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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM171Mar20
In the matter between
Harmony Gold Mining Company Ltd, Harmony
Moab Khotsong Operations (Pty) Ltd and
Golden Core Trade & Invest (Pty) Ltd
Acquiring Firms
And
The remaining gold mining South African
operations of AngloGold Ashanti Ltd
Target Firms
Panel : Ms Y Carrim (Presiding Member)
: Ms A Ndoni (Tribunal Member)
: Prof. F Tregenna (Tribunal Member)
Heard on : 29 April 2020
Order Issued on : 29 April 2020
Reasons Issued on
: 27 May 2020
REASONS FOR DECISION
APPROVAL
[1] On 29 April 2020, the Competition Tribunal (“Tribunal”) unconditionally
approved a large merger between Harmony Gold Mining Company Ltd,
Harmony Moab Khotsong Operations (Pty) Ltd and Golden Core Trade & Invest
(Pty) Ltd and the remaining gold mining South African operations of AngloGold
Ashanti Ltd.
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[2] The reasons for the approval of the proposed transaction follow.
PARTIES TO THE PROPOSED TRANSACTION
Acquiring firms
[3] The acquiring firms are Harmony Gold Mining Company Ltd (“Harmony Gold”),
Harmony Moab Khotsong Operations (Pty) Ltd (“Harmony Moab”) and Golden
Core Trade & Invest (Pty) Ltd (“Golden Core”).
[4] Harmony Gold is a JSE -listed firm incorporated in South Africa , and is not
controlled by any firm. Harmony Gold controls multiple firms, including its wholly
owned firms Harmony Moab and Golden Core.
[5] Harmony Gold conducts gold mining and exploration in nine mines in South
Africa, primarily producing gold. Silver and uranium are by-products of its gold
production. Harmony Gold sells its gold and silver on the London Bullion
Market.
Target firms
[6] The target firm s are the remaining gold mining South African operations of
AngloGold Ashanti Ltd (“AngloGold”). AngloGold is not controlled by any firm.
It controls multiple firms.
[7] The primary target firms consist of the WW package 1 and the VR package ,2
which are wholly owned firms and assets of AngloGold. The target firms do not
control any firms outside of these packages.
[8] AngloGold’s WW and VR packages also conduct gold mining and exploration,
primarily producing gold. Silver is the only by-product from these packages.
1 The West Wits (“WW”) package comprises of: the WW mining business as a going concern made up
of 3 mines in Carletonville; AngloGold’s 25 ordinary shares in as well as its loan claims against
Covalent Water Company (Pty) Ltd; 1 ordinary share in AGA Security Services (Pty) Ltd; 100 ordinary
shares in Masakhisane Investment (Pty) Ltd.
2 The Vaal River (“VR”) package comprises of: the VR remaining businesses as a going concern, made
up of the assets and liabilities excluded from Harmony Moab’s 2018 acquisition of AngloGold’s VR
mining business (see LM229Nov17); AngloGold’s 1633 ordinary shares in as well a s its loan claims
against First Uranium (Pty) Ltd.
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PROPOSED TRANSACTION AND RATIONALE
[9] Harmony Gold intends to acquire the WW package and the VR package from
AngloGold. Post-merger, Harmony Gold will have sole control of the WW
package and the VR package.
[10] The Competition Commission (“Commission”) noted that this proposed
transaction aligns with AngloGold’s previous as well as projected disposals of
its gold mining assets in South Africa. The Commission also found that
Harmony Gold stood to acquire gold assets which were a strategic fit.
RELEVANT MARKET AND IMPACT ON COMPETITION
[11] The Commission found a horizontal overlap in the activities of the merging
parties as both are active in the production and supply of gold and silver. The
Commission concluded on two relevant markets in which it assessed the
proposed transaction’s impact on competition. The first being the international
market for the production and supply of gold , and the second being the
international market for the production and supply of silver.
[12] In the international market for the production and supply of gold , the
Commission found that the merged entity would have a post-merger market
share of 1.7% following an accretion of 0.4%. The Commission found that this
market was highly fragmented and the merged entity would continue to face
competitive constraints as no participant’s market share exceeded 10%.
[13] In the international market for the production and supply of silver, the
Commission found that the merged entity would maintain a post-merger market
share of 0.3% following no discernible accretion. Similarly, the merged entity
would continue to face competitive constraints from a highly fragmented market
as no participant’s market share exceeded 10%.
[14] In light of the above, the Commission concluded that the proposed transaction
was unlikely to substantially lessen or prevent competition in either of these
markets.
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PUBLIC INTEREST
[15] During the Commission’s investigation, unions representing the employees of
the target firms were concerned about conditions and security of employment
post-merger. A 12-month moratorium on retrenchments was also proposed as
a condition of the merger.
[16] In response to these concerns , the merging parties confirmed that all
employees would, ultimately enjoy terms and conditions of employment that
were on the whole not less favourable than those that existed pre-merger. The
merging parties also submitted that the Labour Relations Act 3 afforded the
employees protection in this regard. The Commission found that the merging
parties’ submissions adequately addressed these concerns.
[17] As to the proposed imposition of a 12-month moratorium on all post-merger
retrenchments, the merging parties made an undertaking that no retrenchments
would occur as a result of the proposed transaction. The Commission found
that this undertaking adequately addressed this concern.
[18] The Commission also assessed whether a dilution in the ownership by
historically disadvantaged persons of the target firms (the WW & VR Packages)
would occur post -merger. The Commission noted that both packages are
wholly owned by AngloGold. The Commission also noted that both Harmony
Gold and AngloGold (neither being controlled by any firm) are JSE -listed
companies whose shares are widely traded. The Commission conclude d that
the proposed merger would result in a greater spread of ownership and
increased levels of ownership by historically disadvantaged persons due to
Harmony Gold’s +30% B-BBEE shareholding at group level.
[19] The Commission assessed the proposed transaction’s effects on historically
disadvantaged suppliers that supply services such as cleaning, gardening, food
and beverages to the target firms. The merging parties confirmed that all such
contracts would be transferred to them on similar, commercially reasonable
contracts would be transferred to them on similar, commercially reasonable
terms. The merging parties additionally undertook to facilitate and enhance the
3 No. 66 of 1995 as amended.
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economic participation of local black -owned businesses . Based on this, the
Commission found that the proposed transaction was unlikely to result in a
negative impact on these suppliers as well as AngloGold’s previous community
initiatives.
CONCLUSION
[20] In light of the above, we concluded that the proposed transaction was unlikely
to substantially prevent or lessen competition in any relevant market. In
addition, no public interest concerns arise from the proposed transaction.
[21] Accordingly, we approved the transaction without conditions.
27 May 2020
Ms Y Carrim Date
Ms A Ndoni and Prof. F Tregenna concurring
Tribunal Case Manager:
P Kumbirai
For the Merging Parties: L Mabidikane of Bowmans for Harmony Gold
M Garden & T Theron of ENSafrica for AngloGold
For the Commission: T Loate and R Darji