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[2015] ZACT 100
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Rockwood Fund I v Environserv Holdings (Pty) Ltd (LM072Jul15) [2015] ZACT 100 (8 October 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM072Jul15
In
the matter between:
ROCKWOOD
FUND
I
Acquiring Firm
And
ENVIROSERV
HOLDINGS (PTY)
LTD
Target Firms
Panel
: Yasmin Carrim (Presiding Member)
: Mondo Mazwai (Tribunal
Member)
: Medi Mokuena (Tribunal
Member)
Heard
on
: 23 September 2015
Order
Issued on
: 23 September 2015
Reasons
Issued on
: 8 October 2015
Reasons
for Decision
Approval
[1]
On 23 September 2015, the Competition Tribunal ("Tribunal")
unconditionally approved the merger between Rockwood Fund
I
("Rockwood") and Enviroserv Holdings (Pty) Ltd
("Enviroserv").
[2]
The reasons for approving the proposed transaction follow.
Parties
to transaction and their Activities
Primary
acquiring firm
[3]
The primary acquiring firm is Rockwood, an
en commandite
partnership registered in accordance with the Jaws of the
Republic of South Africa. It is controlled by Rockwood Fund I GP
("the GP Partner") which is in turn controlled by Equity
Investment Trust and Rockwood Fund I GP (Pty) Ltd ("the
investment Partner''). Rockwood controls a number of firms including
Envrioserv (40%) which is the target firm in the proposed
transaction.
[4]
Rockwood is a private equity fund that focuses on taking substantial
equity positions in medium to large sized companies with
experienced
management teams.
Primary
target firm
[5]
The primary target firm is Enviroserv, a firm incorporated in
accordance with the company Jaws of the Republic of South Africa.
It
is jointly controlled by Rockwood and the Mclean Family Trust. It
controls Enviroserv Waste Management Ltd ("EWM")
and
Enviroserv Africa Holdings Ltd ("Enviroserv Africa").
[6]
Enviroserv conducts its business through the
following three divisions at
its
operational subsidiary EWM:
•
Solid
waste
division
[1]
•
Waste beneficiation
division
[2]
;
and
•
International
division.
[3]
Proposed
transaction and rationale:
Proposed
transaction and rationale:
[7]
In terms of the proposed transaction, Rockwood will increase its
ordinary shareholding in Enviroserv from 40% to more than 50%.
Post-merger, Enviroserv will be controlled by Rockwood.
[8]
The merging parties submit that Rockwood is willing to provide
Enviroserv with the additional funding it requires for its operations
in exchange for additional share capital.
Impact
on Competition:
[9]
The Competition Commission ("Commission") considered the
activities of the merging parties to determine whether
there
were any overlaps between them. As stated above, Rockwood is a
private equity fund which focuses on substantial equity positions
in
medium to large sized companies with experienced management team
whilst Enviroserv provides waste management services.
[10]
The Commission accordingly concluded that except for Rockwood's
existing interest in Enviroserv, there is no horizontal overlap
in
the merging parties' activities as the acquiring firm does not hold
any interest in the market for waste management.
Public
interest:
[11]
In relation to employment, the merging parties submitted that EWM is
already engaged in a retrenchment process which will result
in
further retrenchments in the future. The Commission considered this
aspect and found that the retrenchments are a result of
the new waste
classification and management regulations introduced by the
Department of Environmental Affairs. Thus, the Commission
was
satisfied that the retrenchments are not merger specific but rather
operational in nature.
[12]
The proposed transaction did not raise any other public interest
concerns.
Conclusion:
[13]
In light of the above, we agree with the Commission's analysis and
conclude that the proposed transaction is unlikely to substantially
prevent or lessen competition in the relevant market. In addition, no
public interest issues arise from the proposed transaction.
08
October 2015
DATE
__________________________
Yasmin
Carrim
Mondo
Mazwai and Medi Mokuena concurring
Tribunal
Researcher:
Ammara Cachalia
For
the merging parties: Graeme
Wickins, Werksmans Attorneys
For
the Commission:
Rakgole Mokolo
[1]
This
division
involves
the
analysis,
treatment,
transport
and
disposal
of
industrial
waste,
operating
hazardous
and
general
waste landfills.
It
further
includes healthcare risk
waste
incineration, specialised industrial
cleaning,
24
hour
emergency
spill
response,
absorbent
product
sales
and
the
distribution
and
construction,
operation
and
maintenance
of mine
tailings
disposal
facilities.
[2]
This
includes
mineral
beneficiation
and
recovery
from
waste
in the
metallurgical
and
carbon
industries, converting waste to green energy, developing
beneficiation
process
technologies.
The
waste beneficiation division
is further
involved in
slag
handling
mill
services,
material
recovery
and
rocessing
services and on site waste management.
[3]
The international division performs waste management services across
Africa.