MBABANE – The Eswatini Competition Commission (CompCo) approved six acquisitions in the last quarter of the financial year 2022/2023.
The total transactional value of international transactions notified and approved during the fourth quarter stood at approximately E2 237 244 303, while the total transactional value for domestic transactions was at approximately E53 063 000. The total combined annual turnover of both international and domestic transactions stood at approximately E552 453 895 896.
The sectors include commercial property, insurance, agriculture, construction and wildlife sectors in Eswatini. The first approved merger or acquisition in the quarter under review was the acquisition by CIH projects no. 41 (Pty) Ltd of 100 per cent of the shares Pamtro Investments No. 11 (Pty) Ltd as well as the remaining shares in Conlog (Pty) Ltd. The acquiring firm, CIH41 is a special purpose vehicle, which does not have any employees or conduct any business operations and has its principal business address at Building 3, Ashlea Gardens Office Park, 180 Garsfontein Road, Pretoria, 0181, South Africa (SA).
Operations
The target firms are Conlog; Pamtro; Conlog Metering Solutions; and CIG Metering and their operations are based in Durban, South Africa at the Dube Trade Port with satellite offices in Lagos, Nigeria and Johannesburg, South Africa. Pamtro is controlled by Consolidated Infrastructure Group Limited, while Conlog Metering Solutions and CIG Metering are indirectly controlled by CIG. The commission considered the products of the firms and concluded that the relevant market is the supply of smart electricity meters and ancillary services in Eswatini.
There are no overlaps between the activities of the merging parties in the relevant market because the acquiring firm does not manufacture, supply or distribute electricity meters in Eswatini. The transaction was categorised as phase one because the combined market share post-merger was below 15 per cent.
Post-merger, the market shares in the relevant market, market concentration, countervailing power and barriers to entry would not be affected hence the transaction is unlikely to result in the substantial lessening of competition in the country. The transaction was approved without conditions. Another acquisition was that of the Mkhaya Trust (MKHAYA) of the entire issued share capital of ingwavuma estates proprietary limited (Ingwavuma Estates). The acquiring firm is Mkhaya, which is in the business of wildlife and tourism in the Lubombo Region. Mkhaya also owns immovable properties described as farmland in the Shiselweni Region. The target firm is Ingwavuma Estates. It is a company duly incorporated in terms of the laws of Eswatini.
The commission considered the products of the merging firms and concluded that the relevant market is wildlife reserves in Eswatini. There are overlaps between the activities of the merging parties; however, their combined market share is below 15 per cent in the relevant market. The market shares, market concentration, countervailing power and barriers to entry will slightly be affected by this proposed transaction. Post-merger Mkhaya will have a market share accretion of 1.9 per cent in the relevant market, which then will result in a total market share of 13.1 per cent. The transaction is categorised as a phase one. Therefore, the transaction was approved without conditions. Acquisition by Leif 853 (leif 853) of the entire issued share capital of Zimco Group (Pty) Ltd (Zimco Group) was also approved. In this case, the acquiring firm, Leif 853, is a private company incorporated under the laws of SA, with its principal business address at 140 North Reef Road, Elandsfontein, Ekurhuleni, Gauteng, SA.
AutoX is a South African automotive lead-acid battery manufacturer, supplying local and selected African and European markets with batteries used in a number of applications, including automobiles, light commercial vehicles, trucks, industrial, motorcycle, deep cycle and leisure applications. AutoX supplies its products in Eswatini to some customers in the automotive replacement retail and fitment domain. The target firm Zimco, is a private company registered in accordance with the laws of SA and is a producer of lead products and industrial and base minerals (including zinc, aluminium metal and alloys, related chemicals and engineering plastics).
Presence
Zimco does not have a physical presence in Eswatini. It, however, sells products and provides services in Eswatini from SA. Zimco’s activities in Eswatini are conducted through its wholly owned South African subsidiary, Dutton Plastics (Pty) Ltd. In its decision, the commission considered the products of the firms and concluded that the relevant market is the supply of plastic plumbing products in Eswatini. There are no overlaps between the activities of the merging parties in the relevant market since the merging parties are not active in Eswatini. The transaction is categorised as phase one. Post-merger, the market shares in the relevant market, market concentration, countervailing power and barriers to entry will not be affected and hence the transaction is unlikely to result in the substantial lessening of competition in the country. Therefore, the transaction was approved without conditions. Acquisition by Lidwala Insurance Company Limited of United Health Insurance Limited’s health book was approved as well.
Registered
The acquiring firm was Lidwala Insurance, a company incorporated and registered in accordance with the laws of Eswatini. Lidwala Insurance is in the provision of short-term insurance services in Eswatini. Lidwala Insurance offers custom made alternative risk transfer solutions (ART) for the insuring public and is an authorised insurer, registered with the Financial Services Regulatory Authority (FSRA). The target business was United Health Insurance’s health book. United Health Insurance is also a company incorporated and registered in accordance with the laws of Eswatini. United Health Insurance is in the business of providing health/medical insurance and is registered with FSRA. The commission considered the products of the firms and concluded that the relevant market was the provision of health insurance in Eswatini.
The transaction only related to an acquisition of an asset, the health book belonging to a failing firm. Lidwala Insurance was venturing into a new market of health insurance; as a result, there were no overlaps. As such the transaction is categorised as a phase one. The market shares in the relevant market and market concentration will not change as a result of the transaction. Other factors such as countervailing power and barriers to entry will not be affected by the transaction. As such we conclude that the transaction is not likely to result in a substantial lessening or prevention of competition in the market. Therefore, the transaction was approved without conditions. Another acquisition was that by Spark ATM Systems of the entire banking business of Altron Managed Solution.
The acquiring firm, Spark is a private company incorporated in accordance with the laws of the Republic of South Africa, with its principal business address at Spark House, 31 Transvaal St, Paarden Eiland, Cape Town, 7405. The target firm was the Banking Business of AMS, a business division of Altron TMT Proprietary Limited (Altron TMT), which is a private company incorporated in accordance with the laws of Republic of SA, with its principal business address at Altron campus, Woodlands Office Park, 20 Woodlands drive, Woodmead, Johannesburg, 2191. AMS has no physical presence in Eswatini.
Indirectly
It is, however, active in Eswatini directly through its South African operations as well as indirectly through Altron Eswatini Proprietary Limited (a subsidiary of Altron). In making the decision, the commission considered the products of the firms and concluded that the relevant market is the supply of ATM hardware, implementation, licensing, repairs and maintenance to Eswatini. The commission also considered the activities of the merging parties and found that there are overlaps in the relevant market since the proposed transaction is a foreign-to-foreign merger between two South Africa entities; therefore there was a horizontal overlap in SA. However, regarding their sales into Eswatini there is no horizontal overlap due to Altron being the only provider of their services particularly regarding the maintenance of ATM-related services.
The transaction was categorised as a phase one merger since there were no overlaps in the operations of the merging parties in the relevant market. Pursuant to the implementation of the proposed transaction, Spark would acquire control over AMS. Post-merger, the market shares in the relevant market, market concentration, countervailing power and barriers to entry would not be affected hence the transaction is unlikely to result in the substantial lessening or prevention of competition. Therefore, the transaction was approved without conditions.