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competrtion tribunal
J O u J /1 " / r i' <ll
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case N 11): LM200Jan17
In the matter between
THE GOVERNMENT EMPLOYEES PENSION FUND
(REPRESENTED BY THE PUBLIC INVESTMENT
CORPORATION SOC LIMITED)
And
ETG INPUTS HOLDCO LIMITED
Panel
Heard on
Order Issued on
Reasons Issued on
Approval
: Ms Andiswa Ndoni (Presiding Member)
: Mr Enver Daniels (Tribunal Member)
: Prof lmraan Valodia (Tribunal Member)
: 08 February 2017
: 08 February 2017
: 20 February 2017
REASONS FOR DECISION
Acquiring Firm
Target Firm
[1] On 08 February 2017, the Competition Tribunal ("Tribun al") approved the
large merger between The Government Employees Pensio11 Fund ("GEPF")
represented by the Public Investment Corporation SOC Limited ("PIC") and
ETG Inputs Holdco Limited ("ETG").
[2] The reasons for the approval follow.
1
.·
Parties to the transaction and their activities
Primary Acquiring Firm
[3] The primary acquiring firm is the GEPF , represented by PIC . PIC acts as the
fund manager to the GEPF, which is a juristic person established by section 2
of the Government Employees Pension Law, 21 of 199Ci. The GEPF is
governed by statute and not controlled by any other firm.
[4] The GEPF's core business is to manage and administer pensions and other
benefits for government employees in South Africa , invesll.ing its assets in
various asset classes.
[5] The PIC is controlled by the South African Government anc1, in addition to its
functions with respect to the GEPF, acts in its capacity as the duly authorised
representative of the Unemployment Insurance Fund and tile Compensation
Fund.
[6] The activities of the PIC, as the principle asset managem t::! t vehicle for the
South African public sector, are regulated by the Public Investment
Corporation Act, 23 of 2004. All of the PIC's investment decisions are directed
by detailed client mandates, individually negotiated in line with their
investment profile and risk appetite . PIC, on behalf of its investors, thus has
interests in a variety of different sectors . Relevant to the proposed transaction,
the PIC holds a non-controlling shareholding of 13.96% i n1 Omnia Holdings
Limited, 1 a company which , through its subsidiary Omni;31 Fertilizer Ltd, is
active in the importation , manufacturing, blending and distrribution of fertiliser
commodities .
Primary Target Firms
1 Statement of Dr Daniel Matjila, dated 27 January 2017.
2
[7] The primary target firm is ETG, a company incorporated and registered in
Dubai. ETG is a wholly owned subsidiary of ETC Holdings (Mlauritius) Limited
("ETC Mauritius"). 2 In South Africa, ETG controls Sidi Para i (Pty) Ltd ("Sidi
Parani") and Farmisco (Pty) Ltd, trading as Kynoch Fertilizers ("Kynoch").
Kynoch in turn solely controls Fermentech (Pty) Ltd ("Fermen 1: · E~ch").
[8] All three South African subsidiaries of ETG are involved in the importation,
manufacturing , blending and distribution of fertiliser commodi1ies.
[9] Kynoch imports, manufactures, blends and distributes fertilisE!r commodities in
South Africa and the SADC territories. Kynoch produces ra•w material stock
which Fermentech blends, packages and distributes on a to Iii ng basis.
[1 OJ Sidi Parani supplies an extended range of plant nutrition products within
South Africa.
Proposed transaction and rationale
[11] In terms of the share purchase agreement, the GEPF intends to acquire 49%
of the issued shares in ETG from ETC Mauritius . Upon impk:!mentation of the
proposed transaction, GEPF will jointly control ETG with ETC Mauritius.3
[12] In terms of rationale, the GEPF submits that the propos ed transaction is
aligned with the GEPF's mandate to invest in African c:1ssets which are
essential to unlocking Africa's economic potential whilst pn::!:;enting valuable
return on investment.
[13] ETC Mauritius submits that the proposed transaction will serve as a cash
injection, presenting a favourable opportunity to capitalise 0 111 the value it has
created through ETG.
2 ETC Mauritius is, in turn, wholly controlled by Export Trading Group PTE Limited.
3 In terms of the ETG shareholders agreement , GEPF will be able to appoint 2 out of a total of 5
directors to ETG's board. Certain matters will then specifically require the a1pproval of the two
directors appointed by GEPF to pass.
3
Relevant market and impact on competition
[14] The Commission , in its recommendations, found that the proposed
transaction would not result in any horizontal overlaps. The Commission
brought the fact that the GEPF holds a non-controlling 13.96% share in
Omnia, a competitor of ETC in the fertiliser industry to the Trib nal's attention.
The Commission submitted that GEPF's stake in Omnia was too small to
allow it to influence Omnia in any way. The Commission concluded that the
proposed transaction is unlikely to substantially prevent or le1:;sen competition
in any relevant market.4
Public interest
[15] The merging parties submitted, which was confirmed by the Commission, that
the proposed transaction will not have a negative public interi::ist effects. 5
Conclusion
[16] In light of the above, we conclude that the proposed transa ction is unlikely to
substantially prevent or lessen competition in any relevant rr .Eirket. In addition,
no public interest issues arise from the proposed transactio n. Accordingly, we
approve the proposed transaction unconditionally.
20 f '.. ~!bruary 2017
Dab::!
Ms. Andiswa Ndoni and Mr. Enver Daniels concurring
Tribunal Researcher:
For the Acquiring firm
For the Target Firm
For the Commission :
Alistair Dey-van Heerden
Tanya Macdonald of Norton Rose Fulbright
Judd Lurie of Bowmans
Zintle Siyo and Xolela Nokele
4
Tribunal Transcript , page 4.
5 Page 2 and 43 of the Merger record. Page 9 of the Competition Commission's Ftecommendations.
4