COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 54/LM/Aug02
In the large merger between:
Armgold/ Harmony Freegold Joint Venture Company (Pty) Ltd
and
St Helena Gold Mines Limited
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Reasons for Decision
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Approval
On 23 September 2002 we unconditionally approved the merger between Armgold /
Harmony Freegold Joint Venture Company (Pty) Ltd (“Freegold”) St Helena Gold Mines
Limited (“St Helena”). Our reasons for this decision are set out below.
The transaction
This is an acquisition by Freegold of the St. Helena Mine, as a going concern.
The primary acquiring firm is Freegold, a joint venture company between Harmony Gold
and ArmGold.
The primary target firm is the St. Helena Mine, which is controlled by a wholly owned
subsidiary of Gold Fields Ltd.
The acquisition is intended as part of Freegold’s consolidation process of the gold mines
in the Free State region and follows other acquisitions previously approved by the
Tribunal. The parties submit that this will improve regional stability and that the
transaction will enable the transformation of the St. Helena Mine into a low cost, high
productivity producer and will ultimately extend its lifespan.
Evaluating the merger
The relevant market
The primary business of the parties to the transaction is the mining and processing of
gold. It is common cause that the relevant market is the international market for the
production and supply of gold and that is not a concentrated market.
Effect on competition
As noted in previous decisions, a single producer of gold is precluded from influencing
the price of gold in the international market, largely because the price is contingent on
various extraneous factors. 1
Within this market, of which the merged entity’s post merger market share will remain
relatively small, participants are faced with an international price and are essentially price
takers. Thus, the transaction is unlikely to substantially lessen or restrict competition in
the market.
Public interest Issues
Although the transaction will result in a maximum of 600 job losses, the lifespan of the
mine will be extended for a further two years. As a result, it is expected that the number
of man years worked will increase by 36%.
The transaction does not raise any other public interest issues.
We agree with the Commission’s recommendation that the transaction be unconditionally
approved.
10 October 2002
N. Manoim Date
1 See Tribunal Cases: Harmony Gold Mining Company Limited and Randfontein Estates Limited 16/LM/
Feb00; FrancoNevada Mining Corporation Ltd and Gold Fields Ltd 77/LM/Jul00 and Randfontein Estates
Ltd and Anglovaal Ltd 03/LM/Jan01.
2
Concurring: D. Lewis, P. Maponya
3