compel/t,on tribunal
•••• ~ ttfrl;•
COMPETITION TRIBUNAL OF SOUTH AFRICA
In the matter between:
Grindrod Holdings (South Africa) Proprietary
Limited
and
RBT Grindrod Terminals Proprietary Limited
Panel : AW Wessels (Presiding Member)
Case No: LM217Feb17
Primary Acquiring Firm
Primary Target Firm
: Prof lmraan Valodia (Tribunal Member)
: Enver Daniels (Tribunal Member}
Heard on : 15 March 2017
Order Issued on : 15 March 2017
Reasons Issued on : 29 March 2017
REASONS FOR DECISION
APPROVAL
[1] On 15 March 2017, the Competition Tribunal ("the Tribunal"} approved the
transaction involving Grindrod Holdings (South Africa) Proprietary Limited
("Grindrod Holdings") and RBT Grindrod Terminals Proprietary Limited
("RBT Terminals").
[2] The reasons for the approval are as follows.
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PARTIES TO THE TRANSACTION
Primary Acquiring Firm
[3] The primary acquiring frim is Grindrod Holdings. It is ultimately controlled by
Grindrod Limited, a public company listed on the Johannesburg Stock
Exchange (" JSE"). Grind rod Limited is not controlled by any single firm. It
controls a number of firms.
[4] The Grindrod Group is primarily active in the provision of freight and
logistics services. In particular, it specialises in moving bulk dry and liquid
commodities, containerised cargo and vehicles by road, rail, sea and air.
Primary Target Firm
[5] The primary target firm is RBT Terminals, a firm incorporated in terms of
the laws of the Republic of South Africa. Pre-merger RBT Terminals is a
joint venture between Grindrod Holdings (49.9%) and RBT Resources
Proprietary Limited ("RBT Resources") (50.1 %).
[6] RBT Terminals owns certain coal export operations at Richards Bay.
PROPOSED TRANSACTION AND RATIONALE
[7] In terms of the sale agreement Grindrod Holdings will increase its
shareholding in RBT Terminals from 49.9% to approximately 60%.
[8] According to the Competition Commission ("Commission"), RBT Terminals
is jointly controlled by the abovementioned shareholders pre-merger and
this will not change post-merger. The Commission submitted that the
proposed transaction has been notified due to Grindrod Holdings crossing
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the so-called "bright line" with its intended post-merger shareholding of
approximately 60% in RBT Terminals.1
[9] According to the merging parties, Grindrod Holdings has entered into the
proposed transaction in order to settle RBT Resources' loan obligations in
exchange for shares in RBT Terminals. The proposed transaction will
therefore enable RBT Resources to continue as a joint venture partner.
COMPETITION ANALYSIS
[1 O] The Commission found that Grind rod Holdings no longer has any coal
export operations since all its coal export facilities have been transferred to
the target firm. It therefore does not provide any coal export or related
activities outside of the aforementioned joint venture. RBT Resources also
does not have any coal export operations outside of the joint venture.
[11] The Commission further found that RBT Terminals' market share in the
provision of coal export facilities at Richards Bay, including an expansion
programme that is underway, is approximately 20%. The other players that
provide these services at the port are RBCT and Richard Bay Dry Bulk
Terminal.
[12] None of the customers of the merging parties raised concerns regarding the
proposed transaction.
[13] Given the above, the Commission concluded that the proposed transaction
is unlikely to raise competition concerns. We concur with the Commission
that the proposed transaction is unlikely to substantially prevent or lessen
competition in any relevant market.
1 See Commission's Report , pages 6 and 7. Also see Transcript, pages 3 and 4.
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PUBLIC INTEREST
[14] The merging parties confirmed that the proposed transaction will have no
negative effect on employment and not cause any job losses in South
Africa.2 This is also reflected in the Commission's Report.3
[15] As part of its public interest analysis, the Commission also considered the
potential effects of the proposed transaction on the allocation of coal
exporting capacity to junior and/or BEE coal miners. The Commission
concluded that any adverse effects of this nature are unlikely given that the
control structure of the target firm remains unchanged post-merger and
thus there is no change in incentives as a result of the proposed
transaction.
[16] The Tribunal questioned the merging parties regarding the allocation
process of coal exporting capacity to BEE and/or junior miners. The
merging parties confirmed that the proposed transaction will have no
adverse effect on this since the allocation procedures and methods will not
alter post-merger and further indicated that the joint venture's coal export
capacity that is allocated to junior and/or BEE miners is currently above
90%.4 Furthermore, RBT Terminals intends to in future increase the
capacity at its facilities for the primary purpose of availing more export
capacity to junior and/or BEE miners.5
[17] The proposed transaction furthermore raises no other public interest
concerns.
CONCLUSION
[18] In light of the above, we conclude that the proposed transaction is unlikely
to substantially prevent or lessen competition in any relevant market. In
2 Merger Record, pages 10 and 57.
3 Commission's Report, pages 13 and 14.
4 Transcript, pages 14 to 16.
5 Transcript, page 15.
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addition, no other public interest issues arise as a result of the proposed
transaction. Accordingly, we approve the proposed transaction
unconditionally.
29 March 2017
Mr AW Wessels Date
Professor lmraan Valodia and Mr Enver Daniels concurring
Ndumiso Ndlovu TribunalResearohe~
For the merging parties: Richardt Van Rensburg of ENSafrica
For the Commission Boitumelo Makgabo
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