Steinhoff International Holdings Ltd v KAP International Holdings Ltd (101/LM/Nov11) [2012] ZACT 71; [2012] 2 CPLR 531 (CT) (15 August 2012)

Steinhoff International Holdings Ltd v KAP International Holdings Ltd (101/LM/Nov11) [2012] ZACT 71; [2012] 2 CPLR 531 (CT) (15 August 2012)

The Tribunal found that the proposed merger between Steinhoff International Holdings Ltd and KAP International Holdings Ltd would result in a merged entity with a significant market share in the general foam market in KwaZulu-Natal. However, the accretion in market share was relatively small, and the existence of excess capacity, low barriers to entry, and strong countervailing power among customers mitigated the risk of unilateral effects. The Tribunal considered the ongoing market allocation case but concluded that the merger itself did not facilitate collusion or coordinated effects. Vertical relationships between the parties were found to be minor and unlikely to result in...

Citation
[2012] ZACT 71
Parties
Applicant: Steinhoff International Holdings Ltd; Respondent: KAP International Holdings Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
15 August 2012
Case Number
101/LM/Nov11
Procedural Posture
Merger Application / Approval and Reasons
Outcome
The merger is approved unconditionally.
Judges
Yasmin Carrim, Medi Mokuena, Takalani Madima
Legal Topics
Merger Control, Horizontal Merger Analysis, Vertical Merger Analysis, Market Allocation, Restraint of Trade
Competition Law Commercial and Corporate Merger Control Horizontal Merger Analysis Vertical Merger Analysis Market Allocation Restraint of Trade

Case Brief

Summary, issues, holding and outcome

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Parties

Steinhoff International Holdings Ltd

Applicant

KAP International Holdings Ltd

Respondent

Procedural Posture

Merger Application / Approval and Reasons

Legal Issues

  1. 1 Whether the proposed acquisition by Steinhoff International Holdings Ltd of KAP International Holdings Ltd will substantially prevent or lessen competition in the relevant markets.
  2. 2 Whether the transaction raises any public interest concerns under the Competition Act.
  3. 3 Whether the merger will facilitate coordinated effects or foreclosure in the relevant foam markets.

Ratio Decidendi

The Tribunal found that the proposed merger between Steinhoff International Holdings Ltd and KAP International Holdings Ltd would result in a merged entity with a significant market share in the general foam market in KwaZulu-Natal. However, the accretion in market share was relatively small, and the existence of excess capacity, low barriers to entry, and strong countervailing power among customers mitigated the risk of unilateral effects. The Tribunal considered the ongoing market allocation case but concluded that the merger itself did not facilitate collusion or coordinated effects. Vertical relationships between the parties were found to be minor and unlikely to result in...

Court Disposition

The merger is approved unconditionally.

Orders

  • The acquisition by Steinhoff International Holdings Ltd of KAP International Holdings Ltd is approved without conditions.
  • No remedies or conditions are imposed on the parties.