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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM039May19
In the matter between
FFS Calpet (RF) (Pty) Ltd Primary Acquiring Firm
and
Calulo Marine (Pty) Ltd Primary Target Firm
Panel : Enver Daniels (Presiding Member)
: Andreas Wessels (Tribunal Member)
: lmraan Valodia (Tribunal Member)
Heard on : 07 August 2019
Order Issued on : 07 August 2019
Reasons Issued on : 04 September 2019
REASONS FOR DECISION
Approval
[1] On 07 August 2019, the Tribunal unconditionally approved a transaction in
terms of which FFS Calpet (RF) (Pty) Ltd ("FFS Calpet") acquired sole control
of Calulo Marine (Pty) Ltd ("Calulo Marine").
[2] The reasons for the approval follow.
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Parties to the transaction
Primary Acquiring Firm
[3] FFS Calpet is a private company incorporated in accordance with the laws of
the Republic of South Africa. FFS Calpet is jointly controlled by Calulo
Petrochemicals (Pty) Ltd (51.65%); Bud Chemicals and Minerals (Pty) Ltd
(42.73%) and FFS Calpet Management (5.62%).
[4] Calulo Petrochemicals is wholly owned and controlled by Calulo Investments
(Pty) Ltd ("Calulo Investments"). Calulo Investments is ultimately jointly
controlled by the Ntinga Trust and the management and employees of the firm.
Bud Chemicals is wholly owned and controlled by Synchem Management
Services (Pty) Ltd. Calulo Petrochemicals and Bud Chemicals both control
several entities. 1 FFS Calpet wholly owns FFS Refiners (Pty) Ltd ("FFS
Refiners"). Collectively, these entities will be referred to as the "acquiring
group".
[5] The acqu1nng group is involved in the procurement, processing, refining,
distribution and marketing of industrial heating fuels. The acquiring group also
sells creosote wood preservative used in the utility pole industry and produces
base oil used in the manufacture of lubricating oils. The acquiring group
supplies its marine fuel nationally as well as internationally.
Primary Target Firm
[6] Calulo Marine was established in 2003 as the first independent black owned
business to operate as a supplier of marine fuels and lubricants to the local
marine sector. Calulo Marine is a wholly owned subsidiary of Calulo Services
(Pty) Ltd ("Calulo Services"). Calulo Services is in turn wholly controlled by
Calulo Investments. Calulo Marine does not control any firms.
1 Please see page 39 of the merger record for a comprehensive list of these entities.
2
[7] Calulo Marine markets and distributes marine fuels along the South African
coastline, primarily to the fishing industry, Trans net National Ports Authority and
the South African Navy. Calulo Marine sources marine fuel from Engen
Petroleum Group ("Engen") and the Acquiring Group. Calulo Marine does not
engage in any export activities.
Proposed transaction and rationale
[8] In terms of the transaction, the Acquiring Group intends to acquire 100% of the
issued share capital in Calulo Marine from Calulo Services. Post-merger, the
Acquiring Group will exercise sole control over Calulo Marine.
[9] Regarding rationale, it was submitted that as both the acquiring and target firms
are part of the same group of companies being majority-owned by Calulo
Petrochemicals and Calulo Investments, the shareholders of Calulo Marine and
FFS Calpet foresee the transaction facilitating the growth of the group's marine
business to better compete in an internationally competitive market against
larger players.
Relevant market and impact on competition
[1 OJ The Commission considered the activities of the merging parties and found that
the proposed transaction results in a horizontal overlap in relation to the
wholesale distribution of marine fuel.
[11] The Commission utilised revenue figures from the merging parties' competitors
to calculate market shares and found that the merged entity will have
approximately 14.9% market share in the relevant market.
[12] The Commission is of the view that the aforementioned market share estimates
are likely to present a worst-case scenario given that customers such as
Pioneer Fishing, and Sea Harvest had indicated that there are multiple
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alternative wholesale suppliers of marine fuel nationally.2 Further, customers of
the merging parties confirmed that they were not concerned by the merger due
to presence of ample alternatives post-merger. 3
[13] In view of the foregoing, the Commission concluded that the proposed merger
is unlikely to substantially prevent or lessen competition in any relevant market.
Public interest
[14] The merging parties submitted that no retrenchments will occur as a result of
the proposed transaction. In addition to filing proof of service to the employees
of the proposed transaction, the merging parties provided the Commission with
an unequivocal undertaking that the proposed transaction will not result in any
merger specific retrenchments. 4 Ms Mona Naicker and Miss Pearly Leong, who
represent Calulo Marine and FFS Calpet respectively, did not raise any
concerns regarding the proposed transaction. 5
[15] In view of the foregoing, the Commission concluded that the merger was
unlikely to result in any public interest concerns.
2 Such as World Fuel Services Incorporated, Peninsula Petroleum Limited, Cockett Marine Oil PTE,
South African Bunkering Trading, SA Fuel & Lubricants (Pty) Ltd; Moov Fuel (Pty) Ltd; African
Shipping Bunkering Services, Aegean Marine Petroleum (Pty) Ltd, amongst others.
3 Please see page 334-342 of the merger record.
4 Paragraph 12.2 of the Competitiveness Report page 85 of the merger record.
5 Please see page 289-292 of the merger record.
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Conclusion
[16] In light of the above, we concluded that the transaction is unlikely to
substantially prevent or lessen competition in any relevant market. In addition,
no adverse public interest issues arise from the transaction. Accordingly, we
unconditionally approved the transaction.
Mr. Enver Daniels
04 September 2019
Date
Mr. Andreas Wessels and Prof. lmraan Valodia concurring.
Tribunal Case Manager
For the Merging Parties
For the Commission
: Andiswa Nyathi
: Ahmore Burger-Smidt ofWerksmans Attorneys & Louise
Cleland of Shepstone and Wiley
: Wiri Gumbie and Zanele Hadebe
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