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[2015] ZACT 37
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RBT Grindrod Terminals Proprietary Limited v RBTG Business (020495) [2015] ZACT 37 (21 April 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: 020495
In the matter
between:
RBT
Grindrod Terminals Proprietary
Limited
........................................................
Primary
Acquiring Firm
And
RBTG
Business
...................................................................................................................
Primary
Target Firm
Panel: Norman Manoim
(Presiding Member),
Andiswa Ndoni
(Tribunal Member)
Yasmin Carrim
(Tribunal Member)
Heard on: 08 April
2015
Order issued on: 08
April 2015
Reasons issued on :
21 April 2015
Reasons for
Decision
Approval
[1] On 08 April 2015
the Competition Tribunal (“Tribunal”) unconditionally
approved the large merger whereby RBT Grindrod
Terminals Proprietary
Limited (“”RBT Terminal”) intends to acquire sole
control over the RBTG Business (“RBTG
Business”)
comprising of the Richards Bay coal export operations of Grindrod
Holdings (South Africa”) Proprietary Limited
(“Grindrod
Holdings”) and a vacant property (target property”) owned
by the RBT Resources Proprietary Limited
(“RBT Resources”).
The reasons for approving the transaction follow.
Proposed
transaction and rationale
[2] In terms of an
Implementation Agreement, Grindrod Holdings and RBT Resources intend
to form a joint venture through RBT Terminal
that will house the RBTG
Business. RBT Resources will transfer the target property and
Grindrod Holdings will transfer its Richards
Bay Business into RBT
Terminal; such that post-merger RBT Terminal will own and operate a
fully mechanised coal terminal.
[3] The proposed
transaction is aimed at consolidating various rights, properties,
goodwill and coal export businesses owned by
the RBT Group and the
Grindrod Group in RBT Terminal to create a fully mechanised export
coal terminal. RBT Terminal will focus
on servicing Broad-Based Black
Economic Empowerment (“BBBEE”) mining companies
(including junior miners) by providing
them with commodity export
capacity on a contract basis. In addition to this, RBT Terminal’s
future plan is to develop an
inland coal hub that will allow BBBEE
mining companies (including junior miners) to consolidate their
volumes so as to enable those
with low production volumes to access
export markets and enjoy economies of scale as a collective.
Parties to the
transaction
[4] The primary
acquiring firm is RBT Terminal, a firm incorporated in terms of the
laws of the Republic of South Africa. RBT Terminal
is an empty shelf
company jointly controlled by RBT Resources (holding 50.1 %) and
Grindrod Holdings (with 49.1%). This position,
of joint control, will
be maintained post-merger.
[5] RBT Resources is
an investment company that holds 100% of the issued shares in RBCD
Holdings (Pty) Ltd “(RBCD”),
jointly referred to here as
the RBT Group. As indicated the RBT Group of companies comprise of
dormant firms that do not provide
any services. The RBT Group’s
sole active investment is its 50.1% interest in RBT Terminal. Prior
to being transferred to
RBT Terminal, as part of the proposed
transaction, RBT Resources’ vacant property was housed in RBCD.
RBCD is in the process
of being wound down. RBT Resources is jointly
controlled by: Cozispace (Pty) Ltd (“Cozispace”), Mr
Mlungisi Johnson
and MrThabiso Baku.
[6] Grindrod
Holdings is ultimately controlled by Grindrod Limited, a public
company listed on the Johannesburg Stock Exchange (“JSE”).
Grindrod Limited controls a number of firms including Vanguard
Limited and Grindrod Logistics (Pty) Ltd, hereinafter referred to
as
the Grindrod Group. The Grindrod Group of companies provide freight
and logistics services that includes the transportation
of bulk dry
commodities, bulk liquid commodities, containerised cargo and vehicle
by road, rail, sea and air. Of relevance to the
proposed transaction
are the Grindrod Group’s operations related to coal exports.
The Grindrod Group owns four coal export
terminals namely: the
Navitrade Terminal (Richards Bay Business) that forms part of this
transaction, the Grindrod Terminal de
Carvao da Matola (“Grindrod
MT”) (located in Maputo), Grindrod Mozambique Limitada
(“Grindrod ML”) also
located in Maputo and Grindrod
Namibia Terminal in Walvis Bay.
[7] The primary
target firm comprises of the Grindrod Group’s coal export
operation located at the Richards Bay Coal Terminal
(“RBCT’)
and the target property owned by the RBT Group which is also located
in the Richards Bay area and adjacent
to the Navitrade terminal.
Going forward, RBT Resources intends to expand and develop the coal
export operations and properties
transferred into the joint venture
by 2019.
[8] As indicated
above post-merger the Grindrod Group’s coal export operations
at Richards Bay, together with the target property
will be jointly
controlled by RBT Resources and Grindrod Holdings.
Competition
assessment
[9] As indicated
above Grindrod Group and RBT Group are creating a joint venture with
respect to coal export facilities and the
vacant property will be
converted into a coal export facility.
[10] The Commission
did not conclude on a relevant product market but decided to consider
the activities of the merging parties
in the provision of coal export
facilities, as this is where the merger is likely to impact most. In
addition to this, the Commission
did not conclude on a geographic
market as the proposed transaction is unlikely to raise concerns
regardless of the geographic
market adopted. It therefore decided to
consider the impact of the merger in both the narrow market, Richards
Bay, as well as the
broader market that incorporates Richards Bay,
Durban and Maputo. We now consider the effects on competition in both
the narrow
and broader market.
The narrow market
[11] In the Richards
Bay area there are currently three players that provide coal export
operations, namely The RBTG Business, RBCT
and Richards Bay Dry Bulk
Terminal. Of these RBCT is by far the largest with a market share of
more than 80%. However, as indicated
above, the RBT Terminal intends
to convert the target property into a coal export facility and thus
the Commission took into account
the possible market share accretion
expected post the expansion by RBT Terminal. The Commission estimated
that the merged entity’s
increased capacity would grow its
market share from a low base of less than 10% to more than 15%.
[12] The Commission
thus concluded that the proposed transaction is unlikely to raise any
competition concerns in the narrow market
identified. This is because
the expansion will not increase concentration in the market. Instead
it will increase the capacity
available to mining companies for the
export of coal.
[13] We concur with
the Commission’s findings.
The broader
market
[14] In the broad
geographic market the Commission considered the effect on competition
if it included Grindrod’s coal export
terminal facility in
Maputo. The Commission considered a geographic market that included
Richards Bay, Maputo and Durban. Present
in these markets are RBCT,
RBT Terminal,
Richards Bay Dry Bulk Terminal and the RBTG Business after expansion.
[15] The Commission
estimated that post-merger the merged entity’s market share
would increase to more than 15% should the
expansion be successful.
In addition to this, the Grindrod Group’s market share will not
increase significantly as it will
only hold a 49.9% interest in the
combined RBTG Business and the target property. Furthermore, the
merged entity will continue
to face competition from RBCT whose
estimated market share is more than 55%. The Commission therefore
concluded that the proposed
transaction is unlikely to substantially
prevent or lessen competition in the provision of coal export
facilities in the broad
geographic market identified.
[16] We agree with
the Commission’s conclusions that this transaction is
pro-competitive as it will expand capacity for the
export of coal at
the Richards Bay terminal.
Public Interest
[17] The merging
parties confirmed that the proposed transaction will have no effect
on employment, as the expansion of the RBTG
Business may result in
the creation of more employment opportunities in South Africa.
1
As already mentioned in paragraph three above, the proposed
transaction will have a positive impact on other public interest
aspects
such as the ability of small businesses, or firms controlled
or owned by historically disadvantaged persons. The proposed
transaction
raised no other public interest concerns.
CONCLUSION
[18] We agree with
the Commission’s findings that the proposed transaction is
unlikely to substantially prevent or lessen
competition in the
identified market. We therefore approve the transaction without
conditions.
21 April 2015
DATE
Mr
Norman Manoim
Ms Afridiswa
Ndoni and Ms Yasmin Carrim concurring.
Tribunal
Researcher:
Caroline
Sserufusa
For the merging
parties: Richardt van Rensburg of ENS Africa
For the Commission:
Dineo Mashego
1
See
page 57 of the merger record.