COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 69/LM/Aug11
In the matter between:
Total Energie Development S.A.S Acquiring Firm
And
Tenesol S.A Target Firm
Panel : Norman Manoim (Presiding Member)
Andiswa Ndoni (Tribunal Member)
Medi Mokuena (Tribunal Member)
Heard on : 21/09/2011
Order issued on : 21/09/2011
Reasons issued on : 06/10/2011
Reasons for Decision
APPROVAL
1] On 21 September 2011 the Competition Tribunal (“Tribunal”) unconditionally
approved the proposed transaction between Total Energie Development S.A.S
and Tenesol S.A. The reasons for approval of the proposed transaction follows
below.
THE MERGING PARTIES
2] This is an international merger between Total Energie Development S.A.A
(“TED”), the primary acquiring firm, a subsidiary of Total which is incorporated
under the laws of France, and Tenesol S.A, the primary target firm, which is
jointly controlled by the Total Group and EDF Energie Nouvelles Reparties S.A
(“EDF”), also a French based company.
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3] Total group has various subsidiaries in South Africa and is active in among other
things; the production and distribution of petrochemicals, lubricants, oils, gas, agro-
chemicals, etc. Internationally, it is active in the solar energy sector, particularly in
the manufacture and sale of solar cells, solar modules and solar systems for the
generation of solar energy. In South Africa, it is only involved in the solar energy
sector through its 50% shareholding in Tenesol SA which is involved in the
manufacturing of solar modules.
4] Total also has controlling interest in Photovoltech N.V, a firm active in the production
and sale of solar cells. It also has sole control in SunPower Corporation
(“SunPower”), a firm active in the design, manufacture and supply of solar cells,
modules and systems. SunPower is a United States based company which recently
entered the South African market through Total’s recent acquisition 1. However it has
not yet commenced with production in South Africa.
5] Tenesol internationally is active in the production and supply of solar modules and
solar systems. It was submitted that 96.1% of the solar modules that Tenesol
produces in South Africa are exported to Tenesol in Europe for the production of
solar systems, and that the solar systems produced by Tenesol in Europe are sold
worldwide except in South Africa. The remaining 3.9% of the modules produced in
South Africa by Tenesol are sold in South Africa to producers of solar systems.
THE TRANSACTION AND RATIONALE
6] This transaction has been notified with and cleared by various jurisdictions including
the European Commission.
7] Essentially, this transaction is a move from joint to sole control as TED intends to
acquire the remaining 50% shares and the voting rights held by EDF in Tenesol.
That way TED will acquire sole control (100%) of the shares and voting rights in
Tenesol.
That way TED will acquire sole control (100%) of the shares and voting rights in
Tenesol.
1 This transaction was notified and approved in the EU, and was not notifiable in South Africa.
COMPETITION ASSESSMENT
8] There is a horizontal overlap in the activities of the merging parties, in respect of the
production and supply of solar modules as a result of Total’s 50% shareholding in
Tenesol. However this does not result in an accretion in market share or any change
in the market structure given that this deal is essentially a move from joint to sole
control.
9] There is currently no vertical integration in respect of the merging parties’ activities
in South Africa. However, the Commission did a future market analysis for when
SunPower does commence production in South Africa, and found that this would
result in a horizontal overlap with respect to solar modules and a vertical overlap
with respect to solar cells, solar modules and solar systems. Nevertheless the
Commission found that this would not raise serious competition concerns as
Tenesol’s market shares are relatively low (about 15%) in the market for production
and supply of solar modules in South Africa. The Commission also found that
SunPower’s entry into this market is unlikely to increase this market share
significantly as there are other larger competitors in this market.
10] From a vertical perspective, the Commission found that SunPower’s entry is likely to
allow Total to become fully vertically integrated in the solar energy market in South
Africa, though this would not result in any foreclosure concerns given the
insignificance of SunPower’s entry in this market.
PUBLIC INTEREST
11] The merging parties in their competitiveness report said that the proposed
transaction will not result in any job losses. The Commission in its investigation
established that 13 employees were voluntarily retrenched prior to the transaction.
The Commission is of the view that these retrenchments were operational and in the
normal course of business of Tenesol and not related to the merger.
normal course of business of Tenesol and not related to the merger.
12] This deal therefore does not give rise to any public interest issues as the job losses
are not as a result of the merger.
CONCLUSION
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13] We therefore conclude that the proposed transaction is unlikely to substantially
prevent or lessen competition in any of the relevant identified markets.
____________________ 06/10/2011
N Manoim Date
M Mokuena and A Ndoni concurring
Tribunal Researcher: Londiwe Senona
For the merging parties: Bowman Gilfillan
For the Commission: Lerato Monareng