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[2019] ZACT 6
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African Rainbow Minerals Limited v The Machadodorp Works ferrochrome and ferromanganese division of Assmang (Pty) Ltd (LM232Jan19) [2019] ZACT 6 (20 February 2019)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: LM232Jan19
In
the matter between
African
Rainbow Minerals Limited
Primary
Acquiring Firm
And
The Machadodorp Works ferrochrome
and
ferromanganese division of Assmang
(Pty) Ltd
Primary
Target Firm
Panel
: Yasmin Carrim (Presiding Member)
: Mondo Mazwai (Tribunal Member)
: lmraan Valodia (Tribunal Member)
Heard
on
: 6 February 2019
Order
Issued on : 6
February 2019
Reasons
Issued on : 20 February 2019
REASONS FOR DECISION
Approval
[1]
On
6 February 2019, the Competition Tribunal ("Tribunal")
unconditionally approved the proposed transaction involving
African
Rainbow Minerals Limited ("ARM") and the Machadodorp Works
ferrochrome and ferromanganese division ("Target
Business")
of Assmang (Pty) Ltd ("Assmang"), hereinafter collectively
referred to as the merging parties.
[2]
The
reasons for the approval of the proposed transaction follow.
Parties to the transaction
Primary
Acquiring Firm
[3]
ARM
is a public entity listed on the Johannesburg Stock Exchange. ARM is
ultimately controlled by Patrice Motsepe through various
trusts. ARM
directly and indirectly controls numerous firms including Assmang.
[4]
ARM
is a diversified mining and minerals holding company. ARM, through
its subsidiaries and joint ventures, mines and beneficiates
iron ore,
manganese ore, chrome ore, platinum group metals,
[1]
copper, nickel and coal. ARM also produces manganese and chrome
alloys.
Primary
Target Firm
[5]
The
Target Business is a wholly-owned division of Assmang. Assmang is
jointly controlled by ARM and Assore Limited.
[6]
The
Target Business used to be a vertically integrated ferrochrome and
ferromanganese business active in the mining of chrome and
manganese
ore, the smelting of ferrochrome and ferromanganese, and the
production and sale of chrome and manganese alloys into
the
international market. The Target Business has ceased its production
and smelting operations. It is now only active in the recovery
of
manganese from historical slag dumps. The recovered manganese is used
to produce low-grade ferrochrome fines and chips which
are then sold
to the stainless-steel market.
Proposed
transaction and rationale
[7]
ARM
will acquire the Target Business through a sale of shares.
[2]
Post-merger, the Target Business will be housed directly under ARM
and ARM will have sole control over the Target Business.
Impact on competition
[8]
The
Competition Commission ("Commission") found that the
proposed transaction did not give rise to a horizontal overlap
as ARM
and the Target Business are considered a single economic entity.
[9]
Given
that the proposed transaction would not alter the pre-merger
structure and that the market shares of ARM would not increase,
the
Commission concluded that the proposed transaction was unlikely to
substantially prevent or lessen competition in any relevant
market.
We concurred with this conclusion.
Public
interest
[10] The
merging parties confirmed that the proposed transaction would not
have any negative effects on
employment in South Africa.
[3]
The proposed transaction raised no other public interest concerns.
Conclusion
[11]
In light of the above, we approved the proposed transaction
unconditionally.
Ms Yasmin Carrim
Ms
Mondo Mazwai and Prof. lmraan Valodia concurring.
20 February 2019
Date
Tribunal
Researcher
: Hlumelo Vazi
For
the merging parties
:
X Nyali of Bowman Gilfillan Inc
For
the Commission
: I Mhlongo and W Gumbi
[1]
Platinum group metals are six pure metals with high melting points
which consist of the following: platinum, (Pt), palladium
(Pd),
Rhodium (Rh), Iridium (Ir), Osmium (Os), ruthenium (Ru) as well as
gold (Au) based metals such as nickel, copper and cobalt.
[2]
Transcript, page 4.
[3]
Merger Record, pages 9 and 83.