Approval
[1].
On 2 August 2006, the Competition Tribunal unconditionally approved the proposed merger between the abovementioned
parties. The reasons for the decision follow.
Parties
[2].
The primary acquiring firm is Liberty Star Consumer Holdings (Pty) Ltd (“Libstar”). Abrina
2382(Pty) Ltd (“Abrina”) controls Libstar. Abrina is a wholly owned subsidiary of the Royal Bafokeng Finance (“Pty”)
Ltd (“RBF”), which is in turn a wholly owned subsidiary of the Royal Bafokeng Nation (“RBN”). The primary
target firm is Chet Industries Ltd (“Chet Industries”). The shareholders in Chet Industries are Chester Industries Ltd
82.71% (Chester Industries); Kessler family Trust 14.66% and The Chet Share Incentive Share Trust 2.43%. Milton Levine who is the managing director of Chester Industries controls Chester Industries.
Transaction
[3].
This transaction involves the acquisition of the entire issued share capital of the Chet Industries and
its subsidiaries by Libstar. Subsequently, a newly formed subsidiary of Libstar will acquire the business assets of Chet Industries
from Libstar. The newly formed subsidiary referred to above is Calshelf Investment 125 (Pty) Ltd to be renamed Chet Chemicals (Pty)
Ltd (“Newco”). Libstar will hold 70% of the issued shares in Newco, and the Kessler Family Trust holds the remaining
30%. Other than Newco Libstar controls Dickon Hall Foods (Pty) Ltd (“Dickon Hall”) and will also control retailer Brands
(Pty) Ltd (“Retailer Brands”)
Reasons for the transaction
[5].
For Libstar the transaction was motivated by its desire to enter the market for the manufacture, sale,
marketing and distribution of household products such as laundry detergents, fabric conditioners, dishwashing systems, all purpose
cleaners, bath and shower additives, liquid and bar soaps, pre-wash soap/soakers and bleach, and perceives this proposed transaction
as an opportunity to do so. Chet Industries believes that the growth of its business will depend on its ability to improve its black
economic empowerment credentials and to generally reinvent itself by becoming more relevant to the South African commercial landscape.
The merging parties activities
[6].
Royal Bafokeng Nation through its wholly owned subsidiary Bafokeng Finance controls Libstar. Bafokeng Finance
is an investment holding vehicle for the Royal Bafokeng Nation’s non-mining interests and does not sell any products nor provide
any services for its own account. Libstar is an investment holding company, which holds interests in companies within the food industry.
Abrina holds 76% of the issued shares in Libstar. Abrina is a wholly owned subsidiary of the Royal Bafokeng Finance. Retailer Brands
is active in the business of manufacturing and distribution of dry food products such as soups, jellies, spices, sauces, baking powder,
colourants, essences and cornflour, both under its own brand names, as well as for retailers and wholesalers house brands. Dickon
Hall manufactures and packages branded “wet” food products, such as sauces and condiments. Through some of its subsidiaries,
the Bafokeng group are active in the following industries namely, mining, consruction, packaging, insurance, finance and information
Technology.
[7].
Chet Industries is a manufacturer, distributor and marketer of households and laundry detergents products,
both under its own brand name as well as under retailers and wholesalers house brands.
Relevant Market
[8].
According to the Commission neither the acquiring nor the target firm supply products that can be regarded
as substitutes, and accordingly no overlap occurs with regard to the activities of the parties. The Commission is also of the view
that no vertical integration issues arise from the transaction since there is no horizontal overlap between the activities of the
merging parties. We agree with the Commission’s assessment.
Effect on Competition
[9].
The transaction will not substantially prevent or lessen competition, as there are no overlaps or vertical
integration issues arising from the transaction.
Public Interest
[10].
No public interest issues arise from this merger
Conclusion
[11].
Having regard to the above, we conclude that the merger will not lead to a substantial lessening of competition. Accordingly we agree
with the Commission’s recommendation that the transaction be approved unconditionally.
_______________
25 August 2006
N Manoim Date
Concurring: L Reyburn and M Mokuena
Tribunal Researcher
: J Ngobeni
For the merging parties
: Portia Twala and Andile Nikani, Fluxmans Attorneys
For the Commission
: Maarten Van Hoven, Mergers
and Acquisitions
.RTF of original document