Automated Summary
Key Facts
The Competition Tribunal of South Africa unconditionally approved the merger between Dunns Stores (Pty) Limited and Shoe City Holdings (Pty) Limited on 13 June 2005. Pepkor Limited, through its subsidiary Dunns, acquired 90% of Shoe City, with Pepkor Holdings Limited retaining ultimate control. Pre-merger, Pepkor held 18.7% of the broader footwear market, and Shoe City held 4.7%. Post-merger, the combined entity would have 23.5% market share, becoming the third-largest footwear retailer after Edcon (34%) and Woolworths (25%). The Tribunal concluded that the merger would not substantially lessen competition, as Pepkor's market share increase in each segment remained relatively slight, and significant competitors like Edgars and Foschini Group continued to operate.
Issues
The primary legal issue addressed was determining if the merger between Dunns Stores (Pty) Limited and Shoe City Holdings (Pty) Limited would prevent or substantially lessen competition in the footwear retailing market. The Tribunal evaluated market shares, noting Pepkor's 18.7% and Shoe City's 4.7% in the broader footwear market, with the merged entity projected to hold 23.5%. The Commission contended that while new entrants could face high barriers to creating a national chain, the accretion in market share post-merger would be relatively slight. The Tribunal concluded that competition would remain in the market and approved the merger unconditionally.
Holdings
The Competition Tribunal unconditionally approved the merger between Dunns Stores and Shoe City Holdings, determining that the transaction would not substantially prevent or lessen competition in the footwear retailing market post-merger.
Remedies
The Competition Tribunal approved the merger unconditionally, finding that it would not substantially prevent or lessen competition in the footwear retailing market.
Legal Principles
The Tribunal applied competition law principles to evaluate whether the merger between Dunns and Shoe City would substantially lessen competition in the footwear retailing market. It concluded that post-merger market shares (Pepkor 23.5%, Shoe City 4.7%, merged entity 23.4%) and the presence of other major players like Edcon and Woolworths indicated competition would remain unaffected.
Judge Name
- David Lewis
- Yasmin Carrim
- Norman Manoim
Passage Text
- 13. The following figures reflect the market shares in the broader footwear market: Edcon (34%); Woolworths (25%); Pepkor (18.7%); Foschini Group (14%); Shoe City (4.7%); Mr Price (2%); and Others (1.8%).9 While the Commission conceded that penetrating this market with a few outlets/stores is relatively easy, it nevertheless contended that the barriers to establishing a new national chain were extremely high. However it pointed out that the accretion in market share in each of the market segments is relatively slight.
- 16. In light of the information submitted to us, the Tribunal's view is that competition would remain in the footwear retailing market post-transaction. We agree with the Commission's submission that the transaction would not prevent or lessen competition substantially. We accordingly approve this merger unconditionally.
- 12. The merging parties provided us with the market share figures which are reproduced below. Retailer | Men's footwear | Ladies' footwear | Children's footwear | Total Footwear --- | --- | --- | --- | --- **Pepkor** | 15.1% | 10.7% | 36.2% | 18.7% **Shoe City** | 8.7% | 3.7% | 2% | 4.7% **Merged entity** | 23.8% | 14.3% | 38.1% | 23.5%