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[2015] ZACT 97
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Tiso Blackstar Group SE v Robor (Pty) Ltd (LM111Aug15) [2015] ZACT 97 (18 November 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM111Aug15
In
the matter between:
Tiso
Blackstar Group
SE
Primary Acquiring Firm
and
Robor
(Pty)
Ltd
Primary Target Firms
Panel
: Medi Mokuena (Presiding Member)
:Anton Roskam (Tribunal
Member)
: Andiswa Ndoni (Tribunal
Member)
Heard
on
: 21 October 2015
Order
Issued on
: 21 October 2015
Reasons
Issued on
: 18 November
2015
Reasons
for Decision
Approval
[1]
On 21 October 2015, the Competition Tribunal ("Tribunal")
unconditionally approved the merger between Tiso Blackstar
Group SE
(''Tiso"). and Robor (Pty) Ltd ("Robor''),
[2]
The reasons for approving the proposed transaction follow.
Parties
to
transaction
Primary
acquiring
firm
[3]
The primary acquiring firm, Tiso is a public company incorporated in
terms of the Jaws of Mal a. Tiso has a primary listing
on the London
Stock Exchange and a secondary listing.on the Johannesburg Securities
Exchange Limited.
[4]
Tiso is
an
investment holding
company
which has interests in
a number
of
industries
ranging
from
media
to
real
estate.
Relevant
to
the
proposed
transaction
is Tiso's
interests
in
Consolidated
Steel
I
ndustries
(Pty)
Ltd
("CSI")
and Robor.
[1]
Primary
target firm
[5]
The
Primary
Target
firm
is
Rober
which
is
a
private
company
incorporated
in
accordance
with the
l
aws
of South Africa.
Rober is a
manufacturer
and
suppl
i
er
of welded tubes and pipes, cold
formed
steel profiles and associated value added
products.
Rober
is
also
involved
in
the
supply,
distribution
and
value
adds
to
carbon
steel
coil,
plate,
sheet
and
structural
profiles.
Robor's
roof
sheeting
mill had
since
January 2015 only produced roof sheeting on request.
[2]
Robar products are supplied across industries such as mining and
transport.
Proposed
transaction and
rationale
[6]
In terms of the proposed transaction Tiso intends to increase their
shareholding from 19.4% to 51%. The transaction is as a
result of RMB
Ventures 6 (Pty) Ltd disposing their shares, which Tiso will through
a repurchase from Rober acquire.
[7]
Tiso submitted that the proposed transaction provided it with an
opportunity to increase its shareholding in Robar, which is
in line
with its investment philosophy. For Rober the proposed transaction
provided RMB with an opportunity to dispose of its investment.
Impact
on competition
[8]
The Commission, when investigating the activities of the merging
parties found that there is no horizontal overlap, between
the
merging parties in relation to stainless steel and aluminium products
as Rober is.not active in these markets.
[9]
In relation to the carbon steel activities of the merging parties,
the Commission found that the proposed .transaction resulted
in a
horizontal and vertical overlap. In their investigation of the
horizontal overlap the Commission considered whether the transaction
would re$ult in any unilateral effects. The Commission found that the
merged entity would have less than 20% market share with
an accretion
of less than 5%. The merged entity would also continue to face
competition from other market participants. The Commission
also
approached customers of the merging parties about the proposed
traneaction and they did not raise any concerns.
[10]
The Commission also considered the horizontal overlap between the
parties in respect to roof sheeting products. It is of the
view that
even if Rober was still active in this market, it would not resultin
a substantial prevention or lessening of competition
as Rober is a
small player with only one mill. It further found that Robor's major
operations are lts tubing business, and that
its. sheeting business
accounted for a minute portion of its annual revenue.
[11]
The Commission's Identified vertical relationship of the merging
parties is due to Robar and Stalcor operating at different
levels of
the value chain. Stalcor is active In the distribution of carbon
steel and Rober is active in the distribution
and
processing of .carbon steel. The Commission evaluated whether the
proposed transaction would result. in input foreclosure and found
in
the negative. The Commission based this on the fact that Rober
accounts for less than 15% of the upstream market, and would
not have
the necessary market power to engage in an effective input strategy.
In their analysis of the possibility of customer
foreclosure, the
Commission is also of the view that the proposed transaction would
not result in customer foreclosure. The Commission
contacted
suppliersof Stalcor and came to the conclusion that as Stalcor is
a minor customer an inability to supply
Stalcor
would not materially affect the merged
entities competitors from competing
effectively.
[12]
The Commission received concerns of the possibility of information
sharing as Tiso through Kagiso Tiso Holdings has interests
in Aveng
Limited and Macsteel Services Centre SA. The merging parties
submitted that Tiso does not have shares in either companies
and is
not represented on the boards of either company as well. The merging
parties further submitted that the holding in either
company is not
merger specific. The Commission agrees with the submissions. of the
merging parties and found that these concerns
are not merger
specific.
[13]
The Tribunal accepts the Commission's findings that the vertical
overlap does not present any foreclosure concerns. We further
accept
that the horizontal overlaps identified do not result in a
substantial lessening of competition. When considering the
possibility
of information sharing, we also find that the concerns
raised are not merger specific. We therefore conclude that the
proposed
transaction is unlikely to substantially prevent or lessen
competition in any market within South Africa.
Public
interest
[14]
The Commission considered whether a restructuring process in 2014,
due to the cessation of Robor's Baldwin's roof sheeting
operations
was merger specific. The Commission when evaluating the evidence
before it found conflicting accounts of the expressions
of interest,
received for the purchase of shares in Robor. In order to provide
clarity the merging parties deposed to affidavits,
which confirmed
that that the facilities were closed due to financial losses. The
Commission also communicated with relevant unions
about the Baldwin's
closure and none raised concerns.
[15]
The merging
parties further submit that the proposed transaction will not result
in
an
adverse
impact on
employment.
[3]
No
other
public
interest
concerns
were
i
dentified.
Conclusion
[16]
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 transactions. Accordingly, we approve the
proposed
transaction unconditionally,
18
NOVEMBER 2015
DATE
________________
Ms
Medi Mokuena
Mr
Anton Roskam and Ms Andisa Ndoni concurring
Tribunal
Researcher:
Aneesa Ravat
For
the merging parties:
Anton Roets of Nortons Inc
For
the Commission:
Maanda ambani and Kholiswa Mnisi
[1]
CSl
has
100%
shareholding
in
Global
Roofing
Solutions
(Pty)
Ltd
("ORS")
and
Stainless
Steel
and
A
lu1ninium Corporation (''Stalcor”).
[2]
Robar
communicated
to
the
Comm
ission
that
It
has
decided
to
sell
the
roof
sheeting
mill.
[3]
Inter
alia
merger record page
5.