The Merger Application between Kenilworth Racing Limited and Gold Circle (PTY) LTD
Case No.36/AM/Apr12-014845
held at DTI Building, Sunnyside from 10 – 31 October 2012
Panel: N Manoim, Y Carrim, M Holden
Case Manager: Thabo/Andrew
Competition Tribunal – Kenilworth Gold Circle – 10 October 2012
Competition Tribunal – Kenilworth Gold Circle – 11 October 2012
Competition Tribunal – Kenilworth Gold Circle – 12 October 2012
Competition Tribunal – Kenilworth Gold Circle – 15 October 2012
Competition Tribunal – Kenilworth Gold Circle – 16 October 2012
Competition Tribunal – Kenilworth Gold Circle – 17 October 2012
Competition Tribunal – Kenilworth Gold Circle – 18 October 2012
Competition Tribunal – Kenilworth Gold Circle – 19 October 2012
Competition Tribunal – Kenilworth Gold Circle – 22 October 2012
Competition Tribunal – Kenilworth Gold Circle – 23 October 2012
Competition Tribunal – Kenilworth Gold Circle – 24 October 2012
Competition Tribunal – Kenilworth Gold Circle – 25 October 2012
Competition Tribunal – Kenilworth Gold Circle – 26 October 2012
Competition Tribunal – Kenilworth Gold Circle – 29 October 2012
Competition Tribunal – Kenilworth Gold Circle – 31 October 2012
—
Alternatively you can download all the files here (7 mb in size)
The dissent within the Gold Circle ranks has been the industry’s worst kept secret for some time. With the WC continuing to sustain substantial losses, matters came to a head in the latter half of 2011 and members in both KZN and WC voted for the two parties to de-merge. GC KZN opted to stay independent and GC WC sought an arrangement with Phumelela via the Thoroughbred Horseracing Trust. A late bid was made for the WC by third party company Purple Capital, but it was turned away by the WC Board.
In order to progress the proposed GC WC / Thoroughbred Horseracing Trust arrangement, an application for a two-stage transaction was put before the Competitions Commission in December 2011. It was signed by Johan Roodt in his capacity as Attorney for the Thoroughbred Horseracing Trust and the application was for unconditional approval. The first part of the transaction consisted of the newly formed Kenilworth Racing (Proprietary) Limited acquiring the business of Gold Circle Western Cape. The second half of the transaction consisted of the Thoroughbred Horseracing Trust acquiring 100% of the issued share capital in Kenilworth Racing. Taken together, these transactions would result in The Trust acquiring full control of Kenilworth Racing, and thereby the entire business of what is currently known as Gold Circle WC.
After a number of complaints were lodged by Ms Phindi Kema, chief executive of African Racing International, the Competitions Commission denied the application on 19 March 2012. A media release dated 20 March 2012 stated that the Competition Commission “has prohibited a set of proposed transactions in the horseracing industry involving Kenilworth Racing (Pty) Ltd (“Kenilworth”). The first transaction involves the acquisition by Kenilworth over the Western Cape business of Gold Circle (Pty) Ltd (“Gold Circle WC”). The second transaction is the take-over of Kenilworth by Phumelela’s largest shareholder, the Thoroughbred Horseracing Trust. As part of the transactions, Phumelela will manage Kenilworth/Gold Circle WC through a management agreement between Phumelela and Kenilworth, effectively giving Phumelela control of Gold Circle WC. These transactions are interdependent as they cannot be carried out individually.”
It was decided to launch an official inquiry into the proposed transactions which was scheduled for 10 October 2012 at the Competition Commission Court at the DTi campus in Pretoria.
The inquiry started with the opposing legal teams presenting opening arguments. Following on from this was a series of factual witness statements, including submissions from Mr Jeremy Marshall (Marshalls World of Sport), Messrs Charles Savage and Gary van Dyk (Purple Capital), Mr Xhopela Simoto (the Grooms Association), Ms Phindi Kema (Africa Race Group), Mr Ian Jayes (trainer, ex-chairman of the OTA, founding trustee of the Thoroughbred Horseracing Trust, ex-steward), Mr Chris van Niekerk (Trustee of Thoroughbred Horseracing Trust), Mr Vidrik Thurling (Director of Kenilworth Racing), Mr Rian du Plessis (CEO Phumelela), Mr Michel Nairac (CEO of Gold Circle). The witness statements were followed by a series of submissions dealing with the economics of the transactions. These included presentations from Messrs James William Hodge and Patrick Douglas Smith from RBB Economics.
Closing arguments were heard on 31 October 2012, after which the Tribunal adjourned to consider their decision.
On Thursday, 15 November, the Competitions Commission ruled in favour of merger. They will publish the reasons for their decision in due course.
Copies of the submissions and transcripts of the live proceedings are listed below.
