Super Group Holdings (Pty) Ltd v Regional Wholesale Services (Pty) Ltd (LM035Jul21) [2021] ZACT 62 (6 October 2021)
- Citation
- [2021] ZACT 62
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- AW Wessels, I Valodia, A Ndoni
- Case number
- LM035Jul21
More details
- Court
- Competition Tribunal
- Panel
- AW Wessels, I Valodia, A Ndoni
- Case number
- LM035Jul21
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed merger would not substantially prevent or lessen competition in any of the relevant markets identified, as the combined market shares of the parties remain below 15% and their business models differ significantly. The Commission's investigation revealed no significant horizontal or vertical overlaps, and no concerns were raised by customers or competitors. The Tribunal also accepted the parties' submissions that no retrenchments would result from the merger and that the transaction would support enterprise development and expansion of businesses owned by Historically Disadvantaged Persons. No public interest concerns were identified. Accordingly, the Tribunal approved the merger unconditionally.
Court disposition
Merger approved unconditionally.
Orders
- The proposed transaction is approved without conditions.
02
Material facts
Parties
Super Group Holdings (Pty) Ltd
Applicant Counsel: B SelekeRegional Wholesale Service (Pty) Ltd
RespondentAmounts and remedies
- Super Group Post Merger Shareholding in RWS: ZAR 58
- Hugh Randall Holdings Post Merger Shareholding in RWS: ZAR 32
- Business Express of South Africa Post Merger Shareholding in RWS: ZAR 10
03
Procedural history
Posture
Merger Approval / Final Determination
04
Questions and positions
Legal issues
- 01
Whether the proposed merger between Super Group Holdings and Regional Wholesale Service is likely to substantially prevent or lessen competition in any relevant market.
- 02
Whether the transaction raises any public interest concerns under the Competition Act.
Party arguments
- Applicant
- Super Group Holdings and RWS argued that the merger would not result in retrenchments and would facilitate RWS's expansion into new territories, increasing the number of independent businesses in the courier services market. They highlighted RWS's existing use of independently owned companies, most of which are owned by Historically Disadvantaged Persons, and the provision of funding through B-BBEE Spending under enterprise development.
- Respondent
- The Competition Commission submitted that the merger parties have market shares below 15% in all relevant markets, that their business models differ significantly, and that they are not direct competitors. The Commission found no significant horizontal or vertical overlaps likely to raise competition or foreclosure concerns, and noted the absence of objections from customers or competitors.
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 must be assessed in merger proceedings, including the effect on employment and promotion of small businesses or firms controlled by historically disadvantaged persons.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed merger would not substantially prevent or lessen competition in any of the relevant markets identified, as the combined market shares of the parties remain below 15% and their business models differ significantly. The Commission's investigation revealed no significant horizontal or vertical overlaps, and no concerns were raised by customers or competitors. The Tribunal also accepted the parties' submissions that no retrenchments would result from the merger and that the transaction would support enterprise development and expansion of businesses owned by Historically Disadvantaged Persons. No public interest concerns were identified. Accordingly, the Tribunal approved the merger unconditionally.
Obiter and limits
- The Tribunal notes the importance of enterprise development and B-BBEE Spending in supporting the growth of independently owned businesses in the courier services market.
- The Tribunal encourages merging parties to continue promoting the participation of Historically Disadvantaged Persons in the logistics sector.
Court disposition
Merger approved unconditionally.
- The proposed transaction 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.: LM035Jul21
In the matter between:
Super Group Holdings (Pty) Ltd
Primary Acquiring Firm
And
Regional Wholesale Service (Pty) Ltd
Primary Target Firm
Panel:
AW Wessels (Presiding Member)
I Valodia (Tribunal Member)
A Ndoni (Tribunal Member)
Heard on:
23 September 2021
Order Issued on: 23 September 2021
Reasons Issued on: 6 October 2021
REASONS
FOR DECISION
[1] On 23 September 2021, the Competition Tribunal (“Tribunal”)
unconditionally approved the transaction involving Super Group Holdings (Pty) Ltd (“Super Group”) and Regional Wholesale
Service (Pty) Ltd (“RWS”).
[2] The proposed transaction involves Super Group acquiring a controlling interest in RWS.[1]
[3] Super Group is a wholly owned subsidiary of Super Group Limited (Pty) Ltd, a company listed on the Johannesburg Stock Exchange. Super Group is a supply chain management company, which deals with inter alia the sourcing, procurement, transport, and warehousing of goods and services.
[4] RWS offers regional wholesale collections and deliveries to the courier and logistics industry.
[5] The Competition Commission (“Commission”) identified horizontal overlaps in the activities of the merging parties. It assessed the impact of the proposed transaction on the following markets (without taking a definitive view regarding the precise market delineation):
5.1. the national market for the provision of courier services;
5.2. the national market for the provision of freight forwarding and clearing services; and
5.3. the national market for the provision of contract logistics and warehousing services.
[6] The Commission found that post-merger, the merger parties will have market shares of less than 15% in all of the above markets. Further, there are other companies that will continue to constrain the merger
parties in each of these markets post-merger. In addition, the Commission found that the merging parties’ business models
differ significantly and that they cannot be deemed as direct competitors.
[7] Customers and competitors raised no concerns regarding the effects of the proposed transaction on competition.
[8] The Commission also found an insignificant vertical overlap between the activities of the merging parties that we do not deal with in any detail since it is unlikely to raise foreclosure concerns.
[9] We concur with the Commission’s conclusion that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market.
[10] The merger parties submitted that there shall be no retrenchments as a result of the proposed transaction.
[11] The merger parties further submitted that RWS currently utilises, as part of its courier network, independently owned companies, the majority of which are owned by the Historically Disadvantaged Persons (HDPs) to carry out the delivery of parcels. It further provides funding to these independently owned companies through what is called “B- BBEE Spending” under enterprise development. They also submitted that the proposed merger would allow RWS to grow into new territories over the next two to three years in the Western Cape, Eastern Cape and KwaZulu-Natal. This growth plan is expected to
increase the number of independent businesses in the courier services market.
[12] We conclude that the proposed transaction does not give rise to any public interest concerns.
Signed by:Andreas Wessel Wessels
Signed at:2021-10-06 14:16:52 +02:00
Reason:I approve this document
6 October 2021
Mr. A. W. Wessels
Date
Ms. Andiswa Ndoni and Prof. Imraan I. Valodia concurring
Tribunal Case Manager: D Mogapi
For the Merging Parties: B Seleke of Fluxmans Attorneys
For the Commission: M Aphane and T Masithulela
[1] Post the transaction, the shareholding in RWS’s issued share capital will be as follows: Super Group - 58%; Hugh Randall Holdings (Pty) Ltd - 32%; and Business Express of South Africa (Pty) Ltd - 10%.
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