Tsogo Sun Gaming (Pty) Ltd v Millenium Casino Ltd (58/LM/Aug09) [2010] ZACT 10 (4 February 2010)
- Citation
- [2010] ZACT 10
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Y Carrim, N Theron, A Wessels
- Case number
- 58/LM/Aug09
More details
- Court
- Competition Tribunal
- Panel
- Y Carrim, N Theron, A Wessels
- Case number
- 58/LM/Aug09
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed transaction is essentially an internal restructuring within the HCI group, consolidating the indirect shareholding in Tsogo Sun KZN under Tsogo Gaming. Since Tsogo Gaming already indirectly controlled Tsogo Sun KZN prior to the merger, the transaction does not alter the competitive landscape or market structure. There is no overlap in activities that would raise competition concerns, and no public interest issues were identified. Accordingly, the Tribunal concluded that the merger is unlikely to substantially prevent or lessen competition in any relevant market and approved the transaction unconditionally.
Court disposition
Merger approved unconditionally.
Orders
- The merger between Tsogo Sun Gaming (Pty) Ltd and Millennium Casino Limited is approved unconditionally.
02
Material facts
Parties
Tsogo Sun Gaming (Pty) Ltd
Applicant Counsel: Nortons Inc.Millennium Casino Limited
RespondentAmounts and remedies
- Millennium's Shareholding in Durban Add Venture (%): 74.67
- Millennium's Shareholding in Adventure World Management (%): 60
- Adventure World Management's Shareholding in Durban Add Venture (%): 0.39
03
Procedural history
Posture
Merger Approval / Reasons for Decision
04
Questions and positions
Legal issues
- 01
Whether the proposed merger will substantially prevent or lessen competition in any relevant market.
- 02
Whether any public interest concerns arise from the transaction.
Party arguments
- Applicant
- The merging parties argued that the transaction is an internal restructuring within the HCI group, consolidating HCI's indirect shareholding in Tsogo Sun KZN under Tsogo Gaming. They submitted that Tsogo Sun KZN is already indirectly controlled by Tsogo Gaming pre-merger, and the transaction will enable optimal management of casino interests through a single entry point.
- Respondent
- The Competition Commission did not oppose the merger and concurred that the transaction is an internal restructuring with no impact on competition. The Commission confirmed that Tsogo Sun KZN is already controlled by Tsogo Gaming and that no public interest concerns arise.
05
Court’s reasoning
Legal principles
- 01
Competition Act, No. 89 of 1998
A merger that does not result in a change of control or market structure is unlikely to substantially prevent or lessen competition.
- 02
Competition Tribunal precedent
Internal restructurings within a group of companies generally do not raise competition concerns unless they affect market dynamics.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed transaction is essentially an internal restructuring within the HCI group, consolidating the indirect shareholding in Tsogo Sun KZN under Tsogo Gaming. Since Tsogo Gaming already indirectly controlled Tsogo Sun KZN prior to the merger, the transaction does not alter the competitive landscape or market structure. There is no overlap in activities that would raise competition concerns, and no public interest issues were identified. Accordingly, the Tribunal concluded that the merger is unlikely to substantially prevent or lessen competition in any relevant market and approved the transaction unconditionally.
Obiter and limits
- The Tribunal noted that internal restructurings of this nature are generally unlikely to raise competition concerns unless there is a material change in control or market structure.
- No public interest issues were identified in this transaction, reaffirming the principle that not all mergers require conditions or remedies.
Court disposition
Merger approved unconditionally.
- The merger between Tsogo Sun Gaming (Pty) Ltd and Millennium Casino 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: 58/LM/Aug09
In the matter between:
Tsogo Sun Gaming (Pty) Ltd Acquiring Firm
And
The Millennium Casino Limited Target Firm
Panel : Y Carrim (Presiding Member)
N Theron (Tribunal Member)
A Wessels (Tribunal Member)
Heard on : 07/10/2009
Order issued on : 07/10/2009
Reasons issued on : 04/02/2010
Reasons for Decision
Approval
On 7 October 2009 the Competition Tribunal (“Tribunal”) unconditionally approved the merger between the above-mentioned
parties. The reasons for approval follow below.
Parties and their activities
The primary acquiring firm is Tsogo Sun Gaming (Pty) Ltd (“Tsogo Gaming”), a wholly owned subsidiary of Tsogo Sun Holdings (Pty) Ltd (“Tsogo Holdings”). Tsogo Investment Holding Company (Pty) Ltd (“Tsogo Investment“) holds 51% of the issued share capital of Tsogo Holdings; SABMiller plc (“SABMiller“) holds the remaining 49%. Tsogo Investment is controlled by Hosken Consolidated Investments Limited (“HCI”), a public company listed on the JSE Limited.
The Tsogo Sun group’s activities relate to casinos (offering gaming, dining, entertainment and conference facilities) and hotels. HCI is an investment holding company; its principal areas of investment involve gaming, hotels and leisure; media and
broadcasting; transport; energy; property and exhibitions; industrial; food and beverage; and clothing and textiles. SABMiller’s interests relate to brewing, bottling and distribution.
The primary target firm is The Millennium Casino Limited (“Millennium”), a wholly owned subsidiary of Johnnic Holdings Limited (“Johnnic”). Johnnic, in turn, is a wholly owned subsidiary of HCI. Millennium has a 74.67% shareholding in Durban Add-Venture Limited (“Durban Add-Venture”) and a 60% shareholding in Adventure World Management (Pty) Ltd (“Adventure World Management“)1. According to the merging parties, Millennium’s only real asset is its indirect2 40% shareholding in Tsogo Sun KZN (Pty) Ltd (“Tsogo Sun KZN”). Tsogo Gaming indirectly holds the remaining 60%, i.e. majority, shareholding in Tsogo Sun KZN and therefore has control of Tsogo Sun KZN, according to the merging parties.
Millennium, Durban Add-Venture and Adventure World Management are purely holding companies and provide no services. Tsogo Sun KZN owns and operates the Suncoast Casino in Durban.
Proposed transaction
In terms of the proposed transaction, Tsogo Gaming intends to acquire the entire issued share capital of Millennium from Johnnic.
Consequently Tsogo Gaming will post merger wholly own Tsogo Sun KZN. The proposed transaction is principally an internal restructuring
within the HCI group of companies which consolidates HCI’s indirect shareholding in Tsogo Sun KZN in Tsogo Gaming.
Rationale for the transaction
According to the merging parties, the proposed transaction will enable the HCI group to manage its casino interests optimally through a single entry point, being Tsogo Investment.
Competition analysis
The only overlap between the activities of the merging parties in any relevant market relates to their joint shareholding in Tsogo Sun KZN. As stated in paragraph 6 above, the proposed transaction is effectively an internal restructuring and Tsogo Sun KZN is already indirectly controlled by Tsogo Gaming premerger. As such, competition is not substantially prevented or lessened in any relevant market as a result of this proposed deal.
CONCLUSION
The Tribunal concludes that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market. Furthermore, no public interest concerns arise from this transaction. Therefore, the proposed transaction is approved
unconditionally.
____ 04/02/2010
A Wessels
DATE
Y Carrim and N Theron concurring
Tribunal Researcher: Londiwe Senona
For the merging parties: Nortons Inc.
For the Commission: M Matsimela (Mergers & Acquisitions)
1 Adventure World Management holds 0.39% of the shares in Durban Add-Venture.
2 Through its subsidiary Durban Add-Venture.
3
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