About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Competition Tribunal
SAFLII
>>
Databases
>>
South Africa: Competition Tribunal
>>
2013
>>
[2013] ZACT 101
|
|
Ponahalo Investments (Pty) Ltd v De Beers Group Services (Pty) Ltd in respect of Diamond Trading Company South Africa (017541) [2013] ZACT 101 (4 October 2013)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: 017541
In
the matter between:
Ponahalo
Investments (Pty) Ltd
Acquiring
Firm
And
De
Beers Group Services (Pty) Ltd in respect of
Target
Firm
Diamond
Trading Company South Africa
Panel
Andreas
Wessels (Presiding Member)
Andiswa
Ndoni (Tribunal Member)
Mondo
Mazwai (Tribunal Member)
Heard
on
25
September 2013
Order
issued on
25
September 2013
Reasons
issued on :
04
October 2013
Decision
Approval
1.
On 25 September 2013, the Competition Tribunal (“Tribunal”)
unconditionally approved the proposed transaction involving
Ponahalo
Investments (Pty) Ltd (“Ponahalo”) and De Beers Group
Services (Pty) Ltd (“DBGS”) in respect of
its South
African diamond trading operating division, namely Diamond Trading
Company South Africa (“DTC SA”).
2.
The reasons for the approval of the proposed transaction follow.
Merging
parties and their activities
3.
The primary acquiring firm is Ponahalo, a firm incorporated in terms
of the laws of the Republic of South Africa. Ponahalo is
a
wholly-owned subsidiary of Ponahalo Holdings (Pty) Ltd (“Ponahalo
Holdings”). The shareholders of Ponahalo Holdings
are: (i)
Ponahalo Capital (Pty) Ltd, (ii) De Beers Equal Allocation Trust,
being a trust established for the benefit of employees
and identified
pensioners of the De Beers group of companies (“De Beers
Group”) in South Africa, the substantial majority
of which are
historically disadvantaged South Africans (“HDSAs”); and
(iii) De Beers Key Employee Trust Number One
and De Beers Key
Employee Trust Number Two, being trusts established for the benefit
of key employees of the De Beers Group in
South Africa, the
substantial majority of which are HDSAs.
4.
Ponahalo exercises negative control over DBCM Holdings (Pty) Ltd
(“DBCM Holdings”) by virtue of certain minority
protection rights attached to its 26% shareholding in DBCM Holdings.
DBCM Holdings owns all the issued shares in De Beers Consolidated
Mines (Pty) Ltd (“DBCM”). DBCM in turn owns all the
issued shares in Main Street 1085 (Pty) Ltd (“Main Street
1085").
1
5.
Ponahalo is the direct Black Economic Empowerment (“BEE”)
shareholder in the De Beers Group, and was set up as a
special
purpose vehicle as part of Project Prism to acquire the 26%
shareholding in DBCM Holdings and hold the third party debt
structure
which underpinned such acquisition.
6.
The firms in the Ponahalo Group are investment holding companies that
do not conduct any commercial activities of their own.
The only
entity in the Ponahalo Group that is involved in a business activity
is Really Useful Investments No 72 (Pty) Ltd (“RUI”),
which owns an abalone farm. Furthermore, the above-mentioned Trusts
(see paragraph 3 above) do not conduct any business activities
of
their own or control any other entities that conduct such activities.
7.
The primary target firm is DBGS in relation to DTC SA.
8.
The principal activities of the De Beers Group are the exploration,
mining, processing, valuing and sale of rough diamonds. Together
with
its joint venture partners, the De Beers Group is the world’s
leading rough diamond producer (by value) with mining
operations in
Botswana, Namibia, South Africa and Canada. DTC SA is the rough
diamond sorting, valuing and trading arm of the De
Beers group of
companies in South Africa. DTC SA purchases and on-sells rough
diamonds produced by DBCM, which houses the De Beers
Group’s
South African mining operations.
Proposed
transaction and rationale
9.
In terms of the proposed transaction, Ponahalo intends to acquire
indirect negative control over the business of DTC SA (also
see
paragraph 4 above). The way in which this will be accomplished is
that DBGS will sell DTC SA to Main Street 1085.
10.
According to Ponahalo, the proposed transaction will increase the
long term value of its investments in DBCM.
11.
From DBGS’s perspective this transaction
inter
alia
serves as a mechanism to empower DTC SA.
Competition
analysis
12.
There is no horizontal overlap between the activities of the merging
parties since the Ponahalo Group does not sell any products
or
services nor has interests in firms that provide products or services
that involve rough diamond sorting, valuing, selling or
related
activities. There is furthermore no vertical relationship between the
merging parties. We therefore conclude that the proposed
transaction
is unlikely to result in a substantial prevention or lessening of
competition in any relevant market.
Public
interest
13.
The merging parties confirmed that the proposed transaction will have
no adverse effect on employment and that it will not result
in any
retrenchments in South Africa.
2
The proposed transaction raises no other public interest concerns.
Conclusion
14.
For the reasons mentioned above, we approve the proposed transaction
unconditionally.
Andreas Wessels
04
October 2013
Date
Andiswa
Ndoni and Mondo Mazwai concurring
Tribunal
researcher: Ipeleng Selaledi
For
the merging parties: Desmond Rudman of Webber Wentzel
For
the Commission: Portia Bele
1
According
to the merging parties, Main Street 1085 intends to change its name
to De Beers Sightholder Sales South Africa (Pty)
Ltd;
2
See
merger record, pages 8, 43 and 44.