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[2022] ZACT 11
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South African Gas Development Company SOC Ltd and Another v Republic of Mozambique Pipeline Investments Company (Pty) Ltd (LM116Nov21) [2022] ZACT 11 (5 January 2022)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
no: LM116Nov21
South
African Gas Development Company SOC Ltd and Companhia Moçambicana
de Gasoduto S.A.
(Primary
Acquiring Firms)
And
Republic
of Mozambique Pipeline Investments Company (Pty) Ltd
(Primary Target Firm)
REASONS
FOR DECISION
[1]
On
22 December 2021, the Competition Tribunal (“Tribunal”)
unconditionally approved a large merger in terms of which
South
African Gas Development Company SOC Ltd (“iGas”)
[1]
and Companhia Moçambicana de Gasoduto S.A. (“CMG”)
[2]
intend to increase their existing shareholding in the Republic of
Mozambique Pipeline Investments Company (Pty) Ltd (“ROMPCO”).
[3]
[2]
iGas and CMG each hold 25% of ROMPCO,
with the balance of 50% being held by Sasol South Africa Limited
(“Sasol SA”).
Through this transaction, iGas and CMG will
each acquire an additional 15% of the issued share capital of ROMPCO
from Sasol SA,
thereby increasing their shareholding to 40% each, and
Sasol SA reducing its shareholding to 20%.
[3]
Following the implementation of the
proposed transaction, the South African government (through iGas) and
Mozambique governments
(through CMG) will each acquire joint negative
control of ROMPCO, which pre-merger, is controlled by Sasol SA. Sasol
SA will post
merger have joint negative control of ROMPCO.
[4]
iGas is mandated by the South African
government as a state-owned entity for hydrocarbon gas and gas
infrastructure development
in Southern Africa. iGas’ sole
investment is its 25% non-controlling interest in ROMPCO.
[5]
CMG is incorporated under the laws of
Mozambique and CMG's main object is the provision of transport
services for natural gas and
other hydrocarbons through gas pipelines
and the exercise of activities related and/or subsidiary to its main
activity, as well
as the provision of services related thereto.
[6]
ROMPCO owns and operates a pipeline
which transports natural gas from the Pande and Temane gasfields in
Mozambique to Sasol SA's
operations at Secunda in South Africa.
ROMPCO sells gas transportation services to customers in terms of
which ROMPCO provides
capacity in its high-pressure pipeline and
transports natural gas from Sasol SA's onshore gas fields in Pande
and Temane in Mozambique
to Sasol SA's operations in Secunda in South
Africa and to customers in Mozambique.
[7]
ROMPCO also sells capacity in its
transmission pipeline to customers who wish to transport natural gas
from the source in Mozambique
to delivery points in Mozambique and
South Africa.
Competition
assessment
[8]
The
Competition Commission (“Commission”) concluded that the
transaction constituted a single indivisible transaction
due to [….]
[4]
We found no basis to
disagree.
[9]
The Commission found that there is no
horizontal overlap between the merging parties’ activities.
ROMPCO is active in the
transmission of natural gas from Mozambique
to South Africa and to customers in Mozambique. Neither iGas nor CMG
is active in the
same product and geographic market (except through
its
interest
in ROMPCO). As such, the proposed transaction does not remove a
competitor from the market. Further, the Commission noted
that the
ROMPCO natural gas pipeline is the only pipeline from Mozambique to
Secunda. Therefore, the proposed transaction will
not change the
structure of the market.
[10]
The Commission concluded that the
proposed merger is unlikely to substantially prevent or lessen
competition in any relevant market.
Public
interest
Employment
[11]
The employees of iGas in South Africa
were notified of the proposed transaction and no concerns from the
employees were reported.
CMG does not have any employees in South
Africa.
[12]
Given that iGas and CMG are only
increasing their respective shareholding in ROMPCO, the proposed
transaction is unlikely to have
a negative effect on employment.
Other
public interest issues
[13]
The proposed transaction raised no other
public interest concerns.
Third
Party Views
[14]
No third party raised any concerns.
Conclusion
[15]
For the above reasons, we concluded that
the proposed transaction is unlikely to substantially prevent or
lessen competition in
any relevant market, or to have a negative
impact on the public interest.
05
January 2022
Ms
Mondo Mazwai
Ms
Yasmin Carrim and Mr Andreas Wessels concurring
Tribunal
Case Manager:
Juliana Munyembate
For
the Merging Parties:
Daryl Dingley and Andriza Liebenberg of
Webber
Wentzel
For
the Competition Commission:
Billy Mabatamela, Ratshidaho
Maphwanya
Ipeleng
Selaledi and Candice Slump
[1]
iGas is wholly owned by Central Energy Fund Group (CEF SOC Ltd), a
Schedule 2 state-owned diversified energy company reporting
to the
Department of Mineral Resources and Energy.
[2]
CMG is controlled by Empresa Nacional de Hidrocarbonetos De E.P.
(“ENH”). ENH is 100% owned by the Mozambican State,
which is represented by the Institute for the Management of State
Holdings as established in accordance with the Business Sector
Law.
[3]
ROMPCO
is currently controlled by Sasol SA with a 50% shareholding. The
remaining shareholders in ROMPCO are iGas and CMG, each
holding 25%
shareholding in ROMPCO
[4]
Crown Gold Recoveries (Pty) Ltd and Industrial Development
Corporation of South Africa Limited and Khumo Bathong Holdings (Pty)
Ltd, case number 31/LM/May02 at page 3