COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No.: 18/LM/Apr03
In the large merger between:
Main Street 87 (Pty) Ltd
Tosaco Commercial Services (Pty) Ltd
and
Total South Africa (Pty) Ltd
Total Petroleum Renaissance (Pty) Ltd
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Reasons for decision
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Approval
The Competition Tribunal issued a Merger Clearance Certificate on 30 April 2003
approving the merger without conditions. The reasons are set out below.
The merger transaction
The transaction comprises three stages:
1) the buyback of shares in Total South Africa (Pty) Ltd (“Total South Africa”) from
Old Mutual Nominees (Pty) Ltd, which holds 8% and Industrial Partnership
Investments Ltd, which holds 34.34% 1,
2) the acquisition by Tosaco (Pty) Ltd 2 (“Tosaco”), a black empowerment
consortium, of 25% of the issued share capital of Total South Africa through its
wholly owned subsidiary Main Street 87 (Pty) Ltd, and
3) the sale by Total Petroleum Renaissance (Pty) Ltd (“Total Renaissance”), of its
1 This part of the transaction is not a merger transaction in terms of the Competition Act because there is
no change in control at this stage. TotalFinaElf Group will remain in contol of Total South Africa.
2 Tosaco’s Control Pool will consist of Total South Africa (Pty) Ltd 20,2%, Calulo Investment (Pty) Ltd
17.0%, South Base Investments Holdings (Pty) Ltd 15%, Capital Oil Investments Holdings (Pty) Ltd and
the Development Trust 10%. The Control Pool will collectively control Tosaco and Main Street.
entire business to Tosaco Commercial Services (Pty) Ltd (“Tosaco Services”).
The second leg of the transaction, the acquisition of 25% in Total South Africa by
Tosaco, constitutes an acquisition of joint control over Total South Africa through a
shareholder’s agreement with significant minority protection rights.
Post the merger Total South Africa’s shareholders will consist of TotalFinaElf holding
50.1%, Remgro holding 24.9% and Tosaco holding 24.9% through its wholly owned
subsidiary Main Street 87 (Pty) Ltd.
Reasons for the transaction
Total South Africa is a signatory to “ The Charter for the South African Petroleum and
Liquid Fuels Industry on Empowering Historically Disadvantaged South Africans in the
Petroleum and Liquid Fuels Industry ”, in which the Fuel Companies undertake to place
25% of the ownership in the Petroleum and Liquid Fuels Industry in the hands of
empowerment entities. With this transaction Total South Africa fulfils its empowerment
requirements.
Relevant Market
The petroleum supply chain can be divided into upstream and downstream activities. The
upstream activities consist of oil exploration, extraction and transportation. The
downstream activities consist of refining, marketing and distribution.
For purposes of this transaction three separate markets are identified in the vertical
supply chain:
1) The upstream market is the national market for the manufacture and supply of
petroleum products such as diesel, petrol, greases, brake fluids and lubricants.
Total South Africa is active in this market. Tosaco will acquire 25% in Total
South Africa.
2) The first downstream market is the market for the marketing and selling of
petroleum products. Total Renaissance, a wholly owned subsidiary of Tosaco
Services, is active in this market. The geographic market is national.
3) The second downstream market is the regional market for the distribution of the
3) The second downstream market is the regional market for the distribution of the
petroleum products to the retail customers. Fuelogic, a cargo transporter, is active
in this market.
Effect on Competition
Horizontal relationship
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Tosaco is a special purpose vehicle created for the purpose of acquiring 25% of the
issued share capital in Total South Africa through its subsidiary Main Street 87. Both
Tosaco and Main Steet are special purpose vehicles that have never been active in the
market.
There is thus no horizontal overlap in the activities of the merging parties.
Vertical relationship
There is an existing vertical relationship between Calulo, one of the shareholders in
Tosaco, through its 50% interest in Fuelogic, a joint venture with Imperial Group.
Fuelogic is a logistics company that distributes petroleum and petroleum products
nationwide. Fuelogic owns 80 road tankers, which distributes fuel through 16 depots that
operate in Western Cape (where it enjoys a market share of 3%), Eastern Cape (market
share 6%), Kwazulu Natal (market share 2%), Mpumalanga (market share 20%), Free
State (market share 12%), Northwest (market share 10%) and Limpopo (market share
4%).
Total South Africa currently takes up approximately 92% of Fuelogic’s operations and
Sasol takes up the remaining 8%. Due to a new contract that Shell awarded to Fuelogic
its customer mix will change to Total South Africa representing 69% of its business,
Shell 25% and Sasol 6%.
The parties also aver that Fuelogic and Imperial compete directly in the market place and
their brands are independent. They tender seperately and in some cases may be awarded
different portions of the same geographic clusters. Other competitors in this industry that
services Total South Africa and its competitors 3 are Unitrans, Freight Dynamics, Cargo
Carriers, Bulk Trans, Tanker Services (Imperial), Lobtrans and various small operators.
Total South Africa also outsources some of its road transportation activities to other
players in the market such as Unitrans, Bulktrans, Arrow Bulk and Nonke Petroleum.
From the above it is evident that market foreclosure is unlikely to take place in either the
From the above it is evident that market foreclosure is unlikely to take place in either the
upstream or downstream markets and we, therefore, agree with the Commission that the
transactions will not substantially prevent or lessen competition.
Public Interest
The transaction will not result in any job loses or have any negative effect on the
remaining public interest factors.
3 Engen, Casltex, BP, Sasol and Shell
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____________________ 15 May 2003
N. Manoim Date
Concurring: D Lewis and L. Reyburn
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