2.
The target firm is Boco (Pty) Ltd, (“Boco”), which controls Delta Motor Corporation (Pty) Ltd (“Delta”). Boco is merely a private
holding company with respect to Delta. GM is the largest shareholder in Boco.
3.
Delta is a wholly owned subsidiary of Boco. It is the former GMSA. IN 1986 GM disposed of its
shares in GMSA to a management buy-out group. Boco was created as a holding company to faciliate the 1986 Disposal Agreement. GM
acquired 49% of Boco in 1997, retaining the option to acquire the remaining shares. Delta is a licensee of GM with respect to Opel
Corsa and Astra passenger cars in RSA.
The Merger Transaction
4.
The transaction comprises the acquisition of 51% of Boco by GM, to take their existing 49% to 100%. Post-merger, Boco, including its
subsidiaries, will become a subsidiary of GM.
Merger Rationale
5.
GM wants to re-enter SA motor vehicle industry again after it withdrew in 1986 due to economic
and political sanctions. They would like to augment their product and service range in RSA and increase their exports from South
Africa. Delta is in turn promised access to international markets and procurement advantages.
The Relevant Market
6.
GM, one of the largest motor manufacturers worldwide manufactures and sells motor vehicles
under the brands, Cadillac, Buick, Chevrolet, Saab, Saturn, etc. In South Africa the only vehicles GM sells in the country, other
than through Delta, are Saab vehicles which are distributed by an independent dealer network.
7.
Delta’s subsidiaries include Delmot Properties (Pty) Ltd, DAD Holdings Limited, Stainless
Precision Components (Pty) Ltd, Precision Exhaust Systems (Pty) Ltd, DMC Holdings, and Global Logistics Services (Pty) Ltd. Its largest
shareholder is GM.
8.
Delta is the fifth largest automotive company in RSA with an approximately 11.5% share of the
motor vehicle market. It has two assembly plants in PE. It assembles supplies and sells the following motor vehicles:
•
Isuzu - pickups, recreational vehicles, medium and heavy trucks -under license from Isuzu Motors Limited, Japan and
•
Opel Corsa, Astra passenger vehicles under License from GM’s subsidiary, Adam Opel.
9.
Delta also distributes Opel and Suzuki vehicles in RSA.
10.
The activities of the other subsidiaries are not relevant to this transaction.
11.
The overlap therefore occurs in that both GM and Delta manufacture, assemble and supply motor vehicles
in RSA (wholesale). In particular both parties are directly involved in the passenger market and only Delta is involved in the light,
medium and heavy commercial vehicle markets.
Geographical Market
12.
According to the Commission, this market is national since the parties’ motor vehicles are
supplied nationally throughout RSA.
Impact on competition
Horizontal
Passenger Cars
13.
The parties assert that the market shares of the merging parties for the passenger car market as a whole is 7.55% (including Cadillac,
Chevrolet, Isuzu, Opel, Saab and Suzuki).
14.
Therefore, in the passenger motor vehicle market, GM’s license to Delta to assemble and distribute
Opel and Astra cars will not change post-merger. Furthermore, the market shares in the various segments are too small to warrant
concern. Accordingly there will be no material change in market structure as a result of this transaction.
Commercial Cars
15.
Similarly, in the light, medium and heavy commercial vehicle categories, there will be no material
change in market shares post-merger.
Vertical
16.
GM Plats (GM Subsidiary) acquires and sells PGMs used in the production of catalytic converters.
PES (Delta Subsidiary) makes catalytic converters. GM Plats therefore performs an intermediary function for General Motors by applying
PGM’s to a number of catalytic converters or manufacturers in South Africa, one of them being Precision Exhaust Systems, a
wholly owned subsidiary of Delta.
17.
However, GM Plats only supply PGMs for use as catalytic converters in GM vehicles. GM Plats only
supplies these PGM’s to companies that manufacture for the GM group. So, any catalytic converter using PGM’s from GM
Plats ultimately finds its way into a GM vehicle. Therefore there is no potential for rivals of GM to be foreclosed and no vertical
concerns arise as this aspect of GM’s business has always and will continue to stay within the GM group.
Conclusion
We conclude that the merger will not lead to a substantial lessening of competition. The Tribunal therefore approves the transaction
unconditionally. There are no public interest concerns which would alter this conclusion.
_____________
10 February 2004
N. Manoim
Date
Concurring: M. Holden, P. Maponya
For the merging parties:
Bowman Gilfillan Attorneys
For the Commission:
M. Mohlala and K. Ramathula, Competition Commission
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