HUMULANI Marketing, controlled by Invicta Holdings, and High Power Equipment received unconditional approval of their merger by the Competition Tribunal on Friday after the tribunal rejected conditions proposed by the Competition Commission aimed at addressing competition concerns.
The tribunal has not given its reasons for rejecting the conditions proposed by the commission.
Last year, several prohibitions of transactions by the commission were taken on review before the tribunal, which either approved the transactions or approved them with conditions. These included a horse-racing merger in the Western Cape and a merger between Life Healthcare and Joint Medical Holdings.
The commission had been without a head of mergers and acquisitions for more than a year after the resignation of Martin van Hoven in November 2011. Competition law experts expressed concern at the end of last year about the lack of continuity within the division after managers were rotated in the position.
The new head of the mergers and acquisitions division, Ibrahim Bah, started only in January this year.
The commission was concerned the Humulani transaction could facilitate collusion in the market as Invicta’s operating division, Capital Equipment Group, and High Power Equipment were both involved in distributing construction equipment. With the transaction High Power will become a wholly owned subsidiary of Humulani.
Invicta said the acquisition of High Power Equipment was a strategic investment that would broaden its product offering to the plant hire, construction, quarrying and mining industries in Africa.
It said Capital Equipment Group holds the Hyundai earth-moving and construction equipment agency for South Africa and surrounding countries. It will keep the Hyundai distribution separate from its other operations.
The parties told the tribunal the condition of a ban on cross-directorship between the Capital Equipment and High Power was neither "proportionate, nor rational or enforceable". The tribunal approved the transaction without the condition. Another proposed condition, imposing obligations in terms of information exchange between the two firms, was also rejected.
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