COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 40/LM/Apr12
In the matter between:
Grindrod Holdings SA (Pty) Ltd Acquiring Firm
And
Ocean Africa Container Lines (Pty) Ltd Target Firm
Panel : Norman Manoim (Presiding Member),
Andreas Wessels (Tribunal Member)
and Medi Mokuena (Tribunal Member)
Heard on : 14 June 2012
Order issued on : 14 June 2012
Reasons issued on : 24 July 2012
Reasons for Decision
Approval
[1] On 14 June 2012 the Competition Tribunal (“Tribunal”) unconditionally
approved the merger between Grindrod Holdings SA (Pty) Ltd and
Ocean Africa Container Lines (Pty) Ltd. The reasons for approval
follow below.
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The Transaction
[2] The primary acquiring firm is Grindrod Holdings SA (Pty) Ltd
(“Grindrod”), a wholly owned subsidiary of Grindrod Freight Services
(Pty) Ltd (“Grindrod Freight”). Grindrod Freight is wholly owned by
Grindrod Limited, a company listed on the Johannesburg Securities
Exchange (“JSE”).
[3] The primary target firm is Ocean Africa Container Lines (Pty) Ltd
(“OACL”), a joint venture wherein Grindrod has 49% and Safmarine
Container Lines N.V. (“SCL”) has 51% shareholding. OACL is a
company registered in terms of the laws of the Republic of South
Africa.
The Rationale
[4] In terms of the proposed transaction, Safmarine is exercising its
contractual put option which requires Grindrod to purchase its shares in
OACL. Post merger Grindrod will have 100% shareholding in OACL
and thus OACL will become a wholly owned subsidiary of Grindrod.
The relevant market and the impact on competition
[5] The merging parties submit that the relevant product market is the
market for the transportation of containerized cargo between ports. In
particular, the market for the transportation of containerized cargo
between ports along the Southern African coast, which is called port to
port market.
[6] The merging parties further state that the proposed transaction will not
increase concentration in the port to port market. Grindrod is involved
in the shipping, road transport and rail industries but the services it
provides are different from the port to port services provided by OACL.
Grindrod’s shipping services are offered through its subsidiaries, Island
View Shipping, Unicorn Shipping and Unical Services. These services
are limited to bulk cargo shipping, bunkering and tanker services. The
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merging parties submit that these services do not compete with
OACL’s activities.
[7] The Commission is of the view that there is no horizontal overlap
between activities of the merging parties. However, there is a limited
vertical overlap that exists in the activities of Grindrod and OACL in that
Grindrod provide shipping related services to OACL such as
warehousing, insurance, IT, and communication services.
[8] The merging parties’ market shares in all markets identified above are
relatively small and do not raise competition concerns. It should be
further noted that Grindrod’s involvement in the port to port market is
only through the joint venture, OACL, as such there is no market
accretion. The barriers to entry in the port to port market are low.
Furthermore, there are no foreclosure concerns.
[9] The Commission concludes that the proposed transaction is unlikely to
prevent or lessen competition because there is no overlap in the
activities of the merging parties, a conclusion we agree with.
CONCLUSION
[10] There are no significant public interest issues and we accordingly
approve the transaction without conditions.
____________________ 24 July 2012
N Manoim DATE
A Wessels and M Mokuena concurring.
Tribunal Researcher: Thabo Ngilande
For the merging parties: Shepstone and Wylie Attorneys
For the Commission: Mogau Aphane
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