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[2013] ZACT 117
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MHPower Systems Ltd v New South Africa Company (017848) [2013] ZACT 117 (19 December 2013)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No.: 017848
In
the matter between:
MHPOWER
SYSTEMS LTD
Primary
Acquiring Firm
and
THE
NEW SOUTH AFRICA COMPANY
Primary
Target Firm
Panel :
Takalani Madima (Presiding Member)
Mondo Mazwai (Tribunal
Member)
Medi Mokuena (Tribunal
Member)
Heard
on :
20 November 2013
Order
issued on :
20 November 2013
Reasons
issued on : 19
December
2013
Reasons
for Decision
Approval
[1]
On 20 November 2013 the Competition Tribunal (“Tribunal”)
unconditionally approved the merger between
MHPower Systems Ltd
(“MHPower Systems”) and The New South Africa Company (“SA
NewCo”).
[2]
The reasons for approving the proposed transaction follow.
Parties
to transaction
[3]
The
primary acquiring firm is MHPower Systems which is a public company
incorporated in terms of the laws of the Republic of Japan
and is a
wholly-owned subsidiary of Mitsubishi Heavy Industries (“MHI”).
MHPower Systems is a special purpose joint
venture vehicle formed
specifically for the purpose of the proposed transaction. As such
MHPower Systems has no other activities
or purpose as the date of the
proposed transaction.
[1]
[4]
The primary target firm is SA NewCo which is a special purpose
vehicle which is to be incorporated for the purpose
of housing all of
Hitachi Limited’s (“Hitachi”) business and assets
in South Africa, which are to be contributed
to MHPower Systems. SA
NewCo does not control any firms. These assets, rights and
liabilities are currently owned and controlled
by Hitachi Power
Africa (Pty) Limited (“HPA”). HPA is controlled by
Hitachi Power Europe GmbH (“HPE”),
as well as Chancellor
House Holdings and Makotuio Investments and Services.
Proposed
transaction and rationale
[5]
Globally, this transaction comprises of a series of inter-related and
crossconditional steps which will culminate
in the acquisition
of sole control by MHPower Systems over the thermal power generation,
geothermal power systems, environmental
equipment, fue! cells and
other related businesses of MHI and Hitachi (collectively referred to
as the “Consolidated Thermal
Power Businesses”).
[6]
MHI and Hitachi share the same corporate policy of contributing to
society through the development of superior,
original technologies
and products that are environmental friendly. The proposed
transaction will thus aid the merging parties
to develop a stable and
efficient management base for the new company.
Competition
assessment
[7]
The market for the proposed transaction is international, and since
both Mitsubishi and Hitachi are manufacturers
of commercial use
boilers, there is a horizontal overlap. However it seems that the
market can be defined even narrower as depending
on customer
requirements Therefore the Commission decided not to conclude on the
scope of the relevant product market, as it does
not affect the
assessment of the proposed transaction.
[8]
The
Commission was advised by Alstom Power (“Alstom”), a
competitor of the merging parties that the contracts to manufacture
and supply commercial boilers are secured via tenders which are open
and competitive and that the market is an international one
as
multi-national companies compete or bid for such projects.
[2]
Market
share
[9]
The
estimated post-merger market share of MHI and Hitachi internationally
is less than 4%, with a market accretion of less than
2%. Such market
share is thus minimal and unlikely to raise significant competition
concerns.
[3]
Alstom
also advised that it had no concerns in relation to the proposed
transaction as it competes with the merging parties in a
number of
jurisdictions worldwide
[4]
Public
interest
[10]The
Commission advised during the hearing that at the time of the
notification of the transaction to the Commission, Japan had
approved
the transaction. During the Hearing the Commission further advised
that to date clearance had been issued in China, India,
Republic of
Taiwan, United States of America and Turkey.
[5]
[11]The
merging parties confirmed that the proposed transaction will have no
adverse effect on employment and the proposed transaction
raises no
other public interest concerns.
[6]
Conclusion
[12]We
are satisfied with the findings of the Commission and we thus approve
the merger unconditionally.
19
December 2013
DATE
Dr
Takalani
Madima
Ms.
Mondo Mazwai and Ms. Medi Mokuena concurring
Tribunal
Researcher: Caroline
Sserufusa
For
the merging parties: Ryan Goodman for Edward Nathans
Sonnenbergs
For
the Commission: Takalani
Ramavhoya
[1]
See
page 39 of Merger record.
[2]
See
page 762 of Merger record.
[3]
See
page 12 of Commission's report.
[4]
Ibid.
[5]
See
page 3 of Transcript of hearing.
[6]
See
page 3 of Transcript of hearing.