Tourvest’s travel arm consists of three divisions: Inbound Tourism Services Unit, Outbound Travel Solutions and a so-called
“Dotcom unit”.
ϖ
Inbound Travel
The Inbound Tourism Services Unit offers travel tour operators and product companies targeting the incoming overseas and regional
travel market. It comprises a range of service operators including Autshumatu Marine Services, (offering ferry and leisure cruises in the Western Cape);Baz Bus(a backpacker hop-on hop-off bus service to tourist centers around the country) ; Africa Shongololo Express(a train cruise service around the country); Crown Travel, Incentive Touring, Welcome Tours & Safaris, Willson Collins Travel (tour operators specializing in individual, group and specialized scheduled holidays) as well as Sunbound Toursand Safaris( safari drives).
ϖ
Outbound Travel
Tourvest’s outbound travel arm is grouped with financial services and comprises three categories of business, namely outbound
travel agents, wholesalers and product providers; adventure tourism & safari operators and foreign exchange. Well-known brands
include Seekers Travel, American Express Travel, Starlight Cruises, Safpar White River Rafting and Wild Horizons Elephant-back Safaris.
ϖ
Dotcom Unit
Tourvest’s dotcom unit houses a range of e-commerce internet initiatives targeted at both the inbound and outbound tourism community.
Well known websites include travel.co.za; amex.co.za and lastminute.com.
(ii) Retail Merchandise
6.
The Retail Merchandise division houses the group’s tourist retail business, designed to focus on inbound, foreign tourists.
Outlets are predominantly strategically-based at Johannesburg and Cape Town International Airports and major shopping centres. They
include Curio Mega-Store, Big 5 Duty Free Store, Derek Bauer, Tanur Jewellery.
7.
The Commission identified the area of overlap between the parties’ services as being that of providing the services of inbound tour operators to the incoming tourist market. Tourvest is not involved in either the transport or tour guide services aspects of inbound tourism
directly. Similarly, Imperial does not provide any outbound or retail merchandise tourism services.
8.
The Commission identified the geographical market as the whole of South Africa since both companies operate throughout South Africa.
9.
The Tribunal agrees with this definition of the relevant market.
Impact on competition
10.
The Commission calculated the market shares for the relevant market, inbound tour operator services,
as follows:
| Firms |
No. of incoming tourists |
Market share |
Total |
4,6 million |
100% |
Source: SATour figures
11.
Accordingly, this would leave the parties with a 3.12% post-merger market share in the relevant
market. The Commission stated that exact empirical data was not available. Conversations the Commission had with the South African Tourism
Service Association, (“SATSA”) revealed that these were not large players and that they were in no form, dominant or
to be dominant post merger.
12.
However at the hearing, the parties indicated that the inbound tour market is further stratified
into “niche” markets – the coach-based package tours and the “FIT”, or individual itinerary-based traveller
market. Accordingly, on the narrower assessment of the market, it would seem that the Commission’s market share estimates are
somewhat general and could under-state the true position. It would appear that tour operators operate in differentiated “niche”
markets. No market share information was presented to reflect this market.
13.
The parties conceded at the hearing that the largest operators in the small niche coach-based tour
market were Tourvest’s Welcome operation and Imperial’s Springbok-Atlas brand. Notwithstanding this admission, they allayed
any competition concerns raised by the merger of the two largest competitors in this niche market by stating that the packaged-tour
market is presently relying on a rapidly-dwindling customer base. Consumers are now choosing FIT, itinery-based tours, a market for
which there are countless operators. As a result, a great deal of rationalization is required to keep pace with the changing profile
of the industry. In order to respond to the dynamic nature of the industry, the parties are hoping to achieve significant synergies,
economies of scale and rationalization benefits through this merger.
Barriers to Entry
14.
SATSA indicated that there are 650 registered tour operators straddling all niche markets. The larger
players in the inbound tourism industry include RCI, Thompsons, Into Africa, Wilderness Tours and Safaris, Hilton Ross, Magari Safaris
and ERM. There are also many smaller operators.
15.
It would appear that entry into the tour operator market is relatively easy. Tourism is very accessible,
with minimal capital outlay requirements. From the parties’ submissions, it would appear that the inbound tourist customer
base is very sophisticated and discerning. They are likely to “shop around” and compare prices in an industry where pricing
is very transparent. Therefore any arbitrary price increase by the merging parties via their tour operators would in all likelihood
result in consumers merely switching to alternate (cheaper) operators.
16.
The Tribunal therefore endorses the Commission’s view that this merger will not result in
the substantial lessening or prevention of competition in any market.
Public Interest Considerations
17.
The merger raises no public interest concerns since Tourvest and Imperial will continue to conduct
their operations separately.
_____________
11 July 2001
N. Manoim
Date
Concurring: D.H. Lewis, P. Maponya
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