COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:107/LM/Dec11
In the matter between:
Shanduka Resources (Pty) Ltd Acquiring Firm
And
Shanduka Coal (Pty) Ltd Target Firm
Panel : Yasmin Carrim (Presiding Member),
Medi Mokuena (Tribunal Member)
and Taki Madima (Tribunal Member)
Heard on : 14 March 2012
Reasons issued on : 03 May 2012
Reasons for Decision
Approval
1] On 14 March 2012 the Competition Tribunal (“Tribunal”) approved
the merger between Shanduka Resources (Pty) Ltd and Shanduka
Coal (Pty) Ltd. The reasons for approval follow below.
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The Transaction
2] The primary acquiring firm is Shanduka Resources (Pty) Ltd
(“Shanduka Resources”). Shanduka Resources is a wholly owned
subsidiary of Shanduka Group (Pty) Ltd (“Shanduka Group”).
Shanduka Group is a public company listed on the Johannesburg
Securities Exchange.
The primary target firm is Shanduka Coal (Pty) Ltd (“Shanduka Coal”),
a private company incorporated in terms of the laws of the Republic of
South Africa. Shanduka Coal is controlled by Glencore International
AG. Glencore International AG is a subsidiary of Glencore International
plc. Glencore, a company listed on the London and Hong Kong Stock
Exchange. Glencore is not controlled by anyone but has three major
shareholders, namely, Mr Glassenberg, Mr D Badenes and Mr T
Mistakidis.
The Rationale
3] Shanduka Resources wishes to acquire a controlling interest in
operating the coal mining assets. For Shanduka Resources, the
proposed transaction gives rise to certain benefits namely;
increased shareholding in Shanduka Coal to a majority interest,
giving it increased exposure to Shanduka Coal’s mining activities;
and access to the expansion programmes which Shanduka Coal’s
majority shareholder, Glencore, plans within the coal mining
industry, including an expansion programme at the Maputo Coal
Terminal.
4] For Shanduka Coal, the proposed transaction enhances its Black
Economic Empowerment credentials resulting in Shanduka Coal
becoming a majority Historically Disadvantaged South African
(“HDSA”) owned company and achieving the objectives of the
Mineral and Petroleum Resources Development Act 28 of 2008
(“MPRDA”) and the Mining Charter.
The relevant market and the impact on competition
5] Shanduka Resources is an investment company with interests in a diverse
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range of industries such as energy, food & beverages, resources, financial
services, industrial and property, amongst others. The Shanduka Coal has
interests in coal mining, specifically in thermal coal mining and anthracite
coal.
The Commission found that there is a vertical relationship between the
parties to this transaction as Shanduka Group provides transformation
services to Shanduka Coal. These transformation services are services
that Shanduka Resources offers to firms in which it has invested as a
shareholder. The services broadly comprise services which seek to
assist and enhance an investee firm’s empowerment and
transformation credentials and also other services such as public
relations.
In the context of mining firms such as Shanduka these services include
advising, assisting and overseeing development, implementation and
mining conversion process for Shanduka Coal’s empowerment
activities, liaison with regulators and other interested parties and
managing Local Economic Development (“LED”) projects.
6] These transformation services were provided pre-merger and will
continue to be provided post merger and Shanduka does not
market or provide these services to any other third party except for
firms in which they have invested in.
The Commission found that the nature of the vertical relationship will
not lead to any foreclosure concerns as the transformation services
were provided pre-merger and will continue to be provided post-merger
and the services are provided only to companies where Shanduka has
investments in and no other independent third parties.
The Commission found that the proposed transaction is unlikely to
substantially prevent or lessen competition as the transformation
services that Shanduka Resources provide to Shanduka Coal are
services that Shanduka Resources offers to firms in which it has
invested as a shareholder and no other third party where Shanduka
Resources has no investment.
CONCLUSION
Resources has no investment.
CONCLUSION
7] There are no significant public interest issues and we accordingly
approve the transaction.
____________________ 03 May 2012
Y Carrim DATE
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Medi Mokuena and Taki Madima concurring.
Tribunal Researcher: Thabani Ngilande
For the merging parties: Werksmans Attorneys
For the Commission: Bheki Masilela
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