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[2015] ZACT 77
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EOH Intelligent Infrastructure Proprietary Limited v Paterson Candy International (South Africa) Proprietary Limited (LM063Jul15) [2015] ZACT 77 (19 August 2015)
COMPETITION
TRIB
UNAL
OF
SOU
TH
AFRICA
Case
No: LM063Jul
1
5
In
the
matter
between:
EOH
I
ntelligent
I
nfrastructure
Proprietary L
i
mited
Primary Acquiring Firm
and
Paterson
Candy
I
nternational
(South
Africa) Proprietary
Limited
Primary Target Firm
Panel
:Yasmin Carrim (Presiding Member)
:
Mondo Mazwai (Tribunal Member)
: lmraan IValodia
(Tribunal Member)
Heard
on
: 6 August 2015
Order
I
ssued on
:
6
August 2015
Reasons
I
ssued on
:
19
August
2015
Reasons
for Decision
Approval
[1]
On 6 August 2015, the Competition Tribunal ("Tribunal")
unconditionally approved the merger between EOH Intelligent
Infrastructure Proprietary Limited ("EOH") and Paterson
Candy International (South Africa) Proprietary Limited ("PCI").
[2]
The reasons for approving the proposed transaction follow.
Parties
to transaction
Primary
acquiring firm
[3]
The primary acquiring firm EOH is a company incorporated in
accordance with the laws of South Africa. It is controlled by EOH
Holdings Limited which is a company listed on the Johannesburg Stock
Exchange.
[4]
EOH's lines of business, amongst others, include IT Management, IT
outsourcing, and Industrial Technologies.
Primary
target firm
[5]
The primary target firms is PCI which is a company incorporated in
accordance with the laws of South Africa.
[6]
PCI is a contractor for the construction of water treatment plants
for the water and wastewater treatment sector. PCI would
provide
process and plant design, project management, equipment manufacture,
materials supply, installation and commissioning services
to
implement appropriate water treatment plants.
Proposed
transaction and rationale
[7]
The proposed transaction involves EOH purchasing the shares of the
target firm from all its listed shareholders.
[8]
EOH submits that the transaction would enable it to
provide-additional product and.service offerings which it would add
to
its existing product and service portfolio. The proposed
transaction would enable PCI to recoup their investment and allow PCI
better growth opportunities as it creates access to a larger group.
..
I
mpact
on competition
[9]
According to the Competition Commission ("the Commission")
the proposed transaction does not result in a horizontal
overlap
because EOH provides consulting, technology and business process
outsourcing whereas PCI is primarily involved in the provision
of
water and wastewater treatment plants.
[10]
The
Commission identified
a vertical
relationship between the firms
since a business unit of EOH,
Automation Specification, provided
electrical subcontractor services to the target firm.
[11]
The Commission found that the value of the services provided to PCI
is low. PCI submitted that electrical services are procured
by means
of a tender based on price and technical requirements and that this
process will continue post-merger. The Commission
further contacted
the City of Cape Town, a customer of Automation Specification, and
WEC Projects a competitor of PCI. Both have
submitted that there are
a number of firms that could provide such electrical services. The
Commission is therefore of the view
that the proposed transaction
would unlikely substantially prevent or lessen competition.
[12]
We concur with the Commission's competition assessment, i.e. that the
proposed transaction is unlikely to substantially prevent
or lessen
competition in any relevant market. We further agree that it is
unlikely that the transaction would result in vertical
concerns.
Public
interest
[13]
The
merging
parties confirmed
that
the proposed transaction will
not
result in an adverse
impact
on
employment.
[1]
The
proposed transaction further raises no other public interest
concerns.
Conclusion
[14]
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.
19
August 2015
DATE
___________________
Yasmin
Carrim
Mondo
Mazwai
and
l
mraan
IValodia
concurring
Tribunal
Researcher:
Aneesa Ravat
For
the merging parties: Michael Baxter
assisted by Mike Hughes from PCI and Zunaid Mayet and Renee
Fielder
from EOH.
For
the Commission:
Nolubabalo Myoli and Nompucuko Nontombana
[1]
Inter
alia
merger
record page 6.