About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Competition Tribunal
SAFLII
>>
Databases
>>
South Africa: Competition Tribunal
>>
2013
>>
[2013] ZACT 84
|
|
Grindrod Holdings South Africa (Pty) Ltd v RRL Grindrod Locomotives (Pty) Ltd (016709) [2013] ZACT 84 (2 August 2013)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No.: 016709
In
the matter between:
Grindrod
Holdings South Africa (Pty) Ltd Primary Acquiring Firm
and
RRL
Grindrod Locomotives (Pty) Ltd Primary Target Firm
Panel
Andreas
Wessels (Presiding Member)
Andiswa
Ndoni (Tribunal Member)
Medi
Mokuena (Tribunal Member)
Heard
on
16
July 2013
Order
issued on
16
July 2013
Reasons
issued
02
August 2013
DECISION
Approval
[1]
On 16 July 2013, the Competition Tribunal (“Tribunal”)
unconditionally approved the proposed merger between Grindrod
Holdings South Africa (Pty) Ltd and RRL Grindrod Locomotives (Pty)
Ltd.
[2]
The reasons for approving the proposed transaction follow.
Parties
to transaction
[3]
The primary acquiring firm is Grindrod Holdings South Africa (Pty)
Ltd (“GHSA”). It is controlled by Grindrod Freight
Services (Pty) Ltd, which is controlled by Grindrod Limited.
[4]
The Grindrod Limited Group is primarily active in the provision of
freight and logistics services. In particular, it specialises
in
moving bulk dry commodities, bulk liquid commodities, containerised
cargo and vehicles by road, rail, sea and air on a global
basis.
[5]
The primary target firm is RRL Grindrod Locomotives (Pty) Ltd (“RRL
GL”). GHSA currently holds 50% of the entire
issued share
capital of RRL GL and RRL GL falls under the Freight Services
Division of the Grindrod Limited Group. The remaining
current
shareholders of RRL GL are Solethu Investments (Pty) Ltd (26%), Jan
Marthinus Bouwer (“Bouwer”) (10.5%), Cornelius
Marthinus
Erasmus (“Erasmus”) (10.5%) and the Spoon Family Trust
(3%). RRL GL controls RRL Grindrod Limited (Sierra
Leone).
[6]
RRL GL is active in the area of the manufacture, maintenance,
refurbishment and leasing of locomotives, together with the supply
of
locomotive parts.
Proposed
transaction and rationale
[7]
This transaction represents a change in control given that GHSA
already owns a 50% interest in RRL GL and will acquire a further
1%
1
interest in terms of this transaction in order to obtain sole control
over RRL GL as opposed to the current joint control. GHSA
will thus
as a result of this transaction cross the bright line of majority
beneficial ownership of RRL GL.
[8]
GHSA submitted that since it is already the largest shareholder in
RRL GL, it makes commercial sense to obtain a majority interest
in
RRL GL.
[9]
The rationale for the two minority shareholders who are each selling
a 0.5% interest in RRL GL, namely Bouwer and Erasmus, is
to realise
part of their investment in RRL GL.
Competition
assessment
[10]
The transaction will not give rise to a horizontal overlap in the
activities of the merging parties. RRL GL’s products
are not
substitutable with those of GHSA and there are no other subsidiaries
or divisions within the acquiring group which provide
the services
which RRL GL offers.
2
[11]
The proposed transaction has a vertical dimension since RRL GL
manufactured and supplied a number of locomotives to Grindrod
Rail
(Mauritius), the Mauritian subsidiary of Grindrod Freight Services
(Pty) Ltd.
3
The merging parties submitted that this sale occurred last year.
4
The Commission however found that these locomotives are being leased
to another company for the purposes of one of the latter’s
projects in Sierra Leone. Therefore, the vertical relationship
between the merging parties will not present any likely competition
effects in South Africa.
[12]
Furthermore, RRL GL currently provides locomotive maintenance
services to the acquiring group. The national market share of
the
merged entity in the maintenance of locomotives is however less than
5%. The Commission further found that post-merger input
foreclosure
was unlikely since Transnet Rail Engineering is also active in the
maintenance of locomotives in South Africa.
[13]
Customer foreclosure in the production and supply of locomotives is
also unlikely since there are other major customers of
locomotives,
including Transnet.
[14]
The Commission obtained the views of customers of the merging parties
regarding the likely effects of the proposed transaction.
None of
these customers raised any concerns about the proposed transaction.
Public
interest
[15]
The merging parties confirmed that the proposed transaction will not
lead to any employment losses.
5
Furthermore, no trade union raised any concerns regarding the
proposed transaction.
[16]
No other public interest issues arise as a result of this
transaction.
CONCLUSION
[17]
Having regard to the facts above, we find that the proposed
transaction is unlikely to substantially prevent or lessen
competition
in any relevant market. Accordingly, we approve the
proposed merger unconditionally.
ANDREAS
WESSELS
02
August 2013
DATE
Andiswa
Ndoni and Medi Mokuena concurring
Tribunal
Researcher: Nicola llgner
For
the Commission: Tshegofatso Radinku
For
the merging parties: Edward Nathan Sonnenbergs Inc.
1
0.5%
from Bouwer and 0.5% from Erasmus.
2
See
pages 11 and 12 of the transcript. Also see letter of Edward Nathan
Sonnenbergs Inc. to the Tribunal dated 17 July 2013, pages
2 to 6.
3
See
letter of Edward Nathan Sonnenbergs Inc. to the Tribunal dated 17
July 2013, pages 4, 5, 7 and 8.
4
See
page 13 of the transcript.
5
See
merger record pages 12 and 24. Also see pages 8 to 11 and 14 of the
transcript.