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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No.: LM106Oct23
In the matter between:
TotalEnergies Marketing South Africa Proprietary
Limited Primary Acquiring Firm
And
TotalGaz Southern Africa Proprietary Limited Primary Target Firm
Panel : Prof. T Vilakazi (Presiding Member)
: Adv G Budlender SC (Tribunal Member)
: Ms A Ndoni (Tribunal Member)
Heard on : 21 December 2023
Order issued on : 21 December 2023
Reasons issued on : 19 January 2024
REASONS FOR DECISION
Introduction
[1] On 21 December 2023, the Competition Tribunal (“Tribunal”) unconditionally
approved a large merger whereby TotalEnergies Marketing South Africa Proprietary
Limited (“TotalEnergies”) intends to acquire the entire issued share capital of
TotalGaz Southern Africa Proprietary Limited (“TotalGaz”).
The parties and their activities
[2] The primary acquiring firm is TotalEnergies. TotalEnergies is controlled by
TotalEnergies Marketing South Africa ZA (“TotalEnergies ZA”) Proprietary Limited
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which holds 50.1% percent of TotalEnergies. The remaining shareholding is held
by two minority shareholders, Industrial Partnership Investments Limited
(“Industrial Partnership”) which holds 24.9% and Main Street RF Proprietary Limited
(“Main Street”) which holds 25%. By virtue of their minority shareholder rights,
Industrial Partnership and Main Street exercise joint control with TotalEnergies ZA
over TotalEnergies.
[3] Industrial Partnership is wholly owned and controlled by Remgro Limited.
Main Street is controlled by Kilimanjaro Sakhumnotho Consortium RF Proprietary
Limited
1 (“Kilimanjaro”) and the remaining shareholding in it is held by Tosaco
Proprietary Limited2 (“Tosaco”) which is wholly owned by Tosaco Trust.
[4] TotalEnergies ZA is wholly owned by TotalEnergies Holdings Netherlands
BV, which is in turn wholly owned and controlled by TotalEnergies Marketing Afrique
(“TotalEnergies Afrique”). TotalEnergies Afrique is wholly owned and controlled by
TotalEnergies Marketing and Services S.A.S which in turn is wholly owned and
controlled by TotalEnergies SE.
[5] TotalEnergies has 53.23% shareholding by Historically Disadvantaged
Persons (“HDP”).
[6] The target firm is TotalGaz. TotalGaz is wholly owned and controlled by
TotalEnergies Afrique. TotalGaz does not control any firms and has no HDP
shareholding.
Transaction and rationale
[7] The proposed transaction will see Totalenergies acquire the entire issued
share capital of TotalGaz from TotalEnergies Afrique. Of relevance to the proposed
transaction is that TotalEnergies, TotalGaz and TotalEnergies Afrique form part of the
same group of companies that is ultimately indirectly controlled by TotalEnergies
SE. The proposed transaction therefore constitutes an internal group restructuring.
1 With a shareholding of 91.8%.
2 With a shareholding of 8.2%.
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[8] Given the nature of the proposed transaction (internal restructuring), the
merging parties submit that they share a common rationale for the proposed
transaction. TotalEnergies’ primary rationale for the proposed transaction is to
enable TotalGaz to benefit from TotalEnergies’ better HDP ownership and B - BBEE
profile. Recall that TotalEnergies has an HDP shareholding of approximately 53.2%
and TotalGaz has no HDP shareholding. Therefore, the merging parties submit that
the proposed transaction will improve TotalGaz’s HDP ownership and B -BBEE
profile (by effectively absorbing TotalGaz into TotalEnergies) and will place it
(TotalGaz) in a favourable position to acquire new major bulk customers and qualify
for public tenders, thereby increasing revenue and sales.
Competition Assessment
[9] The merging parties submit that given that the proposed transaction is, in
principle, an internal restructuring where TotalEnergies will retain ultimate majority
control of TotalGaz, and that there will be no change to TotalGaz’s day- to-day
operations, it is not necessary to conclude on a definitive market definition.
[10] The merging parties further submit that the proposed transaction will result
in new shareholders, Remgro (through Industrial Partnership) and Kilimanjaro
(through Main Street), acquiring indirect interest in TotalGaz, through TotalEnergies.
In its assessment, the Competition Commission (“Commission”) found that the
proposed transaction will not result in a horizontal or vertical overlap because none
of the abovementioned firms have business activities in the LPG industry that
overlap with those of TotalGaz as a wholesaler and reseller of LPG and related
services in South Africa.
[11] We received no evidence to the contrary and as such, we find that for the
purposes of this transaction there is no need to conclude on the definition of the
relevant market. In addition, no third parties raised competition concerns about the
proposed transaction.
[12] Based on the above facts, we concluded that the merger is unlikely to give
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rise to a substantial lessening of competition in any market/s in which the merging
parties are involved.
Public Interest
Effect on employment
[13] The merging parties submit that the proposed transaction will not result in
any retrenchments.
[14] We note that during its investigation, the Commission engaged with the
Chemical, Energy, Paper, Wood and Allied Workers Union (“CEPPWAWU”),
TotalEnergies’ registered trade union; and TotalGaz’s employee representative, Ms.
Jill Van Graan. Initially, both CEPPWAWU and Ms Van Graan (on behalf of TotalGaz
employees) were concerned about retrenchments. However, their concerns were
addressed after being informed by the merging parties that the proposed transaction
will not result in any retrenchments. In addition, both CEPPWAWU and Ms Van Graan
indicated that there have been no retrenchments by any of the merging parties in the
last 12 months.
[15] Based on the above, we are of the view that the proposed transaction does
not raise employment concerns.
Effect on the spread of ownership
[16] As noted above, TotalEnergies has an HDP shareholding of 53.2% and
TotalGaz has no HDP shareholding. Using the modified flow -through principle the
Commission found that TotalGaz’s HDP shareholding will increase from 0 – 53.2%
following the merger. If the simple flow -through principle is applied, TotalGaz’s HDP
shareholding will increase from 0% to at least 26%. Regardless of the methodology
applied, the level of ownership by HDPs in TotalGaz will increase significantly post -
merger.
[17] For these reasons, we find that the proposed transaction does not raise any
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negative public interest concerns overall.
Conclusion
[18] We conclude that the proposed transaction is unlikely to lessen or prevent
competition in any relevant market and does not raise any public interest concerns.
[19] We therefore approve the proposed transaction without conditions.
Signed by:Vilakazi, Thando
Signed at:2024-01-19 12:49:11 +02:00
Reason:Witnessing Vilakazi, Thando
Presiding Member 19 January 2024
Professor Thando Vilakazi Date
Concurring: Ms Andiswa Ndoni and Advocate Geoff Budlender SC
Tribunal Case Manager: Ofentse Motshudi
For the Merger Parties: Martin Versfeld and Clare-Alice Vertue of
Webber Wentzel
For the Competition Commission: Tarryn Sampson, Raksha Darji and Grashum
Mutizwa