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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 016196
In the matter between:
Prestige Bullion (Pty) Ltd Acquiring Firm
And
Rand Refinery (Pty) Ltd Target Firm
Panel : Yasmin Carrim (Presiding Member),
Mondo Mazwai (Tribunal Member)
and Andiswa Ndoni (Tribunal Member)
Heard on : 17 April 2013
Order issued on : 17 April 2013
Reasons issued on : 08 May 2013
Reasons for Decision
Approval
[1] On 17 April 2013 the Competition Tribunal (“Tri bunal”) approved the
merger between Prestige Bullion (Pty) Ltd (“Prestig e”), and Rand
Refinery (Pty) Ltd (“Rand Refinery”) in respect of the 22 Carat Gold
Krugerrand Bullion Coin Marketing, sale and distrib ution business
(“Kruger Bullion”) of Refinery. The reasons for app roving the proposed
transaction follow below.
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Parties to the Transaction
[2] The primary acquiring firm is Prestige, a compa ny incorporated in
accordance with the laws of the Republic of South A frica. Prestige is a
joint venture between Rand Refinery and SA Mint. T his joint venture
will acquire the business of Rand Refinery that is currently active in the
distribution and marketing of Kruger Bullion Coins. .
[3] The target firm is the Kruger Bullion business of Rand Refinery which is
involved in the marketing, sale and distribution of Krugerrand bullion
coins.
[4] Rand Refinery is the primary refiner which refines various precious gold
metals, metals which can be used in the minting of Kruger Bullion
Coins. SA Mint mints Kruger Bullion Coins .
The Rationale
[5] The MD of the South African Mint Company (Pty) Ltd (“SA Mint”) Mr
Tsehlo, during the hearing submitted that the ratio nale for the
transaction is to correct a long standing anomaly i n the market,
whereby Refinery, a private entity, has distributio n rights to a product
like the Kruger Rand which is legal tender and wh ich by law ought to
be produced and distributed to the public by the SA Mint.
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The relevant market and the impact on competition
[6] The relevant product market is the upstream nat ional market for the
minting of Kruger bullion coins, and the downstream national market for
the marketing and distribution of Kruger bullion coins. 2
[7] The market for the production of Kruger bullion coins presents
significant statutory barriers to entry since the S outh African Bank
1 See Transcript para, page . SA Mint is the only company active in the market for the minting of
Kruger bullion coins by law.
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(“SARB”) is the entity lawfully permitted to commis sion and produce
legal tender.
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[8] There is no horizontal overlap between the acti vities of the merging
parties, however there is a vertical overlap as the target firm sells and
distributes Kruger bullion coins produced or minted by SA Mint. Such
vertical overlap however is unlikely to cause any s ignificant foreclosure
concerns. 4 As explained by Mr Tsehlo during the hearing, SA M int sells
numismatic coins directly to the public, and does n ot sell Bullion coins
directly to the public, nor does it have any intent ions to do so in future.
Hence there will be no change in the current distri bution practice and it
will continue post merger.
CONCLUSION
[9] In light of the above, we find that the transac tion is unlikely to
substantially prevent or lessen competition in the relevant markets.
[10] There are no significant public interest issue s and we accordingly
approve the transaction.
____________________ 08 May 2013
Yasmin Carrim DATE
Mondo Mazwai and Andiswa Ndoni concurring.
Tribunal Researcher: Caroline Sserufusa
For the merging parties:
Nkonzo Hlatshwayo of Webber Wentzel
For the Commission: Themba Mahlangu
4 See Commission Report page 5.