Dow Chemical Company and Union Carbide Corporation (50/LM/Apr00) [2000] ZACT 24 (2 June 2000)

COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 50/LM/Apr00
In the large merger between: 
The Dow Chemical Company
and
Union Carbide Corporation
Reasons for the Competition Tribunal’s Decision
Approval
1. The Competition Tribunal issued a Merger Clearance Certificate on 17 May  
2000 approving the merger between The Dow Chemical Company (Dow) and  
Union Carbide Corporation (Union Carbide) without conditions. The reasons  
for our decision to approve the merger without conditions are set out below.
The merger transaction
2. The   primary   acquiring   firm   is   Dow   and   the   primary   target   firm   is   Union  
Carbide. 
3. Dow   is   a   US   multinational   chemical   producer   and   its   operations   in   South  
Africa   are   conducted   by   a   subsidiary,   the   Dow/Sentrachem   Group.   Union  
Carbide   is   a   US   multinational   firm   whose   business   is   in   chemicals   and  
polymers.
4. Dow is acquiring Union Carbide South Africa (Pty), a wholly owned subsidiary  
of Union Carbide. This transaction is part of a merger agreement between  
Dow and Union Carbide with Union Carbide ultimately becoming a subsidiary  
of Dow.
5. This international merger has been approved by the European Commission

and the antitrust authorities in Australia, New Zealand and Poland.
 
Evaluating the merger
6. In   terms   of   the   information   given   by   the   parties   there   are   three   areas   of  
product overlap between the South African subsidiaries of the merging firms.  
The   products   where   there   is   an   overlap   are   chemical   products   known   as  
Polyethylene Glycol Liquids (PEG Liquids), Triethylenetetramine   (Teta) and  
E­Series Glycol Ethers (E­Series GEs). PEG Liquids   are used as   components 
of   products   such   as   adhesives   ceramics,   cosmetics   and   related   products.  
Teta is used as a component of products such as epoxy­curing agents and oil  
and fuel additives. E­Series GEs are applied as solvents in paints, inks and  
industrial cleaners.
7. According   to   the   merging   parties   none   of   the   products   referred   to   in  
paragraph 6 are manufactured in South Africa, all the products are imported  
for distribution.
The relevant product/services market
8. The   relevant   product   market   is   the   market   for   the   supply   of   Polyethylene  
Glycol Liquids Triethylenetetramine and E­Series Glycol Ethers.  
The relevant geographic market
9. The  relevant  geographic  market  is  international.  The relevant  products  are  
fully imported.
 
Impact on competition
10. This   is   an   international   merger   that   has   already   been   approved   in   other  
jurisdictions   around   the   world.   The   fact   that   overlap   in   the   product   market  
between the merging parties exists in products that are fully imported makes  
our decision largely academic. Our powers are somewhat limited when we  
deal with mergers between multinational companies that have already been  
approved in other jurisdictions. This is especially the case where the products  
concerned are merely distributed in South Africa and the merger has been  
approved in the countries where the products are manufactured. Even if we

approved in the countries where the products are manufactured. Even if we  
prohibit the merger in South Africa the parties will merge elsewhere and a  
single firm will control the two subsidiaries and the importation and distribution  
of the three product categories in South Africa.

11. We note that on the merits the Commission found that the merger raises no  
competition concerns as far as the three product categories are concerned  
and   recommended   that   the   merger   be   approved.   We   have   no   reason   to  
disagree with this conclusion.
Public Interest Considerations
12. The merger raises no significant public interest issues.
 
02 June 2000
N.M. Manoim  Date
Concurring: C Qunta, U. Bhoola