for a period of two years from the implementation date of the merger.
- The conditions are attached as Annexure 'A' to the order.
Full Case Text
Judgment text and source record
43 paragraphs
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM227Nov17
In the matter between
Sanlam Life Insurance Limited
Primary Acquiring Firm
And
Absa Consultants and Actuaries (Pty) Ltd
Primary Target Firm
Panel
: Yasmin Carrim (Presiding Member)
: Medi Mokuena (Tribunal Member)
: Andiswa Ndoni (Tribunal Member)
Heard on
: 7 February 2018
Order Issued on : 7 February 2018
Reasons Issued on : 26 February 2018
REASONS FOR DECISION
Approval
[1] On 7 February 2018, the Competition Tribunal ("the Tribunal") conditionally approved the proposed transaction between Sanlam Life Insurance Limited ("Sanlam Life") and Absa Consultants and Actuaries (Pty) Ltd ("ACA"). The reasons for the approval follow.
Parties to the transaction and their activities
[2] Sanlam Life is wholly controlled by Sanlam Limited ("Sanlam"), and controls a number of entities in South Africa. Sanlam Life, through its business clusters, provides insurance, financial planning, retirement, investment, and wealth management products to personal business, and institutional customers in the South Africa and intemationally[1] Of relevance to the proposed transaction is the Sanlam Employee Benefit ("SEB") division. SEB provides employee benefits
solutions to employers and retirement funds. This includes, inter alia, retirement fund administration services, umbrella fund solutions, group risk products and consulting and actuarial services.
[3] ACA is a wholly owned subsidiary of Absa Financial Services Ltd("AFS"), which in turn is wholly owned by Barclays Africa Group Ltd. ACA administers pension and provident funds, as well as providing consulting and actuarial services. ACA's three main business offerings include administration and support services; consulting, actuarial and advisory services; and healthcare services. ACA also acts an intermediary by providing certain ACA customers with SEB's group risk products. However, this is the only instance where ACA acts as an intermediary.
Proposed transaction
[4] In terms of the Sale of Shares Agreement, Sanlam Life shall acquire ACA as a going concern from AFS. Post-merger, Sanlam Life will assume sole control over ACA.
Relevant markets and impact on competition
[5] The proposed transaction gives rise to horizontal overlaps in the following markets: (i) the national market for the provision of
retirement fund administration services; (ii) the national market for the provision of employee benefit consulting services; and (iii) the national market for the provision of healthcare consulting services. In the first two markets, the merging parties will have a combined post-merger market share of less than 20%, with an accretion of less than 10%. In the third market, the merging parties will have a combined post-merger market share of less than 5%, with an even lower market share accretion.
[6] The Commission submitted that there are other firms in the relevant markets that are able to exercise competitive constraints on the merged entity. The Commission thus concluded that the proposed transaction is unlikely to substantially prevent or lessen competition in the relevant markets. We agree with the Commission's conclusion.
Public interest
[7] The Commission found that the proposed transaction raises employment concerns. This is because the merging parties were unable to assess functions or roles that might be duplicated as a result of the merger and the number of employees that might be affected. At the hearing, the merging parties contended that the intention is for the two entities to operate separately so until commercial conditions dictate otherwise.
[8] In addressing these employment concerns, the Commission recommended that the proposed transaction be approved subject to the condition that the merging parties not retrench any ACA employees for a period of two years from the implementation date of the merger. The proposed transaction does not give rise to any other public interest concerns.
Conclusion
[9] In light of the above, we conclude that the proposed transaction is unlikely to substantially prevent or lessen competition in any
relevant market. In addition, no public interest issues arise save for those adequately safeguarded by the conditions. Accordingly, we approve the proposed transaction with the conditions attached to our order as Annexure "A".
Ms Yasmin Carrim
Ms Medi Mokuena and Ms Andiswa Ndoni concurring.
26 February 2018
Tribunal Researcher: Hlumelo Vazi
For the merging parties: A Van der Westhuizen of Glyn Marais and M Griffiths of
Norton Rose
For the Commission: N Msiza
[1] The business of the Sanlam group of companies is organised into various clusters for management purposes due to its size.