COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 06/LM/Feb01
In the large merger between
Siemens Aktiengesellscraft AG
and
Atecs Mannesmann AG
Reasons For The Competition Tribunal’s Decision
Approval
The Competition Tribunal i ssued a Merger Clearance Certificate on 28 March 2001
approving the merger between Siemens Aktiengesellschaft AG and Atecs Mannesmann
AG without conditions.
The merger comprises two transactions, the Siemens transaction and the Bosch
transaction, the latter being a lease transaction between Bosch and Siemens.
The approval relates to the Siemens transaction only and excludes the Bosch lease
transaction, which is being filed separately as an intermediate merger. 1 The reasons for
approving the merger are set out below.
The merger transaction
On 14 April 2000 Siemens and Bosch jointly purchased the engineering and automotive
operations of Mannesmann. However, subsequent to that the purchase agreement was
amended because of European Competition rules and the parties agreed that Siemens
alone would acquire the shares in Atecs and that the purchase price paid by Bosch would
be refunded. The Share Purchase Agreement was accordingly amended on 13 November
2000.
1 Whilst we are uncertain why the transactio ns were not considered as a single large merger transaction,
since the two are interrelated and the one is dependant upon the fulfilment of the other, the merging parties
had agreed to the Commission’s characterisation and we have not been called upon to d ecide this.
2
This merger consists of two interdependent tran sactions, namely the Siemens transaction
and the Bosch transaction. As stated above the Tribunal will only evaluate the Siemans
transaction.
The Siemans transaction
Siemens Aktiengesellschaft AG (Siemens) purchased Atecs Mannesmann AG (Atecs)
from Mannes man AG (Mannesmann) and Mannesmann Investment GmbH
(Mannesmann Investment).
Atecs is the holding company that trades through five subsidiaries, namely:
• Mannesmann Demag Krauss-Maffei AG (Demag)
• Mannesmann Dematic AG (Dematic)
• Mannesmann Sachs (Sachs)
• Mannesmann Rexroth AG (Rexroth)
• Mannesmann VDO AG (VDO)
Atecs has one subsidiary in South Africa, Mannesmann (Pty) Ltd.
In terms of the Share Purchase Agreement Mannesmann Investment is selling its 46%
shareholding in Atecs to Siemens who will indirectly acquire all the shares in Atec’s five
subsidiaries. At the same time Atecs will execute a capital increase in which
Mannesmann will waive its subscription rights and which will result in Siemens owning
50% of the share capital of Atecs plus two shares.
Evaluating the merger
Background
Vodafone, a telecommunications company, recently acquired control of Mannesmann,
who, accordingly decided to sell the engineering and automotive activities, which are
conducted through its subsidiary Atecs, to Siemens.
The relevant market and impact on competition
Atecs, through its subsidiaries is involved in the following product markets in South
Africa:
• Demag sells injection moulding machines, reaction technology and extruders.
• VDO supplies electronic automation products used in motor vehicles.
• Dematic sells cranes, handling equipment and mobile cranes.
• Sachs is involved in the manufacturing and distribution of clutches and
assembling of heavy dampers for steering systems.
3
• Mannesmann (Pty) Ltd through its subsidiar y VDO Car Communications South
Africa (Pty) Ltd distributes car audio equipment.
In South Africa Siemens is involved in:
• Electric power generation, transmission and distribution
• Supplying of products, systems and services from the broad field of automat ion,
electrical motors, drive systems
• Supplies networks, products and services in telecommunication sector
• Supplies equipment for health care
• Deals with projects such as road traffic control systems, railway signalling
systems and traction technology
Although Siemens will acquire the automotive and engineering business of Atecs there
are no product overlaps between Siemens’ and Atec’s five subsidiaries. However, vertical
integration will take place in that Siemens’ Automation and Drives division sells c ontrol
panels used in cranes sold by Dematic.
Competition in these two product markets will, nevertheless, not be lessened because
sufficient competition exists in the market for cranes with Dematic having a market share
of 25%, Verlinde 20% and Toco Morr is 15% and, according to market participants,
Siemens is not dominant in the assembled control panel market for cranes. Brands that
are dominant in this market are Telemacinic (distributed by Scneider Electrical), Lavato
(distributed by Electromacanica) and Katahama (distributed by CHI Control Limited).
The merger is therefore not likely to substantially prevent or lessen competition in the
relevant markets.
Public interest consideration
The parties stated that no jobs would be lost as a result of t he merger. The merger will
also not affect any other public interest issues raised in section 12A(3) of the Competition
Act.
19 April 2001
N.M. Manoim
Concurring: D.H. Lewis and D.R. Terblanche