8.
During the hearing held on the 22 March 2005, the Tribunal asked the Commission to explain its differing view of the relevant market:
MS KHUMALO: The Commission looked at asset management as a whole and so we took everything that forms part of wealth creation as asset management
hence we looked at asset management as the market for this transaction. So we just looked at the all the subsections of asset management,
which contributes to the creation of wealth and encompassed it under asset management.
9.
While we are of the view that is unnecessary to make a definitive finding on the relevant market, for these purposes, we will accept
the parties’ definition of two separate markets, Both the Commission and parties were in agreement that the relevant geographic
market is national.
Property Management
10.
The parties provided the following market share estimates for the largest participants in the property management market:
Table 1: Property Management
| Firm |
% Market share |
| Broll |
17.5 |
| Gensec |
15 |
| Investec |
8.6 |
| Old Mutual Property |
7.2 |
| Liberty |
6.3 |
| Rand Merchant Bank |
5.1 |
| Marriott |
4.9 |
Source: Taurus Report and parties’ estimates
11.
Post merger, the merged entity will account for approximately 12.1% of the property management market. According to the parties, customers
have strong countervailing power and can, without cost, switch service providers should prices increase or service levels drop.
Asset Management
12.
The parties similarly provided market share estimates for the largest participants in the asset management sub markets. Firstly, the
market for institutional and retail asset management:
Table 2: Institutional and Retail asset management
| Firm |
% Market share |
| Old Mutual Asset Management |
20.3 |
| Sanlam Investment Management |
17.3 |
| Stanlib |
12.7 |
| RMB Asset Management |
10.4 |
| Investec Asset Management |
8 |
13.
Secondly, the market for life assurance products:
Table 3: Life Assurance Products
| Firm |
% Market share |
| Liberty |
28.3 |
| Old Mutual Life Assurance Company |
22.4 |
| Momentum |
14.4 |
| Sanlam |
12.4 |
| Metropolitan |
7 |
14.
According to the parties, in both the sub markets for institutional and retail asset management and for life assurance products, Marriott
Asset Management has a share of less than 1%. The parties submit that this is insignificant and therefore unlikely to impact competition in this market.
15.
The parties provided the following data for the market for property asset management:
Table 4: Property Asset Management
| Firm |
% Market share |
| Liberty |
12.5 |
| Sanlam/Gensec |
10.5 |
| Old Mutual Property |
8 |
| Investec |
7 |
| Madison |
7 |
| Marriott Asset Management |
4.2 |
| Rand Merchant Bank |
3.7 |
16.
In the market for property asset management, the merged entity’s combined market share will be 12,2%. The parties submit that
the market shares must be viewed in the context of the broad asset management markets, and that since Old Mutual Property provides
these services only to Old Mutual Life Assurance Company (South Africa) Limited and to Old Mutual Asset Managers, Old Mutual Property itself does not compete in this market.
17.
Finally, the market for unit trust management:
Table 5: Unit Trust Management
| Firm |
% Market share |
| Stanlib |
15.8 |
| ABSA |
10.9 |
| Sanlam |
9.1 |
| Investec |
8.6 |
| M-Cubed |
8.1 |
| Old Mutual Unit Trust Managers |
7.6 |
| Allan Gray |
7 |
18.
According to the parties Marriott Unit Trust Management Company accounts for approximately 1.6% of this market. The parties further
submit that the combined market share of approximately 9.2% will not have a substantial effect on competition in the unit trust management
market when regard is had to the larger market shares of the competitors listed above and the extensive countervailing power of customers.
19.
Having regard to the submissions made by the parties regarding the markets for property management and asset management (including
all the sub markets identified above) as well as the submissions made by the Commission regarding the broad asset management market,
we agree that the transaction is unlikely to substantially prevent or lessen competition.
20.
There are no public interest issues which arise.
Conclusion
21.
We accordingly approve the transaction for the above reasons.
9 May 2006
.RTF of original document