IN THE COMPETITION TRIBUNAL OF SOUTH AFRICA
CASE NO.: 63/LM/MAY08
In the merger between:
Grindrod Limited Primary Acquiring Firm
and
Oreport Holdings (Pty) Ltd Primary Target Firm
______________________________________________________________________
Panel : D Lewis (Presiding Member), Y Carrim (Tribunal Member), and
L Reyburn (Tribunal Member)
Heard on : 17 July 2008
Order issued on : 17 July 2008
Reasons issued on : 31 July 2008
REASONS FOR DECISION
APPROVAL
[1] On 17 July 2008 the Tribunal unconditionally approved the merger between the
aforementioned parties. The reason for the decision follows:
THE MERGING PARTIES
[2] The primary acquiring firm is Grindrod Limited (“Grindrod”) a company which is not
directly or indirectly controlled by any firm. Grindrod has in excess of twenty subsidiaries one of
which is RohligGrindrod (Pty) Ltd (“Rohlig”). Grindrod owns 50% of Rohlig, the only relevant
subsidiary in this transaction. Rohlig is active in the freight forwarding services. Grindrod also
has 50% interest in Oreport Holdings (Pty) Ltd (“Oreport”), the primary target firm. 1 Oreport
1 For details of the remaining shareholders in Oreport Holdings refer to the CC4 (2) form on
pg 17 of the merger record.
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controls Oreport (Pty) Ltd (100%) 2 and four other firms. 3 Oreport also owns 49.99% share in
East Coast Maritime, a company also active in freight forwarding in Richards Bay.
THE TRANSACTION AND RATIONALE
[3] In terms of the proposed transaction, Grindrod will acquire all of the shares held by the
remaining shareholders of Oreport, and will acquire sole control of Oreport post merger.
Grindrod considers the Oreport business as complementary to its business, and Oreport’s
shareholders consider this transaction as an opportunity to realize their investment.
RELEVANT PRODUCTS AND SERVICES
Horizontal overlap
[4] According to the Commission and the merging parties there is a limited horizontal
overlap which arises from Oreport’s shareholding in East Coast Maritime in Richards Bay, and
Rohlig which are both involved in the clearing and forwarding business. Grindrod, through
Rohlig provides these services nationally, while Oreport through East Coast Maritime provides
them in Richards Bay only.
Vertical relationship
[5] There is also a vertical relationship between Grindrod and the companies within the
Oreport group in that Grindrod has provided freight and warehousing services to Oreport in the
past year. 4
COMPETITION EVALUATION
Horizontal analysis
[6] According to the Commission’s recommendation, Grindrod has 6% market share
nationally and East Coast Maritime has less than 1% market share in Richards Bay premerger.
The merging parties did not provide market shares of their competitors in the market for clearing
2 Oreport (Pty) Ltd is Oreport’s wholly owned subsidiary.
3 These are: Umngani Trading (Pty) Ltd, Chromtech (Pty) Ltd, Thuthukani Coal (Pty) Ltd, and
TBFH Steel (Pty) Ltd.
4 During the preceding financial year, Oreport obtained freight services from Grindrod
(through Island View Shipping (Pty) Ltd in the amount of R11.9 million. In addition, during
(through Island View Shipping (Pty) Ltd in the amount of R11.9 million. In addition, during
the preceding financial year, Oreport rented from Grindrod storage space to the value of
R4.6 million.
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and forwarding services. The Commission relied on market share figures provided to it in an
earlier intermediate transaction namely, SDV (South Africa) (Pty) Ltd and Seaways (Pty) Ltd
Case No. 2008 June 3771 to conduct its investigation and concluded that the transaction was
unlikely to result in a substantial lessening of competition . At the hearing the Tribunal raised its
concerns about the large discrepancy between the market shares provided by the Commission
in this transaction and the market shares in the SDV matter, where Grindrod was said to have
11% market share. Furthermore, we found that the Commission’s description of Grindrod as an
inconsequential player was incorrect because the freight forwarding market is fairly competitive
to the extent that market shares are relatively small even for the leading firms. 5 The merging
parties did not dispute the larger market share attributed to Grindrod by the Commission and we
agree with the figures submitted to us by the Commission namely that Grindrod has 11% and
not 6% of the relevant market.
[7] Nevertheless the higher market share of 11% does not make a difference to the
outcome of this transaction since it is common cause that East Coast Maritime is an insignificant
player in the relevant market, which results in an insignificant market share accretion of less
than 1% post merger.
Vertical analysis
[8] The Commission and the parties submitted that the freight services and warehousing
services provided by Grindrod to Oreport amounts to 0.8% and 2.3% respectively of Oreport’s
annual turnover and less than 1% of Grindrod’s annual turnover in the previous financial year.
For this reason we are satisfied that vertical foreclosure is unlikely to occur due to these
insignificant figures and that there are other various players in the relevant market.
CONCLUSION
[9] Accordingly we find that this transaction is unlikely to substantially prevent or lessen
competition. There are no significant public interest concerns.
__________________ 31 July 2008
Y Carrim Date
5 We do not provide the competitors’ market shares as these were claimed as confidential
by the parties in the SDV and Seaways merger.
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D Lewis and L Reyburn concurring .
For the merging parties: Advocate Engelbrecht instructed by Strauss Scher on behalf of KPMG
For the Commission: L. Chung (Mergers & Acquisitions)
Researcher: L Xaba
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