Summary of Judgment

1. Introduction

This matter concerned large merger proceedings before the Competition Tribunal of South Africa. The Tribunal was required to decide whether to approve a transaction in which Rustenburg Platinum Mines Limited (RPM) acquired control over the Mototolo Joint Venture and certain assets associated with the Mototolo Chrome Recovery Circuit.

The primary acquiring firm was RPM, a wholly owned subsidiary of Anglo American Platinum Limited (AAP), itself an indirect subsidiary of Anglo American plc. The primary target firms were the Mototolo Joint Venture (Mototolo JV) and the Mototolo Chrome Recovery Circuit (in respect of movable assets and chrome-related rights).

In its reasons, the Tribunal recorded that it unconditionally approved the merger on 7 February 2018. The matter was heard on 17 October 2018, with an order issued on 17 October 2018 and reasons issued on 23 October 2018. The reasons reflect the Tribunal’s assessment of the competitive and public interest implications considered in approving the merger.

The general subject matter was whether the transaction—characterised as a move from joint control to (effectively) sole control of a mining joint venture and associated chrome recovery assets—was likely to substantially prevent or lessen competition in any relevant market and whether any public interest concerns arose, including effects on employment.

2. Material Facts

RPM was described as operating smelting operations and metal refining facilities and as holding a 50% interest in the Mototolo JV prior to the transaction. All ore extracted from the Mototolo mine was processed into PGM concentrate through concentrating facilities run by RPM. RPM did not provide refining services to third parties “to any meaningful extent”.

The Mototolo JV was a joint venture created to own and run the Mototolo mine, producing PGM ore and certain precious metal ores (including chrome) as a by-product. Prior to the merger, the Mototolo JV was jointly controlled by RPM and the Glencore Kagiso Platinum Partnership (GKPP), each holding 50%. Within GKPP’s 50% stake, Glencore Operations South Africa (Pty) Ltd (Glencore) held 40.24% and Kagiso Tiso Holdings (Pty) Ltd (Kagiso Tiso) held 9.76%.

The transaction included Glencore’s 50% share in the chrome produced by the Mototolo JV and all movable assets of the Mototolo Chrome Recovery Circuit. The reasons recorded that the immovable assets of the Chrome Recovery Circuit were already owned by RPM.

Under the proposed transaction, RPM would acquire Glencore’s entire interest in the Mototolo JV (as described in the reasons), Glencore’s 50% interest in the chrome ore produced by the Mototolo JV, and the movable portions of the Mototolo Chrome Recovery Circuit. Post-merger, RPM would hold a 90.24% interest in the Mototolo JV, all rights to the chrome produced by the JV, and the entirety of the Mototolo Chrome Recovery Circuit. RPM also indicated it had plans to acquire the remaining 9.76% held by Kagiso Tiso “in due course”.

As to the commercial rationale, RPM stated the transaction would allow it to access adjacent mining opportunities without having to wait for the Mototolo JV’s activities to end. Glencore stated that its PGM activities were non-core to its South African operations and it was therefore disposing of the assets.

The Competition Commission analysed markets for the production and supply of certain PGMs (including platinum, palladium, and rhodium) and for chrome ore. The Commission’s view, as recorded by the Tribunal, was that the merger was unlikely to affect the structure or incentives in any relevant market because it represented a move from joint to sole control of the Mototolo mine.

A further material fact was that pre-merger supply relationships between the merging parties and Glencore would continue post-merger through supply agreements. In terms of those agreements, RPM would continue to provide all chrome ore produced by the target firms to Glencore after the merger. The PGM ore extracted from the Mototolo mine would remain with RPM for use at its concentration facilities, while the chrome ore would be sold to Glencore.

No material factual disputes were identified in the reasons; the Tribunal’s account proceeded on the basis of the Commission’s analysis and the parties’ descriptions of the transaction and its effects.

3. Legal Issues

The central legal question was whether the proposed merger was likely to substantially prevent or lessen competition in any relevant market, having regard to the markets examined by the Commission (PGMs and chrome ore) and the competitive effects of the transaction.

A further legal issue was whether the transaction raised any public interest concerns, with particular attention to employment effects, as well as whether any other public interest considerations arose.

The dispute was primarily an application of competition-law standards to the facts as placed before the Tribunal through the Commission’s investigation and the parties’ submissions. It required an evaluative assessment of likely market effects (including market structure, incentives, and share accretion) and an assessment of public interest impacts.

4. Court’s Reasoning

The Tribunal’s reasoning, as reflected in the reasons, proceeded from the Commission’s analysis of the relevant product markets. The Commission considered the markets for the production and supply of PGMs (including platinum, palladium, and rhodium) and chrome ore, and concluded that the transaction was unlikely to affect market structure or incentives in any relevant market. A key consideration was that the transaction represented a change from joint control to sole control of the Mototolo mine, rather than the combination of previously independent competing firms in a manner that would materially change competitive constraints.

The Tribunal also took into account the continuation of key commercial arrangements post-merger. The reasons emphasised that existing supply relationships between the merging parties and Glencore would persist under supply agreements, under which RPM would continue to supply all chrome ore produced by the target firms to Glencore after the merger. This continuity was treated as supporting the conclusion that the merger would not materially change competitive conditions in the relevant markets in practice, given the described allocation of PGM ore to RPM’s own concentrating facilities and the sale of chrome ore to Glencore.

Although the Commission analysed market shares, the Tribunal recorded the conclusion that any share accretion represented by the Mototolo JV was negligible, and that strong competition would remain in the relevant markets after the transaction. The Tribunal’s acceptance of this assessment formed part of the basis for finding no substantial lessening of competition.

On public interest, the Tribunal recorded the merging parties’ submission that there would be no negative impact on employment. The Commission contacted relevant trade unions and no concerns were raised. The Commission was satisfied there would be no job losses, and further found that the transaction would likely enable the merging parties to pursue new mining activities with a positive effect on employment. The Tribunal recorded that no other public interest concerns arose.

In light of the competition analysis and the absence of public interest harm, the Tribunal concluded that the merger was unlikely to substantially prevent or lessen competition in any market and that no public interest issues arose that would justify conditions or prohibition.

5. Outcome and Relief

The Tribunal approved the merger unconditionally.

No conditional remedies were imposed. The reasons did not record any costs order.

Cases Cited

No cases were expressly cited in the reasons.

Legislation Cited

No legislation was expressly cited in the reasons.

Rules of Court Cited

No rules of court were expressly cited in the reasons.

Held

The Tribunal held that the proposed transaction, in terms of which RPM acquired Glencore’s interest in the Mototolo JV and associated chrome-related rights and movable assets, was unlikely to substantially prevent or lessen competition in any relevant market, including markets for the production and supply of specified PGMs and chrome ore.

The Tribunal further held that no public interest concerns arose from the merger. In particular, the Tribunal accepted that the merger would have no negative impact on employment, that no trade union concerns had been raised, and that the transaction could support further mining activity with a potentially positive employment effect.

On these bases, the Tribunal approved the transaction without conditions.

LEGAL PRINCIPLES

The Tribunal applied the principle that a merger should be approved where it is unlikely to substantially prevent or lessen competition in any relevant market, assessed with reference to market structure, incentives, and the likely competitive effects of the transaction.

The reasons reflect the principle that a transaction characterised as a change from joint control to sole control may, depending on the facts, be less likely to alter competitive dynamics than a merger that combines independent competitors, particularly where market share accretion is negligible and effective rivalry remains.

The Tribunal also applied the principle that merger control requires consideration of public interest effects, including impacts on employment, and that the absence of job losses and the absence of stakeholder concerns (such as from trade unions) may support a conclusion that no public interest conditions are warranted.