COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 70/LM/Aug11
In the matter between:
ACTOM (PTY) LTD PRIMARY ACQUIRING FIRM
And
SAVCIO HOLDINGS (PTY) LTD PRIMARY TARGET FIRM
Panel : Yasmin Carrim (Presiding Member)
Andreas Wessels (Tribunal Member)
Takalani Madima (Tribunal Member)
Heard on : 07 February 2012
Order issued on : 13 February 2012
Reasons issued on : 08 May 2012
REASONS FOR DECISION
Conditional approval
1] The Competition Tribunal (“Tribunal”) on 13 February 2012, in terms of
section 16(2)(b) of the Competition Act of 1998 1, conditionally
approved the large merger involving Actom (Pty) Ltd (“Actom”) and
Savcio Holdings (Pty) Ltd (“Savcio”).
2] This merger was approved subject to the following conditions:
1 Act No. 89 of 1998, as amended.
1
A. Cross-directorships
1. All common directors between Acton Repair Services (Pty) Ltd and Actom
have been removed and there shall not be any common directors
between these two entities in future.
2. Condition 1 applies for as long as Actom has control over Savcio. Should
Actom relinquish control over Savcio, it must inform the Competition
Commission (“Commission”) in writing and provide a signed copy of the
sale agreement.
Monitoring
3. The merged entity must, on an annual basis, submit to the Competition
Commission (“Commission”) an affidavit from a senior official of the
merged entity confirming compliance with condition 1 above. The first
affidavit must be submitted on the 1st of April 2013.
B. Supply of commutators
4. It is recorded that Actom and Transnet Rail Engineering (“TRE”) have an
existing contract, contract number 4600004820 dated 16 May 2011, for
the supply of commutators.
Actom will continue to supply TRE from the date of the Tribunal’s order
with its full range of commutators, on the same terms as agreed in the
existing contract between Actom and TRE and at prices that are no
higher than those in effect as at the date of conditional approval of the
merger (subject to the price adjustment formula in the contract) or as
determined by applying the price adjustment formula contained in
contract 4600004820 to the base prices recorded in the tenders
submitted by Actom in respect of tender TRE11-NAT-08H-0001 and
tender TRE10-NAT-08H-0010.
The commutators will be of the same quality as are presently supplied
to TRE and in the same available volumes.
To enhance transparency of TRE’s demand of commutators given that
it is cyclic in nature and fluctuates, TRE may, if it so desires, provide
the merged entity with a six month view of its commutator demand with
a rolling three month demand forecast.
The above conditions relating to commutators will apply for a period of
five years from the date of the Tribunal’s order.
Monitoring
2
5. The Commission may at any time after the merger, on ten business days
written notice, require the merged entity to furnish to it the following
reports in writing:
5.1.A report/s signed by a responsible person, indicating, for such
period as the Commission may specify, the sales volumes of
commutators, the classes of commutators and the prices at which
such commutators have been supplied to:
5.1.1.Businesses within the merged entity and any of its subsidiaries
or associated entities;
Any other commutator customer pursuant to these conditions.
5.2.A certificate from an independent auditor confirming the correctness
of, or qualifying (as the case may be), information provided by the
merged entity for any particular financial year.
C. Supply of copper wire products
6. The merged entity will continue to supply the open market from the date of
the Tribunal’s order with the full range of copper wire products currently
supplied by Savcio through its divisions Wilec and Transwire, on the
same terms as those divisions presently supply the market, and at
prices that are no higher than current adjusted annually by PPI but
subject to a full recovery (pass-through) of copper costs on a monthly
basis (adjusted upwards or downwards).
The products will be of the same quality as are presently supplied and
in the same available volumes.
The above conditions relating to copper wire products will apply for a
period of two years from the date of the Tribunal’s order.
Monitoring
7. The merged entity must inform its existing customers of copper wire
products of the provisions in these conditions within one month of the
date of the Tribunal’s order. To this end the merged entity must, within
one month of the date of the Tribunal’s order, provide an affidavit by a
senior official attesting to this and a copy of the notice sent to
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customers. For the purposes hereof existing customers means active
customers that have made purchases within the preceding 12 months
from any of the merging parties’ firms or their divisions.
In the event that the Commission receives a complaint from a
customer regarding non-compliance by the merged entity with these
conditions or otherwise determines that there has been an apparent
breach by the merged entity of such conditions that shall be dealt with
in terms of Rule 39 of the Rules for the Conduct of Proceedings in the
Competition Commission.
D. Correspondence
8. The merged entity must send all correspondence with the Commission in
relation to any of these conditions to the following Commission email
address:
mergerconditions@compcom.co.za mergerconditions@compcom.co.za .
E. Right to approach the Tribunal to revise conditions
9. Either the merged entity or the Commission may, for so long as any of the
above merger conditions remain in force, approach the Tribunal to
revise that condition on the basis that changes in market, economic or
regulatory conditions justify such revision.
Background
3] Following its investigation and assessment of the proposed merger, the
Commission on 29 November 2011 filed its recommendation with the
Tribunal recommending a conditional approval of the merger based on
a set of behavioural conditions. The merging parties agreed to these
conditions.
Of relevance is that the Commission during its investigation consulted
with Transnet Rail Engineering (“TRE”), a customer and competitor of
the merging parties, and that TRE raised certain concerns in regard to
the proposed merger. TRE alleged that the merged entity would have
substantial market power to control prices since it would control the
majority of the input components needed by customers and
competitors in certain upstream and downstream markets.
TRE sought to intervene in the Tribunal proceedings of this merger; the
Tribunal heard TRE’s intervention application on 13 January 2012.
4
The merging parties had no objection to TRE being recognised as a
participant in the merger proceedings2 and the Tribunal indicated that it
would like to gain insight into TRE’s objection to the proposed merger,
specifically in relation to the likely impact of the merger on TRE as well
as to TRE’s views of the Commission’s proposed behavioural
conditions.3
Consequently TRE participated in the hearing and called Mr
Maganthiren Govender (“Mr Govender”), the General Manager:
Locomotives within the Transnet Rail Engineering Division, as a
witness.
4] The merging parties called Mr. Mervyn Naidoo, a Director of Savcio, as a
witness.
Parties to the transaction
Actom
5] The primary acquiring firm is Actom, a private company incorporated
under the laws of the Republic of South Africa. Actom formerly traded
under the name Alstom SA and re-branded to Actom in September
2009. Actom is owned and controlled by Actom SA (Pty) Ltd, which in
turn is owned and controlled by Actom Investment Holdings (Pty) Ltd.
Actom is the main operating subsidiary of the Actom Group of
companies.
Actom manufactures and distributes electrical equipment throughout
South Africa. It carries out its business in South Africa through the
following business units: (i) a transmission and distribution unit; (ii) a
power conversion unit; (iii) an engineering, projects and contracts unit;
(iv) an electrical equipment unit; and (v) a power unit. Of particular
relevance to the competition assessment of this transaction is the
Actom business known as Contact Engineering4, a local manufacturer
and refurbisher of commutators for use in the repair of DC and traction
motors.
Acton Repair Services
6] The Commission found that post-merger there will be a common
shareholder between the merged entity and Acton Repair Services
(ARS), a competitor of the merged entity (as explained in paragraph 12
below), in that Kagiso Tiso Holdings (“KTH”) is the third largest
below), in that Kagiso Tiso Holdings (“KTH”) is the third largest
2 See page 12 of the transcript of the intervention hearing of 13 January 2012.
3 See pages 35 and 36 of the transcript of the intervention hearing of 13 January 2012.
4 Part of Actom’s power conversion unit.
5
shareholder in Actom. KTH has a non-controlling 19% shareholding in
Actom, which entitles it to representation on the Actom board, as well
as a 59.8% shareholding in ARS. This common shareholding in ARS
however existed pre-merger.
ARS is a repairer of traction equipment (DC motors) and AC electric
motors, including the repair of traction motors for rail equipment. Whilst
ARS’s core business is the repair of electric motors, it does
manufacture certain components, such as commutators and armature
coils, for its repair business. The Commission concluded that there are
horizontal overlaps between the activities of the merged entity and
ARS in (i) the manufacture and supply of commutators; (ii) the repair of
large traction and general DC motors and large AC motors; and (iii) the
supply of armature coils.
Although the Commission found that KTH would not have (some form
of) post-merger control over the merged entity, it nevertheless was
concerned about cross directorships between the merged entity and
ARS as a potential forum for information exchange and collusion
between these two competitors. The Commission was however
satisfied with a formal undertaking given by the merging parties that,
going forward, all common directors have been removed and that no
common directors will in future be appointed to Actom and ARS. We
have made this a condition for the approval of this merger (see section
A of the imposed conditions). We are satisfied that this condition
addresses the concern of potential post-merger information
exchange/collusion between the merged entity and ARS and we do not
deal with this issue in any further detail in these reasons.5
Savcio
7] The primary target firm is Savcio, a private company incorporated in terms
of the laws of the Republic of South Africa. Savcio was incorporated in
2005 when a private equity-led consortium acquired the Repairs &
Services and Replacement Parts division of Delta Electrical Industries
Services and Replacement Parts division of Delta Electrical Industries
Limited. Savcio has no active subsidiaries in South Africa.
Savcio is an electro-mechanical provider of maintenance and repair
services for rotating electrical equipment and transformers. The
equipment maintained and repaired includes motors, generators and
related mechanical equipment, transformers, static equipment,
electrical systems integration and hydraulic systems. The industries in
which Savcio is active include mining, power generation and
distribution, general manufacturing (steel, petrochemicals and paper),
rail transportation, marine, oil and gas.
Savcio carries out its business in South Africa through three business
5 For further details, see pages 14 to 16 of the Commission’s recommendation.
6
units namely (i) Wilec, a supplier of magnet wire and covered copper
conductors, insulation products and bearings, as well as quality tapes
and abrasives; (ii) Transwire, a manufacturer of magnet wire and bare
and covered conductors; and (iii) a maintenance and repairs unit.
The businesses in the maintenance and repairs unit which are of
relevance to the competition assessment of this transaction are: (i) LH
Marthinusen, which offers electro-mechanical repair and maintenance
services for medium and large sized motors and transformers; (ii)
Marthinusen & Coutts, which offers repair services for rotating electrical
equipment and medium voltage motors; and (iii) Reid & Mitchell, which
offers maintenance and repair services with expertise in motors for
open cast mining and diesel electric locomotives.
Savcio further locally assembles commutators which it then supplies to
third parties such as TRE (also see paragraph 25 below).
Proposed transaction and rationale
8] Actom intends to acquire all the issued shares in Savcio. Upon completion
of the proposed transaction Actom thus will own and have sole control
of Savcio for competition law purposes.
Actom submitted that the proposed transaction is an attractive investment
because the Savcio business is a complementary fit to its business. Through
Savcio’s activities in the repair sector combined with Actom’s manufacturing
operations, the merged entity will be able to provide a ‘one-stop shop’
ensuring the continued viability and growth of both businesses.
9] From the perspective of Savcio, the proposed sale offers a return on
investment for the Savcio shareholders who wish to realise the value of
their investment.
Activities of merging parties
10]From the above-mentioned description of the activities of the merging
parties it is evident that Actom is predominantly involved in the
manufacturing of electrical equipment and related products whilst
manufacturing of electrical equipment and related products whilst
Savcio is mainly involved in the repair of these products. There is
however a horizontal overlap between the merging parties’ activities,
as explained below.
Horizontal overlap
11]The activities of the merging parties horizontally overlap since they both
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manufacture/assemble and supply commutators, a particular
component of a DC motor. 6 A commutator, in simple terms, comprises
of copper segments arranged in a circular form (i.e. the so-called
“copper pack”) which is attached to the steel work. The commutator is
attached to the armature of the motor (i.e. the rotating part) and uses
the electrical current to rotate the armature.
Actom (through Contact Engineering) is a manufacturer of
commutators; it produces bulk volumes of the copper pack (the
essential and most complex aspect of the commutator to manufacture)
and steel casings for commutators. It imports copper in individual
pieces and manufactures the copper pack from scratch. It supplies
commutators primarily to the rail industry, which represents the
dominant source of demand, and it is an approved supplier of TRE, the
largest traction motor repairer (also see paragraph 33 below).
Instead of manufacturing the commutator from raw materials like
Actom, Savcio predominately assembles commutators by importing the
complete copper pack and assembling it by attaching the copper pack
to the steel work. The merging parties submitted that in most cases the
steel work does not need to be replaced and therefore it is less costly
to import only the copper pack and reuse the existing steel casing than
import the complete set.
Vertical dimension
12]There are vertical relationships between the merging parties by virtue of
the fact that they buy and sell certain products from each other in the
ordinary course of business. The most significant of these products are
copper wire and insulation products. We note that commutators,
armature coils, copper wire and insulation are inputs in the
manufacture and maintenance and repair of electrical motors and
transformers.
Commission’s assessment
Commutators
13]The Commission found likely competition concerns as a result of the
proposed deal only in the market for the supply of commutators. We
proposed deal only in the market for the supply of commutators. We
therefore focus on this market in our analysis below. Section B of the
imposed conditions relates to this market.
6 There is no commutator in an AC motor.
8
Copper wire products, armature coils and laminations
14]In regard to the market(s) for the supply of copper wire products the
merging parties are in a vertical relationship since Actom purchases
copper wire from Savcio’s Transwire and Wilec divisions in order to
manufacture electric motors. The Commission however found that the
proposed transaction raises no competition concerns in the markets for
the supply of copper products. The merging parties nevertheless
voluntarily gave undertakings in this regard (see section C of the
imposed conditions).
The Commission further found no likely substantial prevention or
lessening of competition as a result of the proposed transaction in the
markets for the supply of armature coils and laminations. There is no
horizontal overlap between the activities of the merging parties in both
these markets.
The Tribunal has no reason to doubt the Commission’s findings that no
likely competition concerns arise as a result of the proposed deal in
any relevant copper wire product market as well as the markets for the
supply of armature coils and laminations. We have no evidence of any
likely substantial prevention or lessening of competition as a result of
the proposed transaction in these markets and therefore no justification
for imposing any conditions on the merging parties in relation to these
markets. We therefore do not deal with these markets in any further
detail below.
Horizontal overlap: Supply of commutators
15]In regard to the manufacture/assembly and supply of commutators, we
focus on the use of commutators in locomotives due to the fact that the
merging parties’ activities overlap in commutators used in the DC
traction motors found in locomotives. Mr. Govender explained the
function of a commutator in the overall system as follows: “[t]he
commutator is part of the whole system, it fits into a traction motor, a
commutator is part of the whole system, it fits into a traction motor, a
traction motor fits into a locomotive and a locomotive is in total
infrastructure that it works in, or it has to work between the overhead
and the rail ...”.7
The Commission’s market investigation revealed that the participants in
this market include Contact Engineering (Actom), Savcio, Commutator
Engineering, YNF, Morgan Carbon and Armtec. ARS is only an in-
7 Transcript page 116.
9
house supplier of commutators and does not currently supply
commutators to the open market. Post-merger the merged entity will be
the largest player in the supply of commutators in South Africa, with
Contact Engineering (Actom) having the lion’s share of this market.
Savcio however currently is not a particularly large player in this
market; Mr. Govender confirmed that Savcio at present is only
accredited by TRE to supply a single type of commutator model,
namely the 6E1MA model.
The Commission further found that TRE and the Passenger Rail
Agency of South Africa (PRASA) are the predominant commutator
customers since the majority of DC motors in South Africa are in the
rail locomotives operated by them. Mr Govender testified that TRE has
an active fleet size of more than 2 000 locomotives; whist PRASA has
a fleet size of more than 1 000 motor coaches.8 He further testified that
a single locomotive may require a configuration of four to six traction
motors.9 He confirmed that TRE is able to source parts for (only)
approximately 900 of its locomotives from the original equipment
manufacturers (OEMs).10 He further confirmed that TRE’s concerns in
regard to the proposed transaction relate to some 1 200 electrical
locomotives in respect of which there are no OEMs from which TRE
can order parts.11
TRE issues tenders for the supply of commutators to be used in motor
repair and PRASA outsources repair work. The Commission found that
these bids are issued every two to three years. It is important to note
that the merging parties and TRE thus are competitors for PRASA’s
traction motor repair work.
TRE currently does not manufacture or import any commutator classes
and Mr. Govender further testified that although TRE currently repairs
commutators at its facilities this is done only to a very limited extent.12
Whilst PRASA raised no concerns regarding the proposed merger,
TRE indicated that the proposed merger would reduce the number of
TRE indicated that the proposed merger would reduce the number of
players in the commutator supply market making it more difficult to split
tenders between suppliers and to post-merger switch to an alternative
supplier should one of the contracted suppliers not deliver.
The Commission contacted certain foreign companies such as Sahney
(based in India) and Morgan Carbon (based in France) who indicated
that they would be able to supply even small volumes of niche class
commutators to the South African market. Sahney currently supplies a
number of South African companies with certain mainstream
commutators and further indicated that it could build a prototype if it
was given drawings and plans for other commutator sizes. Morgan
Carbon indicated to the Commission that it intends increasing its
supply into South Africa once it has completed a project to increase
capacity in its factories.13
8 Transcript pages 13 and 14.
9 Transcript page 14.
10 Transcript page 15.
11 Transcript page 16.
12 Transcript page 21.
13 Commission’s recommendation page 64.
10
TRE however advised the Commission that it currently has no
structures in place to backward integrate in the self-supply of
commutators, although it is a possibility for the future but a long-term
investment that may take four to five years to achieve.
The Commission concluded that proposed merger is likely to
substantially prevent or lessen competition in the marker for the supply
of commutators unless a condition is put in place to ensure that the
merging parties continue to supply TRE at market related prices for the
next five years. The merging parties indicated their willingness post-
merger to extend TRE’s commutator supply contract for a further five
years, which contract is subject to base prices and an inflationary
increase. The Commission was of the view that such a condition would
legitimately address TRE’s concerns and ensure it the time needed to
set up alternatives such as imports/backward integration.
TRE’s submissions
16]During the Tribunal hearing TRE abandoned its original stance that the
proposed merger should be prohibited and ventured certain counter-
conditions to that proposed by the Commission and the merging
parties. In Mr Govender’s words: “ I can’t think we’re saying we’re not
opposing the merger we’re saying that there must be conditions that
we have that will be met”.14
Following a Tribunal directive15, TRE filed written submissions in
regard to its proposed conditions. In short, TRE submitted that
enhanced conditions should be imposed on the markets for
commutators and copper wire products and furthermore that conditions
should be imposed on the merged entity in relation to the markets for
armature coils and laminations.
We have pointed out in paragraphs 28 to 30 above that no evidence
exists of a likely substantial prevention or lessening of competition in
the markets for copper wire products, armature coils and laminations.
Therefore we below only deal with TRE’s concerns relating to the
Therefore we below only deal with TRE’s concerns relating to the
market for the manufacture/assembly and supply of commutators.
TRE’s main criticism of the Commission’s proposed conditions in
relation to commutator supply related to the time period of application
thereof, which the Commission felt should be five years from the date
of the Tribunal’s order. Mr. Govender during his testimony contended
that “the five year timeframe is very, very limited given the experience
that we have currently with overseas suppliers and primarily
manufacturers”.16 Mr. Govender further explained that in order for TRE
to purchase a commutator from an overseas manufacturer TRE “would
have to give them the drawings, the specifications, the operating
14 Transcript page 45.
15 Transcript page 120.
16 Transcript page 35.
11
conditions, and also send them a traction motor, so they can simulate
the whole fitment of the commutator onto the traction motor”.17
Whilst Mr. Govender at the hearing contended that the period of
application of these conditions should be “ten” years, TRE in its
consequent written submissions following the hearing stated that this
period should be “seven” years. The rationale for this period, according
to TRE, was “the vicissitudes involved in having components for
traction engines, which are obsolete, redesigned and manufactured,
and the alternative evidence relating to the Capex required to set up a
plant of the sophistication required by Transnet in order to manufacture
such commutators ... in-house”.18
TRE further submitted that “the volumes of components required by
Transnet were cyclical in nature ...” and that the conditions should cater
for this.19 It suggested a tightening of the lead times in TRE’s existing
commutator supply contract, which obliges delivery within 8 to 14
weeks, to post-merger delivery by the merged entity between 8 to 12
weeks to ensure that “mission critical” services are not interrupted.20
This would be subject to TRE providing the merged entity with a
“rolling three month forecast” of its demand of commutators.21
We below deal first with the period of application of the conditions, and
second with commutator volumes/delivery.
Period of application of commutator conditions
17]The Commission, in reaction to TRE’s submissions in relation to the period
of application of the conditions relating to commutators, maintained that
a five year period of application of the proposed conditions from the
date of the Tribunal’s order is sufficient for TRE to set up alternative
commutator supply.22 The Commission further submitted that in order
to constrain the merged entity TRE would not need to itself produce
every single commutator that it requires.23
We have found TRE’s ultimate submission of a period of seven years
We have found TRE’s ultimate submission of a period of seven years
of application of the conditions relating to commutators to be arbitrary
and without factual justification. In particular we found Mr. Govender’s
equation of the time period required to redesign and commission and
entire traction motor to that required for a commutator to be wholly
unjustified.
Mr Govender provided the following background information and
17 Transcript page 117.
18 Paragraph 2.3.1 of TRE’s written submissions in support of its proposed conditions.
19 Paragraph 3 of TRE’s written submissions in support of its proposed conditions.
20 Paragraph 4 of TRE’s written submissions in support of its proposed conditions.
21 Paragraph 5 of TRE’s written submissions in support of its proposed conditions.
22 Paragraph 3 of the Commission’s written submissions in relation to TRE’s proposed
conditions.
23 Paragraph 5 of the Commission’s written submissions in relation to TRE’s proposed
conditions.
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explanation of the problems associated with TRE’s current sourcing of
a entire traction motor form China: TRE “started a process because the
fleet required a new traction motor because of its unreliability in terms
of design of that traction model so we copied the design of the 73/71
combination traction motor that we have and we went to suppliers to
develop it and this was during 2007. In 2010 we placed the orders and
deliveries started taking place but we’ve had, normally we have one
type test but we’ve had two type tests and we’ve chosen Yungi24 but
we’ve had numerous defects with the supply of the traction motor in
terms of design and it was copied”.25 He further confirmed that this
related not to a single element of the motor, such as a commutator
(which forms an integral part of a traction motor26), but to “a complete
traction motor ...”27; a “whole function of the motor ... [b]ecause the
motor operates in a system”.28 Mr. Govender further confirmed that
TRE at present has no specific problems with the commutator in the
Yungi motor.29 In Mr. Govender’s words the problems with the traction
motor supplied by Yungi relate to “the design of the interpoles, the
wrong size of copper wire that was used, or copper, strand copper that
was used in the design of the interpoles, which caused malfunction in
the locomotive, then we had fatigue of the shaft and now we have
cooling problems, so we don’t normally do it, we are going back for a
second prototype and a type test”.30
Furthermore, from a customer countervailing power perspective we
note that the threat is present and is real of TRE in future self-supplying
in all or some of its commutator needs by commissioning commutators
from an overseas supplier. In the context of such an existing credible
threat the precise timing of actual self-supply is less important. Should
the merged entity engage in post-merger anti-competitive conduct (for
example by significantly increasing commutator prices after the
example by significantly increasing commutator prices after the
merger) and TRE initiate a process of self-supply, then the merged
entity would risk losing its commutator sales to TRE for the duration of
this “declining”31 market.
We conclude that there is no factual justification for deviation from the
five year period of application of the conditions relating to commutators
as proposed by the Commission and accepted by the merging parties.
Commutator volumes and delivery
18]In respect of commutator volumes, the Commission submitted inter alia
that it would be inappropriate to base TRE’s needs on historical
volumes given the recent change in the market from TRE being a
24 Yungi is part of the China North railroads, with Global Engineering as its local agent, see transcript
page 24.
25 Transcript page 24.
26 Transcript pages 64 and 67.
27 Transcript page 26.
28 Transcript page 63.
29 Transcript page 112.
30 Transcript pages 111 and 112.
31 DC motors are slowly being phased out in the next 15 to 20 years.
13
monopolist to TRE being a competitor alongside other maintenance
and service firms.32
In relation to commutator delivery, the merging parties raised
objections to TRE’s proposed conditions since TRE allegedly regularly
failed to take delivery of commutators when this was tendered by
Savcio. They argued that TRE’s proposed condition would oblige the
merging parties to make delivery within a specified time, without
obliging TRE to take delivery.33
In regard to the lead time of delivery of commutators to TRE the
Tribunal had regard to the existing contractual terms of agreement
between Actom and TRE. We conclude that since a lead time of 8 to
14 weeks was acceptable under normal commercial contractual
conditions such lead time provided for in the conditions should be
sufficient (see section B of the imposed conditions).
However, in order to enhance transparency of TRE’s demand of
commutators given that it is cyclic in nature and fluctuates, the Tribunal
has included a condition that states that TRE may, if it so desires,
provide the merged entity with a six month view of its commutator
demand with a rolling three month demand forecast.
Monitoring of conditions
19]In regard to the Commission’s post-merger monitoring of the proposed
conditions the Tribunal raised concerns during the hearing in regard to
the adequacy of the Commission’s originally proposed monitoring. The
Commission then enhanced the proposed monitoring relating to the
common shareholding conditions and the supply of copper wire
conditions.34 The merging parties had no objection to the
Commission’s ultimate proposed monitoring clauses. 35 The Tribunal
included these monitoring clauses in its final order.
Public interest issues
20]The merging parties confirmed that the proposed transaction will have no
adverse effect on employment, more specifically that no retrenchments
are envisaged as a result of the proposed deal. 36 Furthermore, the
are envisaged as a result of the proposed deal. 36 Furthermore, the
conditional approval of the proposed transaction raises no other
32 See reason for this in paragraph 4 of the Commission’s written submissions on TRE’s
proposed conditions.
33 Paragraph 2.13 of the merging parties’ submission of 09 February 2012 on conditions.
34 See Commission’s written submissions of 09 February 2012 on conditions.
35 Paragraph 7 of the merging parties’ submission of 09 February 2012 on conditions.
36 See pages 10 and 53 of the record.
14
concerns from a public interest perspective.
Conclusion
21] For the above reasons we approved the proposed transaction with the conditions
as set out in paragraph 2 above. For the sake of completeness, a copy of the
Tribunal’s order, including the imposed conditions, is attached hereto as
“Annexure A”.
____________________ 08 May 2012
ANDREAS WESSELS DATE
Yasmin Carrim and Takalani Madima concurring
Tribunal researcher: Thabo Ngilande
For the merging parties: Adv A Rafik Bhana SC and M A Wesley instructed by
Norton Rose and Webber Wentzel
For TRE: Adv C E Puckrin SC and H Gani
For the Commission: Lameez Vania
15