The Competition Authority has declined to approve the proposed acquisition of assets and cession of the main contract belonging to 4Ms Group Holdings (Pty) Ltd by Ltd, citing competition concerns.
Announcing the decision on 13th January 2017, the Authority said it rejected the acquisition on the grounds that the facts, analysis and conclusions of the assessment have shown that there are competition and public interest concerns that arise in the line haul transportation services in the Botswana market on account of the proposed acquisition.
The Authority said it took cognisance of the fact that the proposed transaction is likely to result in reduced competition due to the removal of a competitor in the line haul transportation services market, implementation of the proposed merger is expected to result in the merged entity attaining a dominant position and that the proposed transaction is expected to result in retrenchments and citizen disempowerment.
In declining the proposed merger, the Authority further outlined some conditions.
“Given the competition and public interest concerns identified in this proposed transaction, and the fact that Transport Holdings (Pty) Ltd/Mulbridge Transport (Pty) Ltd is the only other entity apart from 4Ms having a contract with Kgalagadi Breweries (Pty) Ltd that expires in January 2020; Transport Holdings (Pty) Ltd/Mulbridge Transport (Pty) Ltd or any other entity related in anyway with Transport Holdings (Pty) Ltd/Mulbridge Transport (Pty) Ltd is restrained from participating in the tender to be issued by KBL upon the expiry of the existing 4Ms contract with KBL in October 2017, and for the entire period leading up to the end of the Transport Holdings (Pty) Ltd/Mulbridge Transport (Pty) Ltd contract in January 2020, including any extension period that may be granted thereafter,” said a statement from the Authority.
The acquiring enterprise, Transport Holdings (incorporated in Botswana), is owned 80% by Imperial Holding Group (incorporated in South Africa) and the remaining 20% is held by a citizen of Botswana Mr. Anthony Lee, the Managing Director of Transport Holdings. Transport Holdings, together with its subsidiaries are operational in Botswana, South Africa, Mozambique and Namibia.
The target enterprise, 4MS, is a company incorporated in Botswana. It was established in 2004 as a Citizen/Driver Empowerment Scheme by Kgalagadi Breweries Ltd (KBL), and it is in the line haul transport services market with 97% of its business coming from KBL.
The Competition Authority held a public hearing on 9th December 2016 on the proposed acquisition, and heard arguments from representatives of the merging parties, their competitors in the transport industry and other interested parties.