COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 30/LM/Apr06
In the matter between:
Lexshell 676 Investment (Pty) Ltd Acquiring Firm
And
Xstrata South Africa (Pty) Ltd Target Firm
Panel: M Moerane (Presiding Member), M Mokuena (Tribunal
Member) and U Bhoola (Tribunal Member)
Date of Hearing: 14 June 2006
Order issued on: 14 June 2006
Reasons issued on: 16 August 2006
Reasons for Decision
APPROVAL
1] On 14 June 2006, the Tribunal approved the merger between Lexshell 676
Investment (Pty) Ltd and Xstrata South Africa (Pty) Ltd. The reasons for
approval follow.
THE TRANSACTION
2] The acquiring firm is Lexshell 676 (Pty) Ltd (“Newco”). African Rainbow
Minerals Limited (“ARM”) holds 51% shareholding in Newco and the target
firm, Xstrata South Africa (Pty) Ltd (“Xstrata”) holds 49%. 1
3] In terms of the transaction, Newco will acquire a 51% participation interest in a
joint venture to be formed by and between Newco and Xstrata in relation to a
coal mine owned by Xstrata viz. the Goedgevonden mine. Post merger,
Xstrata and Newco will exercise joint control over the mine.
1 ARM is a public company listed on the JSE. A list of ARM’s shareholders can be found on page 2 of
the Commission’s Report. Xstrata is ultimately owned by Xstrata Plc.
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4] According to the parties, the transaction will enable ARM, through its control of
Newco, to enter and exploit the coal market, and thereby increasing the types
of minerals it produces, which will inevitably result in increased revenue.
IMPACT ON COMPETITION
5] Xstrata’s Goedgevonden business mines coal in the Goedgevonden mining
area and is also involved in the prospecting for coal in the Zaaiwater West
area. Newco has not previously engaged in any commercial activities. ARM is
a diversified mining company, involved in the mining and selling of ferrous
metals, platinum group metals, nickel and gold. ARM also conducts exploration
work.
6] According to the parties and the Commission, the acquiring firms do not have
any business operations which produce products that are substitutable for the
products produced by the Goedgevonden business in South Africa. There is
accordingly no overlap in the product offerings of the merging parties. The
Commission and parties further submit that the transaction does not result in
any vertical integration.
7] In the absence of evidence to the contrary, we agree with the Commission and
the parties that the transaction is unlikely to substantially prevent or lessen
competition in any of the markets that the parties are active in.
CONCLUSION
8] There are no public interest issues and we accordingly approve this
transaction without conditions.
_________________________
M Mokuena
M Moerane and U Bhoola concurring.
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Tribunal Researcher: M MuruganModise
For the merging parties: D Rudman and C Roelofs (Werksmans) for Xstrata
South Africa (Pty) Ltd and L Mtanga (Bowman Gillfillan)
for African Rainbow Minerals Limited
For the Commission : T Letsietsa (Mergers and Acquisitions)
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