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[2015] ZACT 68
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Puma Energy Africa Holdings B.V v Brent Oil Holdings Proprietary Limited (LM074Jul15) [2015] ZACT 68 (31 August 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM074Jul
1
5
In
the matter between:
Puma
Energy Africa Holding
B.V
Primary Acquiring Firm
And
Brent
Oil Holdings
Proprietary
Limited
Primary Target Firm
Panel
: Yasmin Carrim (Presiding Member),
: Medi Mokuena (Tribunal
Member)
: lmraan Valodia
(Tribunal Member)
Heard
on
: 12 August 2015
Order
issued on
: 12 August 2015
Reasons
issued on
:31 August 2015
Reasons
for Decision
Approval
[1]
On 12 August 2015 the Competition Tribunal ("Tribunal")
unconditionally approved the large merger between Puma Energy
Africa
Holding B.V ("Puma Energy Africa") and Brent Oil Holdings
Proprietary Limited ("BOH"). The reasons for
approving the
transaction follow.
Parties
to the transaction
[2]
The primary acquiring firm is Puma Energy Africa a
company incorporated in accordance with the laws
of
Netherlands. Puma Energy Africa is ultimately controlled by Puma
Energy Holdings Pty Limited ("Puma Energy"), a company
incorporated in Singapore. Puma Energy is a global
provider of fuel (petrol, diesel, bunker and aviation) lubricants
and
other oil products. It operates at the
upstream bulk supply level (refining,
importing and storage) as well as the downstream marketing and
distribution level (sales to commercial and retailer customers).
In
South Africa, Puma Energy is active through its subsidiaries such as
Puma Energy Procurement South Africa Proprietary Limited
("PEPSA"),
Drakensburg Oil Proprietary Limited and DP Drakensberg Properties
Proprietary Limited (collectively referred
to as "Drakensberg")
and Ought to Invest 15 Proprietary Limited ("OT!"). PEPSA
imports petroleum and diesel
from Mozambique and sells it to
industrial and commercial end users, as well as resellers or
wholesalers in the Gauteng, KwaZulu
Natal, Mpumalanga and
Limpopo Provinces. Through Drakensberg and OT!, the acquiring firm is
also involved in the renting out of
fuel service stations to third
parties, having third parties operate fuel service stations on its
behalf and the operation of fuel
depots from which customers collect
petrol and diesel from. These activities are limited to
KwaZulu Natal and Mpumalanga
Provinces.
[3]
The primary target firm is BOH a company incorporated in
accordance with the laws of the Republic of South Africa. BOH
is a
holding company that does not conduct any business activities, but
simply holds shares in Brent Oil (Pty) Limited ("Brent
Oil").
Brent Oil and its subsidiaries are non-refining wholesalers of
petroleum (such as leaded and unleaded petrol, standard
and low
sulphur diesel) and petroleum products ( for example, lubricants and
illuminating paraffin) to bulk commercial and
retail
customers such as branded fuel stations on a national basis. It
allows station owners to use some of its intellectual property
and
also assists such stations with branding so as to create a national
footprint of Brent Oil branded fuel stations. Brent Oil
also owns
bulk storage facilities and depots in the Gauteng, Mpumalanga, Orange
Free State, Limpopo and Western Cape Provinces.
Brent Oil also has a
distribution network consisting of 40 tankers and licenses. The
target firm sources its petroleum products
from various suppliers
such as Sasol Ltd ("Sasol"), PetroSA
Total SA (Pty) Ltd ("Total"),
PEPSA and Chevron.
Proposed
transaction and rationale
[4]
The proposed transaction will take place by way of a Sale of Share
and Claims Agreement (the Agreement"). Puma Energy Africa
will
acquire 73.57% of the issued share capital in BOH, as well as the 5%
shareholding held by Dream World Investment 63 (Pty)
Ltd ("Dream
World") in Brent Oil, a subsidiary of BOH. Post-merger Puma
Energy Africa will enjoy control over BOH and
Brent Oil.
[5]
The acquiring firm submits that the proposed transaction will assist
it to expand its presence in the South African fuel supply
industry
as it is relatively new in the South African market. The target firm
on the other hand submits that the proposed transaction
will assist
it to get a suitable, substantial, long-term industry partner to grow
the BOH/Brent Oil brand so that it can reach
its true potential.
Competition
assessment
[6]
The relevant product market is the market for the
wholesale of petrol and diesel. The Commission
identified a horizontal overlap emanating from the proposed
transaction. This is because the merging parties are both active in
the market for the wholesale of petrol and diesel in Mpumalanga,
Gauteng, Limpopo and KwaZulu-Natal Provinces. The Commission also
identified a vertical overlap as the acquiring group is active in the
upstream market for the bulk supply of refined products,
whilst the
target firm is active in the downstream market for the wholesale
supply of petroleum products.
[7]
The Commission's analysis revealed that in the provinces where the
merging parties are both active, namely Mpumalanga,
Gauteng,
Limpopo and KwaZulu-Natal, the post-merger market shares will be less
than 5% in the market for the wholesale of
petrol and diesel. In
addition to this, even on a broader national market the post-merger
markets shares of the merging parties
will still be less than
5%. The Commission submits that the merged entiy will continue to be
constrained post merger by other
market players such as Caltex
Oil (SA) (Pty) Ltd ("Caltex"), BP SA (Pty) Ltd ("BP"),
Total and Sasol. We agree
with the findings of the Commission.
[8]
The Commission's analysis of the vertical overlap emanating from the
proposed transaction revealed that input foreclosure is
highly
unlikely as the acquiring group has a national market share of less
than 1% in the market for the bulk supply of petroleum
and diesel
products. It is clearly evident that the merged entity will continue
to compete with other refineries such as Engen,
Shell, Caltex, BP,
Total and Sasol. In addition to this, the Commission spoke to
customers of the acquiring group who advised that
they do have
alternative suppliers should the merged entity channel its supply to
the target firm. The Commissions thus concluded
that the proposed
transaction will not substantially lessen or prevent competition in
the identified product market.
[9]
Based on the above analysis, the Commission came to the conclusion
that the proposed transaction will not substantially prevent
or
lessen competition in the identified markets. We concur with
the Commission on this finding.
Public
Interest
[10]
The proposed transaction will have no effect on employment and raised
no other public interest concerns.
CONCLUSION
[11]
We agree with the Commission's findings that the proposed transaction
is unlikely to substantially prevent or lessen
competition in
the identified markets. We therefore approve the transaction without
conditions.
31
August
2015
DATE
_________________
Ms
Yasmin Carrim
Ms
Medi Mokuena and Prof. lmraan Valodia concurring.
Tribunal
Researcher:
Caroline Sserufusa
For
the merging parties:
Judd Lurie of Bowman Gilfillan and HB
Senekal of ENS
For
the Commission:
Xolela
Nokele