About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Competition Tribunal
SAFLII
>>
Databases
>>
South Africa: Competition Tribunal
>>
2015
>>
[2015] ZACT 20
|
|
Siemens AG v Dresser-Rand Group Inc (020024) [2015] ZACT 20 (13 March 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: 020024
In the matter
between:
SIEMENS
AG
.......................................................................................................
Primary
Acquiring Firm
And
DRESSER-RAND
GROUP INC.
….........................................................................
Primary
Target Firm
Panel: Mr A Wessels
(Presiding Member)
: Ms M Mazwai
(Tribunal Member)
: Ms M Mokuena
(Tribunal Member)
Heard on: 25
February 2015
Order Issued on : 25
February 2015
Reasons Issued on :
13 March 2015
Reasons for
Decision
Approval
[1] On 25 February
2015, the Competition Tribunal (“Tribunal”)
unconditionally approved the acquisition by Siemens AG
(“Siemens")
through its subsidiary Dynamo Acquisition Corporation (“Dynamo”)
of Dresser-Rand Group Inc (“Dresser-Rand”).
[2] The reasons for
approving the proposed transaction follow.
Parties to
proposed transaction
[3]
The primary acquiring firm is Siemens. No one firm controls Siemens
for competition law purposes. Siemens’ shares are
quoted on all
stock exchanges in Germany, as well as on the Swiss Stock Exchange.
Siemens has a number of subsidiaries in South
Africa.
1
[4] Siemens is a
global electronics and electrical engineering group which operates
through the following divisions: power and gas;
wind power and
renewables; power generation services; energy management; building
technologies; mobility; digital factory; process
industries and
drives; healthcare; and financial services.
[5]
The primary target firm is Dresser-Rand. The shares of Dresser-Rand
are listed on the New York Stock Exchange. Dresser-Rand
has a number
of subsidiaries in South Africa.
2
[6] Dresser-Rand is
a global supplier of custom-engineered rotating equipment solutions
for applications in the oil, gas, chemical,
petrochemical, process,
power, military and other industries worldwide. Dresser-Rand supplies
new units and aftermarket parts and
services. Its product portfolio
includes compressors, small gas turbines, industrial steam turbines,
gas expanders, gas and diesel
engines and associated control panels.
Proposed
transaction and rationale
[7] Siemens intends
to acquire all of the issued and outstanding common shares of
Dresser-Rand through Dynamo.
[8] Siemens
submitted that it wishes to compete head-on with competitors across
all parts of the energy industry including the global
oil and gas
sector. The proposed transaction will broaden its product portfolio
and technology base.
[9] Dresser-Rand
submitted that the acquisition will facilitate its continued growth.
[10]
The worldwide activities of the merging parties overlap in relation
to the manufacture and supply of turbo-compressors
3
and industrial steam turbines
4
.
The merging parties submitted that the demand for these products is
lumpy
5
and therefore submitted global market shares over a period of five
years.
[11] The Competition
Commission (“Commission”) concluded that the relevant
markets affected by the proposed transaction
are the international
markets for the manufacture and supply of (i) turbo compressors; and
(ii) industrial steam turbines with
an output of up to 100MW.
[12] With respect to
the international market for the supply of turbo compressors, the
Commission found that the merged entity will
have a post-merger
market share of less than 25%. The merged entity’s ability to
increase prices postmerger will likely be
sufficiently constrained by
other competitors such as General Electric, Solar Turbines, MAN
Diesel & Turbo and Mitsubishi
Heavy Industries (MHI) among
others.
[13] Similarly, with
respect to the international market for the supply of industrial
steam turbines with an output of up to 100MW,
the Commission found
that the merged entity will have a post-merger market share of less
than 25%. The merged entity’s ability
to increase prices
post-merger will likely be sufficiently constrained by other
competitors such as Shin Nippon, BHEL, General
Electric and
TMG-Kanis/Turbinas among others.
[14] Furthermore, to
assess the closeness of competition between the merging parties’
products the Commission obtained relevant
bidding information for the
period 2009 to 2014 and also obtained the views of customers in South
Africa. Based on its assessment
of these tender data for South
Africa, the Commission concluded that the merging parties cannot be
regarded as close competitors
in South Africa since they do not
generally bid for the same projects. Furthermore, customers confirmed
that they do not consider
the merging parties’ products to be
similar.
[15] The Commission
therefore concluded that the proposed merger is unlikely to
substantially prevent or lessen competition in the
above-mentioned
relevant markets.
[16] We concur with
the Commission’s conclusion.
Public interest
[17]
The merging parties confirmed that the proposed transaction will not
have any negative effect on employment in South Africa
and that no
retrenchments will result from the proposed transaction.
6
[18] The proposed
merger further raises no other public interest concerns.
Conclusion
[19] In light of the
above, we conclude that the proposed transaction is unlikely to
substantially prevent or lessen competition
in any relevant market.
In addition, no public interest issues arise from the proposed
transaction. Accordingly we approve the
proposed transaction
unconditionally.
13 March 2015
DATE
Mr AWessels
Ms M Mazwai and
Ms M Mokuena concurring
Tribunal Researcher:
Moleboheng Moleko
For the merging
parties: Rosalind Lake of Norton Rose Fulbright
For the Commission:
Gilberto Biacuana
1
See
merger record, page 15.
2
The
reasons for approving the proposed transaction follow.
3
Compressors
are designed to compress or squeeze air and other gases into a more
pressurized state than that in which they exist
under normal
atmospheric conditions.
4
A
steam turbine is a device that extracts thermal energy from
pressurized stream and converts it into mechanical energy.
5
Merger
record, page 53.
6
Merger
record, pages 9, 46 and 62.