2014/15 Annual Report

Annual Report 2014/15
37
Case Study 10: Preventing market dominance in the merger involving HCI and Atterbell
The Commission prohibited the merger between Hosken Consolidated Investments Limited (“HCI”) and Atterbell Investments (Pty) Ltd (“Atterbell”), trading
as Gallagher Convention Centre (“GCC”). In its assessment, the Commission found that the merger created an overlap with respect to the provision of
conference and exhibition facilities in South Africa and more specifically in the Johannesburg area. HCI offers these services through the Tsogo Sun range of
hotels and casinos as well as the Sandton Convention Centre (“SCC”) business, while Atterbell offers these services through the GCC business.
In evaluating the merger, the Commission took into account the history behind the acquisition, the anti-competitive effects likely to arise from the merger, the
counterfactual arguments presented by the merging parties and public interest concerns arising from the merger.
The Commission found that SCC and GCC were the closest competitors in the market for providing exhibition venues and exhibition facilities, particularly
in the Johannesburg area, where there is no other alternative for some exhibitions. The transaction would therefore not only result in the merged entity being
dominant post-merger but would also elevate the concentration levels by reducing the number of players from four (4) to three (3). The post-merger common
ownership of SCC and GCC would therefore likely result in unilateral effects as it would allow the merged entity to exert its market power and raise prices
in SCC and GCC post-merger to the detriment of exhibition organisers.
Although the merging parties argued that GCC would exit the market should the merger not be approved, the Commission found that there was no
guarantee that the GCC business would remain in the market even if the merger was approved. Further, at the investigation stage, the merging parties had
not presented sufficient evidence to confirm the counterfactual or GCC’s inevitable exit from the market.
The merging parties approached the Tribunal to reconsider the matter. This was heard in March 2015. The Tribunal subsequently approved the merger
subject to conditions, including an obligation to continue running the GCC business for a specified period of time, pricing and ring-fencing obligations.