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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM232Mar17
In the matter between:
EASTERN PLATINUM LIMITED. Primary Acquiring Firm
and
THE PANDORA JOINT VENTURE. Primary Target Firm
Panel
Heard on
Order Issued on
Reasons Issued on
Approval
: Ms Andiswa Ndoni (Presiding Member)
: Prof lmraan Valodia (Tribunal Member)
: Prof Fiona Tregenna (Tribunal Member)
: 17 May 2017
: 17 May 2017
: 12 June 2017
Reasons for Decision
[1] On 17 May 2017, the Competition Tribunal ("Tribunal") approved the proposed
transaction between Eastern Platinum Limited ("Eastern Platinum") and the
Pandora Joint Venture ("Pandora").
[2] The reasons for approving the proposed transaction follow.
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Parties to the Proposed Transaction
Primary Acquiring Firm
[3] The primary acquiring firm is Eastern Platinum, a firm incorporated in accordance
with the laws of the Republic of South Africa. It is a subsidiary of Lonmin pie
("Lonmin"), a public company incorporated in terms of the laws of the United
Kingdom. Lonmin controls a number of firms globally, including Western
Platinum (Pty) Ltd ("Western Platinum").
[4] Lonmin is active in the discovery, extraction, refining and marketing of Platinum
Group Metals (PGMs). Lonmin also produces gold, nickel, copper and chrome
by-products.
Primary Target Firm
[5] The primary target firm is Pandora, an unincorporated joint venture currently
owned by Eastern Platinum (50%), Rustenburg Platinum Limited (42.5%) and
Northam Platinum Limited (7.5%). Pandora is currently jointly controlled by
Rustenburg Platinum and Eastern Platinum.
[6] Rustenburg Platinum Limited ("Rustenburg Platinum") is a firm incorporated in
accordance with the laws of the Republic of South Africa and is a wholly owned
subsidiary of Anglo American Platinum Limited ("Angola American Platinum").
[7) Pandora is engaged in the mining of PGM bearing ore. Pandora also produces
ore which contains by-products, including nickel, copper, chrome ore and gold.
Proposed Transaction and Rationale
[8] Eastern Platinum will acquire Rustenburg Platinum's 42.5% interest in Pandora,
thereby increasing its interest in Pandora to 92.5%. Post-transaction, Lonmin,
through Eastern Platinum, will exercise sole control over Pandora.
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[9] In terms of the rationale, Lonmin wishes to consolidate its position in the Pandora
operations, which it already manages, through Eastern Platinum. Angola
American Platinum considers its interest in Pandora to be a non-core interest,
from which it wishes to exit in order to focus on its more competitive assets.
Relevant Market and Impact on Competition
[1 OJ The Commission considered the activities of the merging parties and found that
there is a potential horizontal overlap in the global market for the production and
supply of platinum, palladium, gold, copper, nickel and the global and national
market for the production of chrome ore. The Commission analysed these as six
separate markets.
[11 J Further, the Commission found that the proposed transaction gives rise to a
vertical overlap as Pandora is engaged in the upstream mining of PGM bearing
ore which is used in the downstream processing of ore by Lonmin. The
Commission, therefore, identified two relevant vertical markets, namely (i) the
upstream market for the mining of PGM bearing ore and (ii) the downstream
market for the processing of ore.
Horizontal Overlap
[12] The Commission is of the view that the proposed transaction will not impact the
structure of the relevant markets since Lonmin already effectively controls 50%
of and operates Pandora. The Commission, however, considered whether the
move from joint to sole control would result in any change in Lonmin's incentives.
[13] The Commission found that the merging parties will have a combined market
share of less than 13% in each of the six abovementioned relevant markets. It
furthermore found that post-transaction, the merged entity will be constrained by
alternative producers such as Anglo American Platinum, Impala Platinum Limited
and S[banye Platinum.
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Vert;cal Overlap
[14] In respect of the vertical assessment the Commission found that the ore
produced at Pandora is already sold to Western Platinum (a subsidiary of
Lonmin) . Since the relationship between Lonmin and Pandora will continue post
merger, the Commission is of the view that the proposed transaction is unlikely
to result in any foreclosure concerns.
[15] We conclude that the proposed transaction overall is unlikely to substantially
prevent or lessen competition in any of the relevant markets.
Public Interest
[16] The Commission is of the view that the proposed transaction is unlikely to
negatively affect employment as Lonmin already operates Pandora and therefore
no job duplications will occur.1
[17] No other public interest concerns arise from the proposed transaction.
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 addition,
no public interest issues arise from the proposed transaction. Accordingly we
approve the proposed transaction unconditionally .
Ms Andiswa Ndoni
Prof lmraan Valodia and Prof Fiona Tregenna concurring
1 Merger Record, page 88.
12 June 2017
DATE
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Tribunal Researcher: Hayley Lyle
For the merging parties: Chris Charter of Cliffe Dekker Hofmeyer for the acquiring
firm and Anton Roets of Nortons Inc for the target firm
For the Commission: Portia Bele
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