Tsebo Outsourcing Group (Pty) Ltd and Equality Food Services (Pty) Ltd (106/LM/Dec06) [2007] ZACT 35 (11 May 2007)

Tsebo Outsourcing Group (Pty) Ltd and Equality Food Services (Pty) Ltd (106/LM/Dec06) [2007] ZACT 35 (11 May 2007)

The Tribunal found that the relevant market is the national market for catering services. The merging parties' combined market share post-merger would be approximately 12%, which is not significant enough to raise competition concerns. The market is characterized by strong countervailing power from clients, who can choose to provide catering services in-house, and low barriers to entry, as demonstrated by the entry of several new firms in recent years. The Tribunal agreed with the Commission's assessment that the merger is unlikely to substantially prevent or lessen competition. No significant public interest issues were identified, and the transaction was approved without conditions.

Citation
[2007] ZACT 35
Parties
Applicant: Tsebo Outsourcing Group (Pty) Ltd; Respondent: Equality Food Services (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
11 May 2007
Case Number
106/LM/Dec06
Procedural Posture
Merger Control / Approval
Outcome
Merger approved without conditions.
Judges
Y Carrim, N Manoim, M Mokuena
Legal Topics
Merger Control, Market Definition, Barriers to Entry, Countervailing Power
Competition Law Commercial and Corporate Merger Control Market Definition Barriers to Entry Countervailing Power

Case Brief

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Parties

Tsebo Outsourcing Group (Pty) Ltd

Applicant

Equality Food Services (Pty) Ltd

Respondent

Procedural Posture

Merger Control / Approval

Legal Issues

  1. 1 Whether the proposed merger between Tsebo Outsourcing Group (Pty) Ltd and Equality Food Services (Pty) Ltd is likely to substantially prevent or lessen competition in the national market for catering services.
  2. 2 Whether there are any significant public interest concerns arising from the transaction.

Ratio Decidendi

The Tribunal found that the relevant market is the national market for catering services. The merging parties' combined market share post-merger would be approximately 12%, which is not significant enough to raise competition concerns. The market is characterized by strong countervailing power from clients, who can choose to provide catering services in-house, and low barriers to entry, as demonstrated by the entry of several new firms in recent years. The Tribunal agreed with the Commission's assessment that the merger is unlikely to substantially prevent or lessen competition. No significant public interest issues were identified, and the transaction was approved without conditions.

Court Disposition

Merger approved without conditions.

Orders

  • The merger between Tsebo Outsourcing Group (Pty) Ltd and Equality Food Services (Pty) Ltd is approved without conditions.