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[2018] ZACT 73
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Total South Africa (Pty) Ltd v Gulfstream Energy (Pty) Ltd (LM1960ct17) [2018] ZACT 73 (8 March 2018)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM1960ct17
In
the matter between:
Total
South Africa (Pty) Ltd
Primary
Acquiring Firm
And
Gulfstream
Energy (Pty) Ltd
Primary Target Firm
Panel
: Andreas Wessels (Presiding Member)
:
Mondo Mazwai (Tribunal Member)
:
Andiswa Ndoni (Tribunal Member)
Heard
on
: 21 February 2018
Order
Issued on : 21 February 2018
Reasons
Issued on : 8 March 2018
REASONS FOR DECISION
Approval
[1]
On
21 February 2018, the Competition Tribunal ("Tribunal")
approved the proposed transaction involving Total South Africa
(Pty)
Ltd (''Total SA") and Gulfstream Energy (Pty) Ltd
("Gulfstream").
[2]
The
reasons for the approval of the proposed transaction follow.
Parties to the proposed
transaction and their activities
Primary
acquiring firm
[3]
The
primary acquiring firm is Total SA. Total SA is owned by Total
Overseas Holdings (Pty) Ltd ("TOH"), Main Street 87
(Pty)
Ltd ("Main Street") and Industrial Partnership Investments
Limited ("IPI"). TOH is a wholly owned subsidiary
of Total
France. Total France is a public company listed on the French Stock
Exchange.
[4]
Total
SA has crude oil refinery capabilities through its stake in National
Petroleum Refiners of South Africa (Ply) Ltd. It also
markets and
distributes a number of refined petroleum products throughout South
Africa including diesel, petrol, greases, illuminating
paraffin,
kerosene, liquefied petroleum gas (LPG), bitumen, jet fuel and
lubricants. Total SA sells these refined petroleum products
to both
retail and commercial customers.
Primary
target firm
[5]
The
primary target firm is Gulfstream. Gulfstream is wholly owned by Mrs.
Jolyn Hendriena Jegels ("Mrs. Jegels") Mrs.
Jegels does not
control any other firms.
[6]
Gulfstream
is an independent wholesaler of petroleum solutions. It primarily
supplies diesel, petrol and illuminating paraffin to
various
customers including commercial and retail customers. Gulfstream
however does not have its own refining capabilities.
Proposed
transaction and rationale
[7]
In
terms of the proposed transaction, Total SA intends to acquire 30% of
the ordinary issued share capital of Gulfstream from Mrs.
Jegels.
After the implementation of the proposed transaction, Total SA
through certain minority protections, will have negative
control over
Gulfstream.
[8]
Total
SA's rationale for the proposed transaction is to allow it to invest
in and service customers through an empowered entity.
[9]
Gulfstream
submitted that the proposed transaction allows it inter alia greater
security of supply as well as wider access to markets.
Impact
on competition
Horizontal
assessment
[10]
The Competition Commission ("Commission") found a
horizontal overlap between the merging
parties' activities in the
wholesale and distribution of refined petroleum products. The
Commission noted that although Total SA
and Gulfstream sell other
refined petroleum products, the main focus of their businesses is the
wholesale and distribution of petrol
and diesel. For this reason the
Commission focussed its competition analysis on the wholesale and
distribution of (i) petrol; and
(ii) diesel to (a) commercial; and
(b) retail customers.
[11]
In relation to the commercial
customer segment, the Commission found that the merging parties will
have a combined market share
of less than 15% in the market for the
wholesale and distribution of diesel to commercial customers; and a
market share of less
than 15% in the market for the wholesale and
distribution of petrol to commercial customers.
[12]
In relation to the retail
customer segment, the Commission found that the merging parties will
have a combined market share of less
than 15% in the market for the
wholesale and distribution of petrol to retail customers; and a
market share of less than 15% in
the market for the wholesale and
distribution of diesel to retail customers.
[13]
Based on these market shares and
the presence of a number of competitors, the Commission concluded
that, from a horizontal perspective,
the proposed transaction is
unlikely to raise any competition concerns.
Vertical
assessment
[14]
The Commission also found that
the proposed transaction has a vertical dimension since Total SA is
active in the upstream market
for the production of refined petroleum
products and Gulfstream is active in the downstream market for the
wholesale and distribution
of refined petroleum products. Total SA
currently supplies Gulfstream with products.
[15]
The Commission however found that Gulfstream is not a major customer
of Total SA and that there
are various other suppliers of refined
petroleum products in South Africa. The Commission concluded that the
proposed transaction
does not raise either input or customer
foreclosure concerns given the existence of sufficient alternatives
in both the up- and
downstream markets. We have no reason to disagree
with this conclusion.
Public
interest
[16]
The merging parties confirmed that the proposed transaction will not
result in any job losses
or retrenchments.
[1]
[17]
The proposed transaction furthermore raises no other public interest
concerns. The Tribunal asked
certain questions of the merging parties
in relation to public interest considerations and was satisfied with
the responses provided.
[2]
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.
Mr Andreas Wessels
Ms
Andiswa Ndoni and Ms Mondo Mazwai
8 March 2018
Date
Case
Manager:
Jonathan Thomson
For
the Merging Parties:
Lara Granville
of Cliffe Dekker Hofmeyr
For
the Commission:
Rethabile
Ncheche
[1]
Merger Record, pages 11 and 63.
[2]
Also see Commission's Report, pages 23 to 27; and Transcript, pages
9 to 12.