LEITES, MA TAKE ON COMPETITION COMMISSION

 
MBABANE - Siyembili Motors Swaziland trading as Leites Toyota has taken the Competition Commission to court over the sale of land.

The pieces of land, which are now a subject of legal proceedings, were purchased from Siyembili Motors Swaziland by MA Props (PTY) Limited for E6 million. This amount has been derived from two deeds of sale which had been annexed to court documents.

Siyembili Motors decided to seek legal recourse after the commission wrote them a demand for notification of a merger and acquisition.
The commission is of the view that the parties should have notified it about the transaction as it was one that was notifiable as per the law.

Claimed

It (commission) claimed that MA Props acquired a controlling interest in an asset which was or might be utilised for business purposes and therefore the transaction fell under the ambit of a merger as defined in the Competition Act.
In the demand for notification, the commission’s Chief Executive Officer (CEO), Thabisile Langa, stated that the commission had reasons to believe that Siyembili and MA Props engaged in a transaction or conduct as described in Section 35 of the Competition Act No.8 of 2007, involving the sale/transfer of the properties, Portions 1079 and 1080 of Farm 2, both located in Mbabane.

In terms of Section 35 (1) of the Act, a person who, in the absence of authority from the commission whether as principal or agent and whether himself/herself or his/her agent, participates in effecting- (a)  a merger between two or more independent enterprises engaged in manufacturing or distributing substantially similar goods or providing substantially similar services, commits an offence and shall, on conviction, be liable to a fine not exceeding E250 000 or to imprisonment to a term not exceeding five years or both.

Impose

The CEO further alleged that in terms of Section 35(1) of the Competition Commission Regulations, the commission may impose an administrative penalty of up to 10 per cent of the enterprise’s annual turnover to ensure compliance with the Act.
“The commission hereby calls upon Siyembili Motors (PTY) Limited to submit within 30 days to the commission all and/or any relevant documentation concerning the transaction as envisaged by Section 35 of the Act,” reads part of the demand for notification.

She pointed out that in terms of Section 35(1) of the Act, a merger or takeover made in contravention of subsection 35(1) of the Act shall not have any legal effect and no rights or obligations imposed on the participating parties, by any agreement in respect of the merger or takeover, shall be legally enforceable unless an application for condonation has been made to and granted by the commission.
Siyembili Motors now wants the High Court to set aside and declare as incorrect the decision of the commission to the effect that the sale of the vacant portions of land from it and MA Props were a notifiable transaction.

Applicant

In his founding affidavit Wynand Louw who is the director of the first applicant (Siyembili Motors) submitted that the company was motor franchise which had been operating in the Kingdom of Eswatini for many years.  He informed the court that the first applicant was the sole distributor of new Toyota vehicles and was the sole distributor of all genuine Toyota parts in the Kingdom of Eswatini.
He informed the court that MA Props was a property management consultancy business and had a number of landed investments.
“It is noteworthy that the Siyembili Motors is licensed to trade as a motor vehicle dealer, and MA Props (PTY) Limited as a business broker, estate agent and employment agent,” submitted Louw.

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