The relevant market
Edcon trades predominantly in the retailing of clothing, footwear, accessories and cellular phones throughout South Africa and in
neighboring countries. Edcon’s major retail formats are Edgars, Jet, Sales House, Red Square, Cuthberts, Smiley’s Wearhouse
and ABC, which target the lower-middle to upper-middle income groups.
Through its recently acquired Super Mart stores, which are large discount departmental stores aimed at the middle to lower income
groups, it sells electrical appliances and sound equipment, house and kitchenware, DIY products, flooring, blankets and linen, jewelry,
beauty products and cosmetics, music and video, schoolwear, stationery, toys and luggage. It also offers a full range of clothing
for men, ladies, kiddies and infants.
CNA operates mainly as a book and stationery retailer. It also sells newspapers and magazines, audio and audio-visual products (music,
video & DVDs) greeting cards and gift wrap, photographic development and printing services, toys, interactive games, software,
cellular communication products, confectionery and an assortment of collectables.
The following categories of product are sold by CNA and Edcon:
1.
Cellular telecommunication services
2.
Audio and audio-visual products
3.
Toys
4.
Stationery
With regard to the cellular telecommunication market the profile of CNA’s customers corresponds to a large extent with that
of Edcon’s customers i.e. extending from lower-middle to upper-middle income families, with the majority in the middle-income
market.
With regard to the audio and audio-visual products, toys and stationery, sold by CNA and Super Mart, the customer profile, the product
range and quality, the different store formats and the store location indicate that the merging parties do not compete in the same
relevant product markets. For example Super Mart caters for different audio and audio-visual tastes and according to the merging
parties the degree of overlap between Super Mart and CNA’s repsective product offerings in terms of music and audio-visual
content is no more than 8-10%. The parties estimate that the degree of overlap of similar products between Super Mart and CNA in
the toys category is no more than 15% and in the stationery product market, the top 10 sellers list of each merging party, indicates
that they focus on different consumer groups.
CNA and Edcon buy merchandise, set prices and advertise their products on a national level. We therefore agree with the Commission
that the geographic market is national for each of the relevant product markets.
Effect on Competition
Since Edcon and CNA do not compete in the same relevant product markets for audio and audio-visual products, toys or stationary we
will only consider the effect on competition in the cellular telecommunication market.
There are a number of competitors in the cellular telecommunication market. The following competitors are the largest players in the
pre-paid cellular market:
•
Vodacom
25,7%
•
MTN
15,4%
•
Furniture Stores
10.3%
•
Pick ‘n Pay
6.9%
•
Makro
5.1%
•
Dion
5.1%
The merged entity’s market share will be 8.6%. The Competition Commission, in its recommendation, found the cellular telecommunication
market highly competitive and unconcentrated, with low barriers to entry.
We agree with the Competition Commission’s recommendation and find that the merger will not substantially prevent or lessen
competition in any of the relevant markets. Since the merger will not adversely affect competition we do not need to consider the
additional fact that CNA is also a failing firm.
Public Interest Issues
The transaction does not raise any public interest grounds.
18 November 2002
N. Manoim
Date
Concurring: F. Fourie, M. Holden
For the merging parties: Werksmans Attorneys
For the Competition Commission: A Coetzee, Legal Services Division
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