Automated Summary
Key Facts
The Competition Tribunal of South Africa approved the merger between Corvest (Pty) Ltd and Merchant Commercial Finance (Pty) Ltd (M Factors) on 2002-10-16. Corvest acquired 65% of M Factors' shares from Corpcapital, with the remaining 35% retained by the Alexsa Trust. The transaction aims to facilitate Corvest's horizontal expansion in the factoring services market. The relevant market is defined as the provision of factoring services in South Africa, with M Factors' market share estimated between 6-12% by the parties (per the Commission's report, it is lower). The Commission concluded the merger's post-transaction market share remains insignificant and unlikely to harm competition. No adverse public interest concerns, including job losses, were identified.
Issues
The Competition Tribunal evaluated the merger between Corvest and M Factors to determine if it would substantially lessen competition in the factoring services market. The Commission analyzed market shares, noting M Factors' pre-merger share was estimated between 6-12% but likely lower. Key competitors included Cutfin (ABSA), Nedliberate (Nedcor/BOE), and Standard Bank Factors. The tribunal concluded the post-merger market share remained insignificant, with low barriers to entry and customer countervailing power, supporting unconditional approval.
Holdings
The Competition Tribunal unconditionally approved the merger between Corvest and M Factors, determining that the post-merger market share of the merging parties is insignificant and unlikely to adversely impact competition. The decision also noted no regulatory barriers to entry, low sunk costs, and strong countervailing power of customers, as well as no adverse public interest concerns such as job losses.
Judge Name
- N. Manoim
- D. Lewis
- U. Bhoola
Passage Text
- The rationale for the transaction is to facilitate Corvest's horizontal expansion in the financial services sector, and more particularly in the factoring services market. The parties submit that the transaction is in anticipation of increased international consolidation and competition, capital demands of counterparties and regulators, efficiency requirements, costly technology and a shortage of financial services skill in South Africa.
- the parties' post merger market share is insignificant and unlikely to adversely impact on competition in the market.