COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case no.: 59/LM/Aug04
In the large merger between:
Reunert Ltd
and
African Cables Ltd
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Reasons
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Introduction
The Tribunal approved the merger between Reunert Limited and African Cables
Holdings (Pty) Ltd on 8 September 2004 unconditionally. The reasons are set out
below.
The transaction
Reunert Limited (“Reuner”) and Pirelli Cable Holding N.V. (“Pirelli”) a company
incorporated in the Netherlands jointly controlled African Cables Holdings (Pty)
Ltd, with each holding 50% in the joint venture. African Cables holds 100% in
shareholding in African Cables Limited (“African Cables”). Subsequent to this
transaction Reunert will control African Cables as a result of its acquisition of
Pirelli’s 50% shareholding in the target firm. 1
The transaction was concluded because Pirelli has decided to sell its shares in
1 It is Reunert’s intention, so it says, to sell a portion of its shares, which could be as much as 25.1% to a
BEE company.
African Cables to enable it to focus on markets it considers more strategic. There
were also differences over the introduction of BEE shareholders.
Effect on Competition
There is no product overlap in the present transaction.
African Cables is engaged in the design, development, manufacture and
installation of insulated electrical power cables that range from low voltage to
high voltage. 2 Within this market it competes with rivals such as Aberdare
Cables that has a market share of 43% as opposed to African Cables’ market
share of 28%. Imports represent 16% of the market share.
Reunert, inter alia, manufactures and supplies low voltage electrical switchgear,
copper and optical fibre telecommunication cable and various office systems. 3
In light of the fact that Pirelli has sensitive information on the business of African
Cables it has agreed to a restraint from being directly or indirectly engaged or
interested in the manufacturing of or trading in the products offered by African
Cables for a period of three years. After expiry of the period Pirelli can
immediately enter the South African market as a potential competitor to African
Cables.
In light of the fact that there is no product overlap we find that the transaction will
not substantially lessen or prevent competition.
Public interest issues
The transaction raises no substantial public interest concerns and is unlikely to
have an effect on employment.
____________ 13 September 2004
N Manoim Date
2 Low voltage ranges from 500V – 6.6Kv, medium voltage ranges from 6.6 kV to 33kV and high voltage
ranges from 42kV – 132 Kv.
3 Although the technology used in producing electronic and telecommunication cable is in principle the
same, the type of machinery used is different. Thin copper wire or optical fibre is used in
telecommunication cable while power cable uses heavy conductors of much larger dimensions. The
manufacturing methods differ substantially.
2
Concurring: L Reyburn, M Mokuena
For the merging parties: none
For the Competition Commission: Maarten van Hoven
3