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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM001Apr20
In the large merger between:
Senwesbel Limited & Senwes Limited Primary Acquiring Firm
and
Suidwes Holdings (Pty) Limited Primary Target Firm
CONDITIONAL APPROVAL
[1] On 18 August 2020, the Competition Tribunal (“Tribunal”) conditionally approved
the proposed transaction whereby Senwesbel Limited (Senwesbel), and its
subsidiary Senwes Limited (Senwes), would acquire the entire issued share
capital of Suidwes Holdings (Ring Fenced) (Pty) Ltd (Suidwes). Post-merger
Senwes will control Suidwes.
Panel : Mondo Mazwai (Presiding Member)
: Enver Daniels (Tribunal Member)
: Imraan Valodia (Tribunal Member)
Heard on
Final submissions
received
:
1; 3; 8; 19; 23 July and 5 August 2020
14 August 2020
Order issued on : 18 August 2020
Reasons issued on : 12 April 2021
REASONS FOR DECISION
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[2] Our reasons for conditionally approving the proposed transaction follow.
BACKGROUND
[3] On 30 March 2020, the merging parties notified the Competition Commission
(“Commission”) of the proposed transaction.
[4] The merging parties requested the Commission to consider the matter on an
urgent basis as they claimed that Suidwes was in severe financial distress and
would cease operating by the end of May 2020 if the transaction were not
expeditiously approved. The merging parties submitted that if this happened
Suidwes would likely be put under business rescue which w ould lead to
uncertainty for farmers, disruption to the maize value chain and the
retrenchment of approximately 1 ,246 employees located primarily in rural
areas.
[5] The Commission duly conducted the investigation on an expedited basis to
accommodate the par ties. It concluded that Senwes’ acquisition of Suidwes
would substantially prevent or lessen competition in the market for grain storage
in concrete silos in three overlapping geographic areas. In particular, the
Commission found that the merger would raise storage and handling costs at
the different silos and would potentially lead to low er prices being offered to
farmers for their grain. This is because on the Commission’s market definition,
the merged entity would acquire a dominant position and become a monopoly
in the respective geographic markets identified, which would give rise to these
unilateral effects. The Commission recommended the approval of the merger
subject to conditions, including the divestiture of silos, which were agreed with
the merger parties. Given the expedited nature of the proceedings to date, the
Commission had not tested the proposed remedies with market participants.
[6] However, prior to the commencement of the hearing, following questions raised
by the Tribunal at the pre-hearing regarding, inter alia, about the
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appropriateness of the remedies (including the size and location of the silos to
be divested),1 the Commission tested the conditions with market participants.2
[7] Since the divestiture condition was motivated on public interest grounds inter
alia that it would enable a B-BEEE entity to enter the market, t he Commission
indicated that its investigation on conditions revealed that the divestiture offer
would not provide the scale for a new (B-BBEE) entrant to enter the grain
storage market and compete effectively. The relevant silos proposed for
divestiture were allegedly not profitable and had low-capacity utilisation.
[8] The Commission indicated on the eve of the hearing that it had changed its
recommendation to one of prohibition. The Commission further submitted that
while it recognised that Suidwes may be in financial distress, it was of the view
that the failing firm defence did not hold . This was because there were
alternative buyers for Suidwes who posed less competition concerns than
Senwes. In addition, even if it were to be found that there were no alternative
buyers of the Suidwes business, the silo assets of Suidwes would not exit the
market since third parties were likely to buy these assets.
[9] The merger parties levelled criticism against the thoroughness of the
Commission’s investigation which w as clearly affected by the f act that it was
undertaken an expedited investigation. The Commission on the other hand
questioned the good faith of the merger parties.
[10] While disputing the Commission’s conclusions on the basis that the
Commission had not dis charged the onus of proving a substantial prevention
or lessening of competition , the merging parties nevertheless tendered
conditions to divest of three silos (in addition to pricing conditions) which the
Commission initially accepted.
1 Tribunal Directives dated 11 and 22 June 2020.
2 The Commission indicated in its letter dated 30 June 2020 that given the expedited nature of its
investigation due to Suidwes’ dire financial position, it had not had an opportunity to test the divestiture
remedy with third parties and had accepted the merging parties’ tendered condition in good faith.
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[11] The hearing had been set down for 1 July and 3 July 2020 as an uncontested
matter. However, the change from a conditional approval to a prohibition on the
eve of the hearing, necessitated the hearing of evidence and further dates for
hearing.
[12] Given this late development, the parties were directed to provide brief
statements indicating the issues to be covered by each of their witnesses, which
the parties duly did.
[13] We heard the matter on the following further dates: 8; 19; 23 July and 5 August
2020, with final argument heard on 14 August 2020.
[14] The Commission called three factual witnesses , each of whom was a n
unsuccessful bidder for Suidwes’ business (or parts thereof). They were:
[14.1] Mr Stefan Oberholzer (“Oberholzer”), the managing director of Oos
Vrystaat Kaap (OVK), a competitor of the merging parties in the Free
State;
[14.2] Mr Xolani Nhlapo (“Nhlapo”), a director at West Street Capital
(WSC), an investment holding firm which focuses on investing in
agriculture and more specifically agricultural infrastructure;
[14.3] Mr Theo Ernst Rabe (“Rabe”) the CEO of NWK Ltd, a competitor of
the merging parties in the North West.
[15] The merging parties called two factual witnesses , each from the merging
parties:
[15.1] Dr Herman Van Schalkwyk (“Van Schalkwyk”), the CEO of Suidwes.
[15.2] Mr Corne Kruger (“Kruger”), the CFO of Senwes.
[16] We note that the merging parties’ tendered conditions evolved over time in
response to concerns raised by the Commission, the Tribunal and the
independent expert. This culminated in the merging parties tendering a final set
of conditions.
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[17] We found, in the absence of conclusive evidence of a substantial prevention or
lessening of competition, that the tendered conditions would address the
potential competition and public interest harms arising from the transaction. We
therefore conditionally approved the proposed transaction.
The Independent Expert
[18] Neither the Commission nor the merging parties called expert economists as
they were initially in agreement on the conditions , obviating the need for a
robust market definition or a showing of a substantial prevention or lessening
of competition. However, in light of the remedies in particular being highly
contested, and taking into account the worsening financial position of Suidwes,
we notified the parties on 14 July 2020 that the Tribunal intended to call
Professor Johann Kirsten (Prof. Kirsten), an agricultural economist at the
University of Stellenbosch as an independent expert witness to provide an
opinion, more specifically regarding remedies.3
[19] Following the guidance of the Competition Appeal Competition in
Anglo/Kumba4 regarding procedural fairness , t he Commission and merging
parties were duly given the opportunity to indicate a ny conflict with the
appointment. It was made clear that the parties would (i) have access to Prof.
Kirsten’s report; and (ii) have the opportunity to cross examine him on any
submissions made therein.
[20] Prof. Kirsten filed an expert report on 17 July 2020 which was entered into the
record as an exhibit. 5 He was made available for questioning by th e merging
parties and the Commission on 19 July 2020.
[21] We note that the Commissio n and merging parties’ position toward the expert
changed during the proceedings. While the merging parties had initially
reserved their rights regarding the expert’s appoint ment, they submitted that
3 In doing so, we relied on sections 52,54, 55 and 58 of the Act.
4 Anglo South Africa (Pty) Ltd & Others vs The Industrial Development Corporation Limited & Others
24/CAC/Oct02 and 25/CAC/Oct02.
5 See Exhibit 17.
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Prof Kirsten’s report and evidence showed that the marke t was a lot more
dynamic than what the Commission had contended for.
[22] While the Commission had no objection to the appointment of the expert, it
submitted that Prof. Kirsten had “opined on competition matters using the lens
of an agricultural economist and not that of a competition economist ”. The
Commission submitted that his views were merely an opinion, which was not
informed by the basic principles of competition economics , evidence or data
and on this basis should be dismissed.
PARTIES TO THE TRANSACTION
Primary acquiring firm
[23] The primary acquiring firms are Senwesbel and its subsidiary, Senwes.
Senwesbel is a public company listed on the Johannesburg Stock Exchange
(“JSE”) and is not controlled by any single firm or shareholder. Senwesbel,
Senwes and its subsidiaries are referred to below as ‘Senwes’.
[24] Senwes is one of the largest agricultural businesses in South Africa, with its
central head office in Kler ksdorp, in the North West Province. Senwes has
serviced the agricultural industry since 1909 with agricultural production inputs
and market access for commodities, as well as other value -adding agricultural
services.
[25] Senwes’ operations are located primarily in the Free State, Gauteng and North
West provinces of South Africa. It supplies its products and services largely to
commercial farmers, processors (millers and oil seed processors) and traders.
Its main activities include, amongst others, grain handling and stor age,
financing, grain trading, grain transport, equipment sales, agricultural retail
stores, insurance, agriculture inputs and agriculture services.
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Primary target firm
[26] The primary target firm is Suidwes, a private company. Approximately 89.36%
of the shareholding in Suidwes is held by farmers. Suidwes and its subsidiaries
are referred to below as ‘Suidwes’.
[27] Suidwes is a 111-year-old agricultural company in South Africa with its central
office situated in Leeudoringstad, North West Province. Its bus iness activities
include grain storage and handling, grain trading, retail outlets, financing, and
agricultural services, amongst others.
TRANSACTION
[28] In the proposed transaction, Senwes will acquire the entire issued share capital
of Suidwes, through a scheme of arrangement in terms of section 114 of the
Companies Act 2008.
[29] The transaction comprises two legs. In the first leg, Senwes will provide a loan
to Suidwes amounting to R508 million. The Senwes loan is interest bearing
(prime plus 5%) and repaya ble at the earlier of June 2021, or if the merger
between Senwes and Suiwes were not to proceed for any reason , the loan
would become a current liability in terms of the relevant accounting standards.6
[30] The second leg of the transaction is a scheme of arr angement in term s of
section 144 of the Companies Act 2008, where Senwes acquires the entire
issued share capital of Suidwes. Upon completion of the proposed transaction,
Senwes will have sole control over Suidwes.
6 Merging parties’ heads of argument, page 36, paragraph 113.
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RATIONALE FOR THE TRANSACTION
[31] Senwes submitted that its rationale for the transaction was as follows:
“It is Senwes’ strategic objective to be an integrated agri -business and
a significant role player in the food value chain. The strategy is therefore
focused on growth and diversification thr ough expansion within the
agricultural and food value chain. The proposed transac tion with
Suidwes is aligned with Senwes’ strategy and will allow the Senwes
group to diversify within its core strengths.”
[32] Suidwes’ rationale was the following:
“Suidwes is confronted by a situation where, without rapid intervention
from a cashflow perspective, it will likely immediately face business
rescue or liquidation. Suidwes is a failing firm facing significant financial
challenges.
As a result of the sign ificant fi nancial losses which Suidwes had
incurred, it breached certain covenants which it had with its primary
lenders, being the Land Bank and First National Bank (“FNB”)…
Given Suidwes’ dire financial position, it is unlikely to be able to obtain
credit from other financial institutions. Suidwes’ position has worsened
considerably as a result of the coronavirus pandemic. The proposed
transaction is, therefore, critical to the survival of Suidwes.”
[33] As mentioned above, Senwes extended a loan t o Suidwes to assist it with the
immediate risk posed by the demands of the Land Bank. However, despite this
loan, at the Tribunal hearing, Suidwes submitted that its financial position had
continued to deteriorate during 2020, and that this was further compounded by
the impact of Covid-19.7
7 Merging parties’ heads of argument, page 17, paragraph 56.
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ISSUES FOR THE TRIBUNAL’S DETERMINATION
[34] The Tribunal had the following issues to determine:
[34.1] The first was with respect to the market definition.
[34.2] Second, was whether the merger would harm competition in the
relevant market.
[34.3] Third, we were asked to determine the relevant counterfactual. That
is, what would happen absent the proposed transaction in light of
the allegation that Suidwes was a failing firm.
[34.4] Finally, we needed to consider whether the conditions tendered by
the merging parties would be able to cure any harm arising from the
transaction.
RELEVANT PRODUCT AND GEOGRAPHIC MARKET
Relevant Product Market
[35] The Commission defined the relevant product market as that of concrete silos
for the storage of grain and oilseed operated by commercial silo operators .8 It
excluded all the alternative forms of storage and held that these do not impose
a meaningful constraint on the concrete silos.
[36] Based on interviews conducted with 13 farmers during its investigation , the
Commission argued that there were a number of technical reasons, including
the deterioration of the quality of grain, safety risks, length of storage and a lack
of cleaning a nd drying facilities , which rendered alternative storage facilities
inferior to silos. During the course of the proceedings, the Commission relied on
the evidence of these 13 farmers interviewed during its investigation to support
its findings that alternative storage facilities were seen as inadequate substitutes
to concrete silos. However, it did not c all any of the farmers interviewed as
8 Commission’s heads of argument, page 6, paragraph 9.1.
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witnesses. As we discuss later, this was detrimental to the Commission’s case
since the farmers’ interviews could not be tested in oral evidence.
[37] The merging parties on the other hand relied on its t wo witnesses, van
Schalkwyk and Kruger who operate concrete silos and considered alternative
storage a competitive threat to concrete silos.
[38] The Commission in turn criticised the merging parties for not calling any farmers
to substantiate their claim regarding alternative storage facilities to concrete
silos. According to the Commission the evidence of the 13 farmers interviewed
was more important than the technical substitutability evidence of the merging
parties led through van Schalkwyk and Kruger.
[39] The Commission had also intended to call Mr Doors Kruger of Silostrat, a trader
which operates a silo bag business, as a witness , but withdrew him a few days
before the hearing. This also left some critical evidence untested in oral
evidence, as we discuss later.
[40] We pause to mention that in the Imerys decision the CAC confirmed that the
Commission bears the onus to prove a substantial prevention or lessening of
competition.9 Once it has discharged this onus, the merging parties then bear
the onus to show that the proposed mer ger has pro -competitive benefits that
outweigh its anticompetitive effects; or that the merger can be justified on public
interest grounds.
[41] We turn to first consider the evidence regarding the technical substitutability of
concrete silos with silobags.
Silobags
[42] Silobags are semi-permanent storage facilities generally made of a three -layer
plastic film with UV protection.
9 Imerys South Africa (Pty) Ltd and Andalusite Resources (Pty) Ltd v The Competition Commission ,
CAC Case No: 147/CAC/Oct16; CT Case No: IM013May15 at paragraphs 36 – 41.
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[43] According to the Commission there are distinct functional differences between
silobags and concrete silos.
[44] To support its findings the Commission relied on the evidence of Oberholzer of
OVK, which owns concrete silos. According to Oberholzer, silobags have certain
limitations, these include: drying of grain cannot be performed in silobags, theft
is a greater problem compared to concrete silos and that silobags do not allow
for cleaning. He also suggested that there may be a problem with rat infestations
and that the loading of silobags is a much slower process compared to loading
a concrete silo. These disadvantages may affect the qua lity of the grain stored
in silobags.
[45] The Commission submitted that because of these disadvantages , silobags are
not used as substitutes to concrete silos but are rather used as complementary
facilities, to fill a gap in the market when there is not enough storage capacity at
concrete silos. This was confirmed by the Commission’s witness, Rabe of NWK,
a competitor of Senwes in his evidence, when he stated: “At this moment, no, I
think there is silobag facilities, but that could be mor e because of market gaps
and contracts towards specific markets. So, no, we don’t regard it as a direct
threat…”.10
[46] In cross-examination, Rabe said the following regarding NWK’s11 response to
questions posed by the Commission during its investigation12:
“MR NORTON: So, the qu estion is “do other storage options such as
zinc bunkers, private silos and storage bags exert any competitive
constraint on your business?” Do you see that?
MR RABE: Yes.
10 Transcript, pages 360 and 361.
11 Record, page 2825.
12 Transcript, page 325.
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MR NORTON: And your answer is “there is a competitive constraint to
some degree. Oth er storage mediums offer a product in competition
with NWK”. Do you see that?
MR RABE: Yes.
MR NORTON: And the obvious meaning of what you’ve said there is
that other storage mediums, and I assume that that means bunkers,
silobags, etc, do offer competition to your concrete silos. Correct?
MR RABE: Yes, to some degree.”
[47] Mr Rabe further confirmed this in cross-examination13:
“MR NORTON: And then if you look at paragraph 18.3, you say in 18.3
“it is anticipated that should NWK not continue to offer relativel y low
storage and handling fees, as is currently the case, producers may be
persuaded to consider the acquisition and use of silobags or other
alternative options for storage of their grain”. Do you see that?
MR RABE: Yes.
MR NORTON: In other words, what you are saying here is you have to
consider the potential diversion of products to these alternative storage
options if you were to push your fees up. Correct?
MR RABE: Yes, we do.”
[48] The Commission submitted that although silobags are present in the market and
may be growing, they have not yet attained critical mass to significantly constrain
traditional concrete silos due to the limitations mentioned above.
[49] The merging parties disagreed. According to them, the use of silobags has been
growing in the market as can be gleaned from the growth of Silostrat’s business.
Silostrat currently has approximately 600 000 tons of silobag capacity in the
Senwes / Suidwes area. Van Schalkwyk pointed out that Silostrat has 305 000
13 Transcript, page 325.
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tons of capacity in the Suidwes area a lone and that it is easily able to up -scale
its capacity as silobags are easy to erect. He pointed out that the expansion of
silobag capacity simply required moving a fence in order to expand the area
where the silobags will be erected.
[50] Oberholzer later conceded14 that where silobag facilities were constructed, the
grain which is stored in those facilities would no longer be stored in concrete
silos.
[51] One of the primary reasons given for th e switch from concrete silos to silobags
was price. The cost of st oring grain in concrete silos is high for some farmers
resulting in these farmers exploring alternative options.
[52] As mentioned, the Commission had originally elected to call Mr Doors Kruger
(“Doors Kruger”) of Silostrat but subsequently withdrew him , although he
attended the proceedings.16 The evidence of Silostrat could not be tested in oral
evidence on the competitive constraint it poses on concrete silos or on whether
it provides storage to third parties . The merging parties alleged that the
Commission’s withdrawal of Silostrat was because his evidence did not support
the Commission case.
[53] Kruger indicated that Silostrat is storing grain in order to supply it to various
millers and that this diverts grain away from the Senwes storage facilities. Kruger
14Transcript, page 87 and Merging parties’ heads of argument, page 94, paragraph 314.
15Commission telephonic interview with Silostrat dated 13 May, Record page 2908.
16 Merging parties’ heads of arguments, page 28, paragraph 92.
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pointed out that farmers can store their grain with Silostrat and price the grain at
a future date. According to him, this has the same effect as third party storage.17
[54]
[55] However, as indicated, Silostrat was n ot called to give its view and its views
could not be tested in oral evidence. The Commission ’s view was that the
merging parties , in arguing that alternative storage constained silos, conflate
competitors in the storage market with competitors in the trad ing market. It put
to Kruger the question why Silostrat is not listed on SAFEX if indeed it provides
third party storage. Kruger submitted that it was Silostrat’s choice whether or not
to register on SAFEX. Regardless, his evidence was that Silostrat (millers and
on-farm storage) was taking grain away from concrete silos. The extent to which
the trading and storage markets were inte rrelated could not be tested with
Silostrat or from the demand side, with farmers.
[56] Regarding the drying capabilities of silobags Oberholzer admitted that he was
unaware of new technology such as the Drylobag system which allegedly makes
it possible for silobags to have the same grain aeration facilities as is available
in concrete silos.19
[57] He testified that OVK did not take into account Drylobag technology or silobags
when determining their storage fees and rates, but rather considered their own
costing aspects. The Commission pointed out that neither Senwes nor Suidwes
have used Drylobags or know how much they would cost to import.
17 Transcript, page 777.
18 Record, page 2825.
19 Transcript, page 93.
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[58] There are clear drawbacks associated with silobags which the merging parties
did not dispute. However, as van Schalkwyk testified there are also risks in in
concrete silos. According to him, such risks can be managed in both types of
facilities.
[59] In our view, we heard sufficient evidence to suggest that silobags appear to be
gaining traction in the market and the Commission’s witnesses (Oberholzer and
Rabe) testified that alternative storage facilities pose a competitive constraint to
concrete silos to some degree. This is confirmed by the Commission’s third
witness, Nhlapo who confirmed in evidence that grain previously stored in
Senwes’ concrete silo had been diverted towards silobags.20
[60] The above indicates that w hile silobags may not be perfect s ubstitutes to
concrete silos, there is a degree of substitutability between the two.
[61] Apart from the technical substitutability of concrete silos with silobags, a
contentious issue as foreshadowded above was whether grain that goes directly
from the farme r to a trader , such as Silostrat should form part of the relevant
market. The Commission submitted that since tr aders, millers and on -farm
storage facilities store for their own account, and are not available for third party
storage, they should be exclude d from the market. We deal with this in the
section discussing General Trends in the Grain Storage Market.
Bunkers
[62] Grain bunkers may be constructed from corrugated iron, wood, concrete, or steel
for the angled walls, while the floor is generally covered w ith a plastic ground
sheet to prevent ground moisture from contaminating the stored grain. Grain is
then stored within the bunker, which is generally also covered with sheeting to
prevent inter alia wind erosion. In addition to the construction of the actu al
20 Transcript, page 250
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facility, additional investments are required for loading (e.g. conveyor belts) and
drying equipment.
[63] According to the Commission the biggest disadvantage of bunkers is that grain
stored in bunkers is more exposed to theft and hail. Further, bunkers lack other
features such as drying and cleaning facilities which require additional
investment. Like silobags, the Commission was of the view that bunkers should
be considered to have a complementary relationship with concrete silos. Further
that bunkers are not available for third party storage but provide storage for the
account of the bunker operator.
[64] The merg ing parties argued that the Commission’s analysis in relation to
bunkers was very thin and appeared to be parasitic on its critique of silobags as
being a suitable alternative to concrete silos. According to the merging parties
the Commission simply assert ed that there were limitations associated with
fumigation, aeration and theft which were based on incorrect assertions made
by Oberholzer.
[65] The mer ging paries submitted f irstly, that both Suidwes and Senwes had
fumigated their own bunkers in the past. Obe rholzer conceded that he had no
knowledge that it was in fact possible to fumigate bunkers .21 Oberholzer was
also unable to dispute that the speed of loading at Senwes’ bunkers was as fast
if not faster than at certain of Senwes’ concrete silos. Finally, with respect to
theft Kruger confirmed that Senwes had not had any insurance claims in respect
of theft from its bunkers in the previous five years.22
[66] The merging parties argued that many market participants have constructed
bunkers, including GWK, China Oil and Foodstuffs Corporation (“COFCO”), Afgri
and the merging parties themselves, and that t his was attributable to the fact
that bunkers are not sig nificantly different to concrete silos. In the overlapping
areas only GWK has bunker facilities.
21 Transcript, page 92.
22 Transcript, page 814.
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[67] According to Van Schalkwyk, f ollowing the construction of the GWK bunker in
the Christiana area, the Christiana silo had lost up to one third of its throughput
volume.23 The merging parties submitted that there are a number of entities
which have constructed bunkers in South Africa including Afgri (which has more
than 500 000 tonnes of bunker capacity), Senwes (102 000), and Suidwes (175
000 tonnes of capacity). Senwes’ Raathsvlei bunkers have a capacity of more
than 60 000 tonnes (which is the same size as the Regina silo).
[68] With regard to the Commission’s argument that third parties are not able to store
grain in bunkers, the merging parties rebutted this argum ent by pointing to the
fact that COFCO currently stores grain for third parties.24
[69] It appears that there has been an increase in the number of bunkers constructed
and that these appear to be placing a competitive constraint on the merging
parties’ silos as shown in the Christiana area, discussed later.
Zinc silos (and on farm facilities)
[70] Zinc silos are generally available in two types, namely corrugated steel or
smooth walled. Zinc silos are fully enclosed structures installed with aeration and
fumigation equipment, as well as hoppers for in and out loading. The zinc silos
can differ by size and capacity depending on the needs of the storer and can be
set up relatively quickly. T hese silos are generally erected by the farmers on
their farms.
[71] According t o the Commission, zinc silos have limited storage capacity and
farmers generally have to produce large volumes of grain for the investment to
be economically viable and thus only the largest farmers may be able to do this.
Further that this storage was often only available to the farmer and was not made
23 Transcript, page 449.
Record page 2911-2915. Also see transcript page
491.
18
available to third parties. However, of these market participants, only GWK has
bunker facilities in the overlapping areas.
[72] The Commission found that although some farmers have their own storage
capacity, farmers generally view this alternative as too risky. This was mainly
due to quality concerns as grain can sprout and become toxic. The Commission
submitted that it was because of this that farmers preferred using commercial
silos as silo operators have th e expertise to grade grain correctly and remove
poisonous seeds, broken seeds and determine the moisture content. Therefore,
concrete silos allow for safer storage of grain for a long-term period.
[73] The merging parties disputed the Commission’s contentions . They submitted
that there had been an increase in farmers erecting their own zinc storage
facilities and that this had threatened their business as these farmers could also
store grain for their neighbours.
[74] Kruger also reflected on the increase in on -farm storage and the fact that this
results in grain by-passing Senwes’ storage facilities. He emphasised that in the
Hoopstad area there are many farmers who have erected their own facilities and
also that farmers store grain for their neighbours. He submitted25:
“MR KRUGER: Chair, once again, and I explained it in the first with Mr
Norton. Take just Deon Berg as a farmer. He is planting 5 to 6 000
hectares. He is storing product on his farm. He is delivering at Premier
Kroonstad. So, previously Deon Berg 5 000 tons times 6 tons per hectare,
30 000 tons was delivered at our facility. Now it’s gone. So, that’s
competition for us. They are taking … they participate in the commercial
production and therefore they took away product from us. It’s not that that
product is not going to for commercial use. It is going for commercial use
and therefore we are missing the opportunity.”
25 Transcript, page 769.
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[75] The Commission put up a 2006 article to Kruger and to Prof Kirsten titled, “On-
farm storage, the road ahead”, written by Dr Andrea Van Der Vyver, an
agricultural economist in the rural development faculty of natural science at the
University of Pretoria.26 According to the Commission, this article highlighted the
disadvantages associated with on -farm storage. The Commission used this
article to make the point that there had been a slow uptake of alternative storage
because of the disadvantages associated with on-farm storage, such as the cost
to insure grain in on -farm storage ( which tends to be higher), higher finance
costs, higher marketing costs and a screening reduction.27
[76] In response Kruger submitted that while there are disadvantages associated
with on -farm storage, there were also advantages such as the tax reduction
which is enjoyed by farmers with on-farm storage. Secondly, that the market has
changed and that many farmers have resorted to constructing their own on-farm
storage.
[77] In his evidence, Kruger confirmed the view of Professor van der Vyver that
“…farming activ ities increased in size. Direct sales to processors became
possible and transport from the farm, on-farm loading to processors has become
a common practice. Therefore, the demand for on -farm storage and increased
storage at processing facilities is on the rise.” When asked his thoughts on this
statement, he submitted28:
“MR KRUGER: I think it’s exactly correct, Chair, and the farmers with
their new John Deere equipment, they harvest so fast, they actually
choose to erect facilities on their farms, because it’s buffers their
harvest process and from there on it gives th em channel to market.
So, it’s exactly correct. It actually forms part of a plaaslaai action as
well, Chair. It’s to buffer your product on-farm and then store it there
or buffer it and send it off to the miller. That’s the two types of models
you get there.”
26 Transcript, page 893-896 and record, page 2883.
you get there.”
26 Transcript, page 893-896 and record, page 2883.
27 Transcript, pages 894 and 895.
28 Transcript, page 925.
20
[78] The merging parties pointed out that Professor van der Vyver in his article
indicated that the construction of on-farm storage allows for the delivery of grain
from the farm to the miller (so called plaaslaai)29 throughout the season and not
only at harvest time. Professor van der Vyver stated that this trend was likely to
continue.
[79] From the Suidwes point of view, Van Schalkwyk testified that where a farmer is
disgruntled with the service offered by Suidwes, the farmer will construct his or
her own facility and “it will mean that we lose him for good, because he will store
on his farm and he won’t bring it to our silos anymore ”. He also confirmed that
“we know of various examples of farmers that actually do store maize for their
neighbours and other farmers in their facilities.” As the merging parties put it, on-
farm storage will divert grain away from concrete silos and it is, therefore, a
suitable alternative to concrete silos.
[80] From the submissions of the 13 farmers, there are different views with regards
to zinc silos as a viable alternative of the traditional concrete silo.
[81] Some farmers have expressed that they have not and do not use zinc silos (and
other alternatives storage facilities such as silo bags, bunkers, and grain dams).
These farmers are of the view that such alternatives are not the best substitute
for concrete silos due to the quality of grain and the possible risk that grain could
get exposed to various elements that may cause damage.
[82] On the other hand, some of these 13 farmers whic h have used zinc silos
(together with other alternative storage facilities) are of the view that they provide
an alternative to traditional concrete silos. There are also farmers that consider
all types of storage facilities in the same way but note that cement silos and zinc
silos are expensive as an option, to construct on farms. Some farmers believe
that zinc silos and concrete silos are good for long-term storage.
that zinc silos and concrete silos are good for long-term storage.
29 The terms “plaaslaai” translates to “loading on the farm” thus describing a situation in which the buyer
picks up the grain directly from the farmer, cutting out transport costs.
21
[83] Based on the above we are of the view that the evidence of the 13 farmers is
mixed and inconclusive.
[84] Zinc silos appear to be increasing in use , however the extent to which these
place a competitive constraint on concrete silos, or how rapidly they will grow in
future is unclear. Without the benefit of oral testimony from the farmers, we leave
question this open.
General Trends and Dynamics of the Grain Storage Market
[85] According to the merging parties there has been a noticeable growth in
alternative storage facilities in the last 20 years, while over the same period no
new concrete silos had been built.
[86] Kruger testified that in the period 2003 to 2020, alternative storage capacity had
increased from 500 000 tons to 2.2 million tons in the area in which Senwes
operates; and that on a national basis the total alternative storage capacity
currently stood at 9 million tons .30 These 9 million tons had been erected over
the last 15 years as compared to the 50 years of construction it took to construct
the current concrete silo capacity in the market. 31 According to the merging
parties, the growth in the volume of alternative storage capacity was proof that
it is exerting some competitive constraint on concrete silos.32
[87] The merging parties put up an extract from Senwes’ Strategic Plan, which shows
the current dynamics of the grain storage market, as replicated in Table 1 below
below.
30 Transcript, page 760.
31 Transcript, page 782.
32 Transcript, page 815.
22
Table 1:
[88] Further, t he merging parties submitted that the JSE does not distinguish
between concrete silos and alternative storage as an approved silo is defined
as: “a delivery point that could either represent an upright storage structure,
bunker, silobag site or warehouse owned by a JSE approved storage operator
and approved for each marketing seasons in terms of the requirements set out
in Appendix D .”33 They pointed out that since 2009 the number of registered
silos has increased reflecting the growth in alternative storages.
[89] The Commission submitted that even if silobags (or alternati ve storage in
general) were considered as alternatives, they only account for less than 5% of
total storage capacity nationally.34
[90] As indicated, one of the issues in dispute was whether the grain that is not stored
in the merger parties’ silos forms part o f the contestable market . The merging
parties submitted that there appear ed to be a substantial amount of grain
bypassing their concrete silos. Taking into account the amount of grain delivered
to their silos in the Senwes and Suidwes areas relative to the total maize
production in those areas, they estimatated that approximately 40% to 50% of
grain bypassed their silos, as indicated in Table 2 below.
33 Johannesburg Stock Exchange Agricultural Derivatives Contract Specifications, Annexure D July
2013, page 3.
34 Commission’s Heads of arguments page 6, paragraph 9.6.
23
Table 2:
[91] They submitted that this demonstrated that over time an increasing proportion
of the grain which is produced in the traditional Senwes and Suidwes areas by-
passed the parties’ own storage facilities. According to the m, this means that
there are a range of other storage facilities in which grain is being stored and
these impose a direc t or indirect constraint on entities such as Senwes and
Suidwes.
[92] Kruger testified that one of the significant benefits which alternative storage
facilities have over concrete s ilos is the fact that they can be positioned in the
middle of production areas, whereas concrete s ilos cannot be m oved. He
emphasised that for every ton of grain which reached the mills through an
alternative channel, the owners of concrete silo facilities lose the revenue
associated with that ton of grain, which they would have earned if the alternative
facility did not exist.
[93] Further that the existence of traders and millers who purchase directly from
farmers via plaaslaai also impose a constraint on the activities of the providers
of storage services.
[94] As part of the assessment o f the grain that bypasses the merging parties ’
facilities, the merging parties also submitted municipal and district production
data for the Free State and North West areas, aimed at reflecting the estimated
grain production from the three overlapping area s. Kruger estimated that
Senwes stored approximately of the grain produced in the overlap ping
area, and the balance of bypasse d their silos in these overlapping areas.
24
[95] The Commission disputed this analysis and argued that these bypass figures
did not reflect the size of storage that is lost by the merging parties to rivals in
the concrete silo storage space, since the bypass figures included grain stored
at traders' facilities and millers' facilities , farmers’ own storage facilities, and
plaaslaai grain. According to the Commission the bypass figures are not part of
the contestable market since traders, millers, own farm storage facilities and
plaaslaai do not store for third parties but for their own account. The Commission
submitted that the merging parties conflate loss of storage revenues to other
commercial storage competitors vs the loss of revenues to all competitors in the
procurement of grain. To determine the loss of storage revenues to rivals, the
merging parties should not cite inst ances wh en they lose to rivals in the
procurement process for grain.
[96] The Commission submitted f urther that to understand the actual sizes of the
merging parties in the concrete silos storage market, the Tribunal should instead
consider the evidence of the capacity that Senwes and Suidwes have in the
overlapping areas. We deal with this in the market share section.
[97] We did not have to conclusively decide on the bypass figures in the overall
determination of this matter . The Commission submitted that: “ I think so much
has been made by the merging parties around that actually in the physical world
a lot of grain bypasses concrete silos. We are unperturbed about that, because
to our view that’s irrelevant, because we have a storage market. So, we are
worried ab out grain that actually does go into the storage. We are less
concerned about grain that doesn’t go via concrete silos.”35
[98] This however does not speak to the evolving dynamics in the market and the
interrelationships between the distinct markets from both the supply and demand
side. We heard no direct evidence from farmers regarding how they made
side. We heard no direct evidence from farmers regarding how they made
decisions on the d ifferent storage options. This is not to suggest that the
Commission’s conclusions may ultimately be found not to be correct, however,
35 Transcript, page 46.
25
they coul d not be thoroughly tested with relevant factual witnesses or with
detailed economic assessment to make a conclusive determination.
[99] As we discuss below, the evidence suggested that the market was more
dynamic than contended for by the Commission.
[100] The Commission also relied on Senwes/Suidwes’ strategic documents which
considers participants in the grain sto rage market. It submitted that these
documents, contrary to what the merging parties contended , did not reflect
alternative storage facilities as comp etitors.36 More specifically they failed to
mention the names of the merging parties ’ two biggest alleged competitors
COFCO and Silostrat.
[101] The merging parties in response indicated that they refer to ‘alternative storage’
multiple times in these documents as being competitors. Further , that the
documents show t hat alternative storage is listed as a risk to the Senwes
business.37 Not much turned on this issue in our overall conclusion.
[102] Similarly, the two articles (of 2006 and 2017) put by the Commission to the
merging parties witnesses did very little to advance the Commission’s case
without direct evidence that could be tested in oral evidence.
[103] The 2006 article is the van der Vyver article referred to under the zinc silo
discussion above. It sought to indicate that although alternative storage facilities
had been in the market for some time (since 2006), their uptake was slow.38
[104] The 2017 article is an article in which Senwes is reported as saying that concrete
silos are still the safest method of storing grain and that Senwes will continue to
use this and only when this capacity is filled up will Senwes look to alternatives.
Kruger explained that this was published in a year where there was was a
36 Transcript, pages 830-835.
37 Transcript, pages 833 and 834. Record page 1113.
38 Transcript, pages 807 and 808.
26
bumper crop, and it was an attempt to encourage farmers to deliver their product
directly. There is no evidence to the contrary.
[105] The Commission’s other argument, aside from the above by-pass arguments,
was that Senwes’ own documents show ed that its
. Senwes’ silos are
which is evidenced by Senwes’ financial statements which
showed that
with an . Furthermore, a
strategic planning document from March 2020 showed
[106] The Commission was of the view that with returns of
concrete silos were
highly profitable. Kruger did not d ispute the evidence and
However, he submit ted that
that39:
[107] This issue could not be taken further absent a detailed assessment of costs, and
was on its own inconclusive to establish a substantial prevention or lessening of
competition.
[108] We now turn to consider Prof Kirsten’s evidence.
39 Transcript, page 791.
27
Prof Kirsten
[109] Prof Kirsten was of the view that alternative storage facilities do indeed provide
viable alternatives to concrete silos and that this trend would increase rapidly in
the future.
[110] In this regard, Prof Kirsten stated that:
“The argument for delineating the market is to my mind driven to a large
extent by the incorrect perception that altern ative storage systems on
farms and elsewhere do not provide competition to the current silos.
Like the merging parties I am also of the view that the alternative storage
options do indeed present profitable alternatives – especially for the
large farmers.”
[111] However, he went much further, to state that in his opinion, the relevant product
market was one for “a market solution that is provided to the farmer and that
market solution revolves around the issue of trading, storage, price, delivery
time, etc. So, a trader or any company can come to a farmer with a particular
solution that takes the grain away from him or her in a way that is convenient,
speedy and at a price that is sensible to the farmer.”40
[112] It cannot be disputed on the evidence that new technologies have entered and
are entering the grain storage market given the need by farmers to find a more
integrated solution. It is also clear that these technologies have been disrupting
the grain storage market especially with respect to co ncrete silos given the
increased uptake of alternative storage. The extent of this disruption and
changes towards integrated market solution s from the perspective of farmers
was unclear. This could not be tested with farmers.
[113] The Commission sought to challenge the expert t estimony given by Prof.
Kirsten, primarily on the basis that he was not a competition economist and had
not applied the SSNIP test in order to define the relevant product market.
40 Transcript, page 997.
28
[114] A SSNIP test seeks to analys e whether a non -transitory price increase in a
candidate market would be profitable. In this respect, the test is seeking to
assess the cross elasticity of demand for a given good in comparison to another
alternative good. However, as Professor Kirsten ind icated such tests are
inherently complex and re quire significant amounts of data (which was not
available) to be able to determine with any degree of scientific accuracy whether
two products are indeed substitutes.
[115] In our view such criticism levelled aga inst Professor Kirsten suffered from the
difficulty that the Commission itself did not conduct a SSNIP test which it
advocated for. Instead it relied on submissions made by farmers, evidence which
as discussed above, was mixed and inconclusive , and could not be tested with
the farmers since none were called.
[116] It is common cause in this case that no economic expert evidence was called by
the Commission nor the merging parties which would have provided a more
robust assessment of the relevant markets . In particular, we had no expert
evidence, such as a S NNIP test, to provide a quantitative assessment of the
competitive dynamics between alternative storage options. Neither were we
presented with any uncontested evidence from actual market participants, such
as grain farmers, about how they made decisions o n the different storage
options. Moreover, the debate on bypass figures was bogged down in technical
arguments and left the matter moot. Absent such evidence, we aknowlege that
alternative storage facilities cannot be excluded from the relevant market,
however, on the evidence cannot conclusively decide whether they exercise a
sufficient competitive constraint to concrete silos.
Conclusion on the relevant product market
[117] The Commission’s approach to market definition was premised on its conclusion
that alt ernative storage facilities should be discounted as forming part of the
that alt ernative storage facilities should be discounted as forming part of the
relevant contestable market as they do not exert a suf ficient competitive
constraint on concrete silos.
29
[118] We are of the view that the Commission’s assertions that alternative storage
facilities do not form part of the relevant product market is not sufficiently
supported by the evidence of the witnesses before us. At best for the
Commission the interviews of t he farmers the Commission relied on is mixed.
This evidence could not be test ed with the farmers as none were put up as
witnesses. With the debate on bypass figures bogged down in technical
arguments, we rely on the evidence of the expert witness which su ggests that
the competitive dynamics in the market have changed substantially in the recent
period, and the in seeking a comprehensive solution for their maize output,
farmers do actively consider alternative storage facilities available to them.
[119] Having also analyzed each form of alternative storage facility identified by the
Commission, we are of the view that each has its own advantages and
disadvantages associated with it, including concrete silos.
[120] To our mind there is a degree of substitution across these different forms of
storage, albeit to varying degrees. It bears mention that one of the
disadvantages of concrete silos, which were not disputed by the Commission
are that they are expensive to construct and operate. They cannot be moved,
unlike alternative storage solutions, which means that when grain declin es in
areas wher e concrete silos are located this often leads to these silos being
mothballed and/or operating at a lower efficiency compared to other silos located
in high production areas.
[121] The evidence further shows that there has been significant growth in alternative
storage capacity over the last 15 years with no new concrete silos being built
over the same period. The evidence of farmers , although mixed would suggest
that they are in fact using alternative storage . While the merging parties profit
margins have been high despite the increased storage capacity in the market,
margins have been high despite the increased storage capacity in the market,
the Commission did not put up any evidence to refute Kruger’s explanations on
margins.
30
[122] Based on the evidence before us we are of the view that the market is potentially
broader than the market for concrete silos and includes silobags, bunkers and
zinc silos to a degree . However this broad market could not be tested with
farmers and alternative storage facility providers . We have thus found the
evidence inconclusive on the scope of the relevant market.
Relevant Geographic Market
[123] According to the Commission, the farmers interviewed indicated that they were
unlikely to travel further than between 25km and 35km to deliver their grain into
a storage facility due to transport costs, convenience and the SAFEX transport
differential.41 This was also confirmed by competitors, who indicated that beyond
this distance delivery of grain would no longer be economical ly feasible for a
vast majority of farmers. 42 In light of this the Commission used a 40 -kilometre
radius as “the outer distance which would capture a typical area in which farmers
are willing to travel to deliver their grain.”
[124] The Commission concluded that there were three local geographic markets (in
a 40km radius around the target silos) in which Suidwes silos overlap with silos
owned by Senwes in the North West and Free State provinces.
[125] The areas of overlap are the Ottosdal, Leeudoringstad, and Christiana areas.
[126] The merging parties submitted that the Commission’s approach to the
geographic market was arbitrary as no witness was called by the Commission
to support this approach.
[127] In their filing the merging part ies defined the geographic market as a radius of
40-60km. However, during the hearing, they submitted that the market for grain
storage had changed since the competition authorities’ decisions in Afgri and
41 The SAFEX transport tariff is a notional tariff calculated annually on the basis of a mix of rail and road
costs from a particular silo to Randfontein. What this means is that famers typically would expect to get
a price of SAFEX less the transport differential.
42 Commission’s Recommendation, pages 57 and 58, paragraphs 100-102.
31
Senwes. They contended that the geographic market was actually much wider
than the 40-60km radius as grain could be transported as far as 100km.43
[128] In response to a question by the Chair, Kruger submitted the following:
“CHAIRPERSON: Yes, before you do that, Mr Norton, I have a question
for Mr Kruger about the grain that moves, as you say, even further away
from the 40 kilometre radius to another Senwes facility. What would the
reason be for a farmer moving all the way to that particular facility?
MR KRUGER: Ja, it’s all about the economics Chair. So, the transport
differential from the place he is harvesting till Randfontein, if you move
it, say we are farming here in the west, so if you move from the west to
the east and to Randfontein, that transport different ial is to your
advantage. So, anywhere you can even deliver 5 or 400 kilometres
away from where it’s been harvested, you can deliver the product and
therefore if you don’t like Senwes, you can choose any facility from here
to Randfontein and you can even choose the millers in Randfontein So,
Chair, it is normally the economics, which makes sense and the
Unigrain business model is exactly like that. They’ve got a transport
solution coupled with a trading solution and they just say to the farmer,
listen, I co llect at your farm, I will take it wherever I want, the farmer
does not even know where the product is going. He just knows that he
is selling it to Unigrain and then Unigrain will settle the transport costs
and he will deduct that transport cost from the transport differential of
Safex. So, that’s normal economics for him or that’s how his business
model is working.”
[129] However, when asked a follow up question about the catchment are a around
the silos i.e. how much of the grain in the Senwes silos comes from more than
a 40km radius, Kruger indicated that it was 10%, 20%. He indicated that up to
60-70% comes from within a 40 km or less radius.44
43 Transcript, page 736.
44 Transcript, page 963.
32
[130] While Rabe testified that the catchment area for silos is approximately 20km for
farmers, he also stated that it could be wider for market players such as millers
who would be willing to transport product up to distances of between 200 and
250km.45
Conclusion on Geographic Market
[131] It appears from the evidence that farmers choose a silo on a consideration of
commercial terms, including transport costs to the storage facility.
[132] While the transport differential may extend the distance over which grain is
transported, the evidence is not conclusive as to a specific radial point at which
one silo falls within or without the catchment area of another . Both Rabe and
Kruger’s evidence shows that the distance differs depending on the player
concerned. Traders may transport g rain over longer distances, but farmers
(particularly small-scale farmers) may not.
[133] The distance travelled will depend on many factors, and while the distance may
be as far as 400km , this does not apply to the bulk of grain produced in the
vicinity of the concrete silos.46 What was clear from the evidence was that the
majority of the grain, between 60 and 70% enter ed the merging parties’ silos
from within a 40km radius. This would suggest to us that the majority of farmers
are only prepared to travel short distances to the closest storage facility possibly
due to the high cost of transport.
[134] We have accepted the geographic market s as delineated by the Commission
i.e. as three local geographic markets (in a 40km radius around the target silos)
in which Suidwes silos overlap with silos owne d by Senwes in the North West
and Free State provinces.
45 Transcript, pages 335 and 336.
46 Transcript, page 663.
33
MARKET SHARES AND MARKET CONCENTRATION
Competition Analysis
Market shares
[135] We next turn to the market share analysis to further assess the competitive
constraints of other storage alternatives. Th e market shares assist in providing
an overview of the market given the limited data analysis provided by the
Commission.
[136] This market share analysis underwent various iterations as the evidence showed
that the market was potentially broader than what ha d been defined by the
Commission. We reflect those calculations which spoke directly to our
considerations.
[137] Based on a rele vant market definition of only concrete grain silos the
Commission estimated the following market shares:
[137.1] The Commission found tha t the merging parties would have a
combined market share of approximately 65% in the North region
(Ottosdal).
[137.2] A market share of approximately 100% in both the East
(Leeudoringstad) and West (Christiana) regions.
[138] During the proceedings following testimony by Van Schalkwyk47 it appeared that
data from the South African Grain Information Service (“SAGIS”) may be an
alternative source to answer the question of how much of the grain around each
of the silos is actually stored in these concrete silos.
[139] The Tribunal therefore requested both the Commission and the merging parties
to procure this data for the preceding 5 -10 years which would cover, amongst
other things, the total level of production in the various geographic areas , the
47 Transcript, page 623.
34
volumes stored of this produ ction in the various forms of storage , as well as
capacity and utilisation of each of the silos in the three geographic markets.
[140] It turned out that this data was not available through SAGIS, and the merger
parties instead purch ased data from an independen t third party, GeoTerra,
which estimates the production volumes per magisterial district.
[141] However, given that the Commission had defined the geographic ambit to be a
40km radius from the relevant Suidwes silos, this created methodological issues
given that only portions of each of the magisterial districts surrounding the silos
would fall within this 40km radius. The merging parties were of the view that
including the total production figures for each of the magisterial distri cts would
overstate the production area falling within the scope of this radius as it would
potentially include portions of these districts which are located considerable
distances from the relevant silos and, thereby, understate the proportion of the
production of maize in these districts which flows into the relevant silos. On the
other hand, only including the area falling within 40km of the relevant Suidwes
silos would underestimate the relevant production areas as it would not include
the additional an d adjacent areas which may f eed the relevant Senwes’ silos
(i.e. outside of the 40km radius from the relevant Suidwes silo, but within 40km
of the relevant Senwes silos).48
[142] To overcome this methodological hurdle, the merging parties sought firstly, to
include only the production areas which fall roughly within 40km of the relevant
Suidwes and Senwes silos in order to calculate the total production in these
areas surrounding t he silos. The GeoTerra data was not available on a more
granular level and as such the merging parties made assumptions as to the
proportion of the production area in each of the districts that would fall within the
approximate 40km radii.
approximate 40km radii.
[143] The Commission on the basis of the production data provided by the merging
parties and to overcome the hurdles identified, co nducted its own exercise (as
48 Letter to the Tribunal dated 16 July 2020.
35
described further below) aimed at estimating the level of production in each of
the three geographic markets.
[144] The Commission considered the (approximate) location of the districts which
would fall within each overlapping area guided by the views of industry
participants such as Silostrat, GWK and NWK. No farmer views were obtained.
The Commission considered the maize production only from those municipal
districts which can be considered to be reasonably falling within the overlapping
areas Ottosdal, Leeuringstad and Christiana, and applied the merging parties’
own assumptions on the proportion of grain that can be considered to have been
produced from each of those identified districts.49
[145] The Commission also estimated the prop ortion of alternative storage facilities
relative to total storage capacity per geographic area based on information
obtained.
[146] For each of the geographic areas, the Commission used the total storage
capacity (which includes the storage capacity of the registered grain silos as well
as alternative storage facilities that offer storage services to third parties) to
estimate the market shares for grain storage facilities in the overlapping areas.
Privately-owned silos we re excluded given that on the Commissi on’s
investigation they are mainly used to store farmers’ own grain and are not always
available to the public or for use by other third parties. In other words, on this
estimation the Commission showed what the mergin g parties market position
was relative to alternative storage providers.
[147] We discuss the results of this exercise below by geographic area.
Ottosdal
[148] There are five relevant silos in this region: Suidwes Bamboesspruit, Suidwes
Strydpoort and Suidwes Wolmaranstad. The two Senwes silos which are located
49 An average annual maize production from the applicable districts (from the range of applicable
production) for each year was also calculated for purposes of smoothing assumptions.
36
within a 40km radius of the Bamboesspruit silo are the Melliodora and Werda
silos. NWK is the only concrete silo competitor in this area.
[149] The merging parties and the Commission estimated the percentage of the white
maize produced in these areas which is receipted into the merging parties’ silos.
[150] According to the merging parties’ estimates, white maize receipted into the
merging paries concrete silos is depicted in Table 3 below.
Table 3:
[151] In calculating its market shares , the Commission obtained additional information
from NWK as a competitor to the merger parties in the Ottosdal area.
[152] The Commission then excluded certain of the productio n areas which had
formed part of the merging parties’ calculations. It (i) excluded the Lichtenburg
magisterial district (which the merging parties submitted fell within a 40km radius
of the Ottosdal, Werda and Melliodora silos and should be included) and; (ii)
included the Wolmaransstad silo (which the merger parties had excluded as it is
located more than 40km away from the Werda and Melliodora silos).
[153] The Commission’s market share calculations are depicted in Table 4 below:
37
Table 4:
[154] In addition, the Commission recalculated market shares inclusive of alternative
storage and found that the mer ging parties would have a market share of
approximately 65% in the Ottosdal area post -merger as depicted in Table 5
below:
Table 5:
[155] The merging parties pointed out that the NWK silos are located between the
Senwes and Suidwes silos and have lower storage and handling rates than the
Suidwes silos. This means that they are the most proximate constraint to the
38
Suidwes silos. This fact combined with the point that the merging parties have a
combined share of receipts of white maize of less than 32% in 2019/2020 means
that there is unlikely to be any concerns arising in relation to the combination of
their silos in this area, even on the Commission’s estimates.
Leeudoringstad area
[156] In the Leeudoringstad area the following four silos are relevant: Suidwes
Leeudoringstad, Suidwes Wolmaransstad and Suidwes Makwassie which
overlap with the Senwes Regina silo within a 40km radius.
[157] As before, th e merging parties and the Commission estimated the percentage
of the white maize produced which is receipted into the merging parties’ silos.
The Commission prepared its calcul ations based on its understanding of the
market and excluded certain districts i .e. Delareyville, Schweizer -Reneke,
Christiana and Viljoenskroon districts from its calculations on the basis that
these districts are located too far away from this geographic market to be
included. Only three districts were included in its calculations, they were the
Klerksdorp, Wolmaransstad and Bothaville districts.
Table 6:
39
Table 7:
[158] The Commission also re-estimated market shares taking into account alternative
storage and found that the merged entity would have a market share of 72% in
the Leeudoringstad area. Once again, the merging par ties pointed out that on
the Commission’s own estimates, they had a market share of in 2019/2020.
This would mean that of the white maize produced in this area by -passed
the merger parties’ silos.
Table 8:
[159] In this region the merging parties further pointed out that there are a number of
third parties such as Silostrat and Vyf Susters’ silobag depot offering alternative
storage facilities. 50 According to Kruger, Vyf Susters has a silobag facility of
between 140 000 and 160 000 ton. In addition, the merging parties have
submitted that there are also a number of farmers who have built their own
storage facilities in the area.
50 Merging Parties Heads, paragraph 425.
40
[160] Kruger further testified that the area between the Leeudoringstad and Regina
silos is a cattle farming area and that the primary area where Leeudoringstad
would draw grain is the area to the south closer to Vyf Susters. Ther efore, no
concern arises given the combined shares of less than 35%; as there is effective
competition from Vyf Susters and Silostrat to constrain the behaviour of the
merged entity.
[161] The Commission also re-estimated market shares taking into account alternative
storage and found that the merged entity would have a market share of 72% in
the Leeudoringstad area.
Christiana
[162] While district level production information was available from GeoTerra for the
Ottosdal and Leeudoringstad areas which fall in the North West and Free State
provinces, the same was not the case for the whole of the Commission’s
Christiana area. This was because, while the Christiana facility is located in the
North West province, Jan Kemp Dorp is located in the Northern Cape province.
[163] For the Jan Kemp Dorp area, the m erging parties relied upon internal Senwes
estimates of production volumes and not on independent third -party data.
Senwes submitted further that the total maize production volumes from this area
make up such a small proportion that the merging parties sub mitted that was
unlikely to have a material impact on the overall volumes which would be
produced in the Christiana overlapping area identified by the Commission. This
is because the Christiana area is mostly a cattle farming area . In addition, the
merging parties included in their calculation the actual maize receipts in respect
of the relevant silos over an eight -year period. This data reflected the actual
volume of maize which was received at each of the relevant silos.
[164] Suidwes operates a 68 000ton capa city silo in Christiana. Senwes’ Jan Kemp
Dorp silo has a capacity of 28 000 tons, and is located within a 40km radius from
41
the Christiana silo. In this region, GWK has constructed a 30 000 ton bunker
next to the Jan Kemp Dorp Silo.
[165] GWK also owns the Wes tra mill, which previously belonged to Suidwes and
which is adjacent to the Christiana silo. According to Van Schalkwyk, GWK
stored its grain in the Christiana silo prior t o it constructing its own 50 000 -ton
bunker alongside the Christiana silo. Once this was erected GWK stopped
storing its grain at the Christiana silo, which according to Van Schalkwyk was
because GWK could now store its grain at lower rate and have better access to
its grain.51
[166] The Commission acknowledged the construction of the GWK bunk ers next to
the Jan Kemp Dorp and Christiana silos, but discounted them on the basis that
they are not concrete silos. The merging parties submit that there are many other
third party owned storage facilities in the areas surrounding the Jan Kemp Dorp
and Christiana silos.
[167] As before the merger parties and the Commission estimated the production
areas falling within a 40km radius of the relevant silos as well as the proportion
of maize receipts passing through the relevant silos.
[168] The Commission excluded the production areas of Hoops tad and Boshoff due
to these districts being located too far away from this geographic market. The
Commission’s production estimates only included the Jan Kempdorp,
Hartswater, Magogong and Christiana districts. On this basis i t found th at the
merging parties’ receipts accounted for over market shares consistently
in the period 2011-2019, as depicted in the Tables 9 and 10 below:
51 Transcript, pages 446 and 447.
42
Table 9:
Table 10: Proportion of maize that passes through the merging parties silos
Period Total average
production
Total receipts Receipts relative
to total
production
2012/2013 65100 198 385 305%
2013/2014 115 472 121 869 106%
2014/2015 86 165 140 139 163%
2015/2016 70 330 168 826 240%
2016/2017 64 005 116 643 182%
2017/2018 52156 87674 168%
2018/2019 32954 52099 158%
2019/2020 58796 60758 103%
Source: Commission’s calculations.
[169] The merging parties disputed the Commission’s calculations in this regard and
submitted that the analysis was self-evidently wrong. It was simply not possible
for the merging parties to have a market share in excess of 100% and that this
was a clear indication that the Commission had excluded relevant production
areas from its calculation erroneously.
[170] The Commission acknowledged that its estimation of market shares “…would
appear to suggest that the merging parties’ combined annual receipts are
43
significantly (and consistently) more than the average maize production figures
in the area. This implies th at these facilities [are] likely [to] receive significant
amounts of maize from areas outside the immediate Christiana area and the
Commission has not been in a position to ascertain, in the time available, the full
extent of the areas from which the grain is derived…”
[171] The Commission’s own information shows that GWK has a bunker
situated next to the Christiana silo, constructed in 2016/2017, and that it has a
throughput of
[172] The Commission’s data also reflects the reduction in the throughput of the
Christiana silo since the construction of the GWK bunker. This suggests that the
GWK bunker is an alternative to the Christiana silo and a significant competitive
constraint. However, the GWK volumes receipted by the GWK bunker were not
included in the Commission’s calculations.
[173] In the Christiana area, based on storage capacity the Commission also
estimated that the merged ent ity would have a post -merger market share of
67%.52
Conclusion
[174] We heard many iterations of the market shares over the course of the
proceedings. The Commission’s initial assertion was that the merging parties
would be dominant and enjoy a monopoly in at least two of the geographic areas
(Leeuringstad and Christiana) identified based on storage capacity.
[175] The merging parties on the other hand provided data in which their market
shares post-merger would be less than 35% in each of the three geographic
areas on the different permutations of market shares discussed above.
52 Commission’s Letter dated 19 July 2020.
44
[176] Given these disparities in market share calculations in the three geographic
areas, and the disputes about the reliability of the data, we have not placed much
reliance on them. We turn to consider the Commission’s theories of harm against
this backdrop.
THEORIES OF HARM
[177] The Commission was of the view that the merger would give rise to unilateral
effects due to increased concentration in the relevant markets. It relied on three
theories of harm.
[178.1] First that the transaction would allow the merged entity to raise
storage and handling fees in the three overlapping areas.
[178.2] Secondly, that the merged entity would be able to procure grain
from farmers at cheaper prices than was previously the case pre-
merger.
[178.3] Finally, that as a consequence of the volumes of white maize
stored in the merging parties ’ facilities, that post -transaction the
merged entity would be in a position to influence the price of white
maize by unlawfully withholding maize from third parties in their
facilities.
[178] The merging parties broadly contended that there was no basis for any of the
Commission’s theories, and insofar as there were concerns, the conditions
tendered would adequately address the concerns.
[179] We briefly discuss each of these theories below.
Increase in grain storage and handling fees
[180] The Commission submitted that the merger would likely lead to a loss of
competition in the relevant market as Senwes and Suidwes are the two major
participants in their resp ective regions . Senwes is already the largest grain
storage company in South Africa and the proposed transaction would remove
the competition between these companies.
45
[181] The Commission argued that the removal of an effective competitor, as a result
of this transaction, would likely result in increases in storage and handling fees
for the overlapping silos . Senwes would be the main silo owner in the
overlapping areas and according to the Commission’s investigation, Senwes’
handling and storage fees are genera lly higher than those of Suidwes in
overlapping areas.
[182] For this first theory of harm, the Commission advanced three mechanisms
through which this would occur. The first was the proposed merger may result
in an increase in the storage rates in relation to the Suidwes silos in the
overlapping areas.
[183] Secondly, that the proposed merger may result in an increase in the storage
rates across the Suidwes portfolio of silos. Thirdly that the proposed merger may
result in an increase in the storage rates across the combined Senwes-Suidwes
portfolio of silos.
[184] The Commission submitted that Senwes had a higher annual storage tariff than
Suidwes, and that this rate was above the comparator group average. Senwes
also had a higher daily tariff than Suidwes, and this rate was the highest for the
comparator group. On the Commission’s calculations, Senwes’ tariffs were
between 15% and 21% higher than those of Suidwes.
[185] Based on these findings the Commission argued that post -merger Senwes
would have the incentive and ability to raise storage tariffs at its silos. This ability
and incentive would be in addition to the expected increase of tariffs at the newly
acquired Suidwes silos, as the merged entity would translate Senwes’ existing
pricing policy onto all new storage faci lities. Customers would have no choice
but to accept these price increases as there would be no alternatives. This would
likely harm the welfare of farmers who are customers of the merging parties.
46
[186] The merging parties disputed the Commission’s submissions and submitted that
Senwes and S uidwes apply company -tariffs, meaning that their pricing policy
was not differentiated by silo.
[187] Further that the differential between the daily storage tariffs between Senwes
and Suidwes currently amounted to 1c per ton.
[188] With respect to seasonal storage rates , Kruger testified that the average
seasonal storage rate of Senwes is
[189] However, the Commission disputed this, pointing out that the Senwes
documents showed that for the past two years, the bulk of storage fees were
actually from the annual rate and that Kruger ’s testimony was not borne out by
its documents.
[190] With respect to handling fees the Commission submitted that Senwes had the
highest rate amongst the five largest storage companies whereas Suidwes
offered the second lowest handling fee in that group.
[191] The merging parties submitted that the difference in handling fees of
This was not challenged by the Commission.
[192] With regard to both the handling fees and storage tariffs, Kruger maintained that
the competition faced by the merging parties from alternative storage facilities
was a constraining factor on Senwes’ pricing strategy and would remain so post-
merger.
47
[193] The Commission submitted that despite the discrepancies between the merging
parties’ documents and witness testimony, the primary issue was that the
merger would result in a permanent change to the structure of the market . The
loss of competitive rivalry between Senwes and Suidwes would create an
upward pricing pressure in the overlapping areas.
[194] The Commission argued that the loss of competitive rivalry is concerning when
one considers the submission from the merging parties that they charge uniform
rates across all their silos which could then broaden the upward pricing pressure
to all silos of the merged entity.
Our analysis
[195] As indicated, on the evidence before us, we could not conclusively find that
alternative storage facilities could be excluded as having a constraining effect
on concrete silos, the only issue being the extent of this effect. In light of the lack
of strong evidence by farmers in this regard, w e assessed t he proposed
transaction on a worst case scenario that it potentially removes the competitive
rivalry between Senwes and Suidwes.
[196] Given Senwes’ national pricing policy, and to address the concern that Senwes
will post-merger, have an ability to increase its pricing in the overlapping areas
the merging parties tendered a pricing condition. This condition was initially
accepted and recommended by the Commission.
[197] This is further discussed under the remedies section below.
Decrease in the premia paid to farmers
[198] The second theory of harm advanced by the Commission was that the merger
would result in lower prices being paid for grain to farmers.
[199] According to the Commissio n the proposed transaction w ould result in a direct
loss of competitive rivalry between Senwes and Suidwes, with the merged entity
48
likely to be in a position to exercise market power against farmers in the
procurement of grain in the Senwes/Suidwes areas post-merger.
[200] Currently, the merging parties compete for the procurement of grain from
farmers in the overlapping areas. Further, the merging parties compete on
several levels including offering volume discounts on storage to farmers. The
Commission was of the view that the merged entity would likely significantly
lower prices paid to farmers for their grain.
[201] The Commission based its theory on an analysis which it performed to try to
calculate the premia paid in respect of pre -season contracts in the overlapping
areas as compared to the premia paid in non -overlapping areas. According to
the Commission, farmers in areas of greater competition could receive prices
that were up to 5% higher for their grain, as compared to other farmers in areas
where Senwes faced little or no competition.
[202] The Commission accordingly submitted that because the merger would result in
a higher degree of market concentration in the three markets which it had
identified, the premia paid to farmers would decrease as a result of the lessening
of competition.
[203] Kruger challenged the Commission’s calculation on the basis that “they ignored
a lot of stuff. They ignored the qualities of product. They ignored the handling
fees, the commissions, if it was delivered or pre -delivered, they ig nored the
interest. So Chair, it’s an incomplete dataset. It’s materially incorrect. Just to look
at that non-overlapping minus 5%, that discount of 5%, we never paid discounts
[premia] to the amount of 5% and that’s the average number.”
[204] Applying what the merging parties considered the correct methodology the
merging parties found that the premia are not systematically higher in the
overlapping areas but are rather dependent on the proximity of the silo to
processors.
49
[205] Further the merging parties argued that the Commission’s conclusion ignore d
the fact that Senwes is required to treat all users of its storage facilities in an
equivalent fashion. This arises both from the consent order 53 confirmed by the
Tribunal and the SAFEX regulations. The consent order related to a complaint
against Senwes that as a vertically integrated firm that is allegedly dominant in
the grain storage market, ha d abused its position by charging higher storage
tariffs in its silos to exclude rival firms in the downstream market for the trading
of grain.
[206] In terms of the consent order Senwes is required to offer all parties which store
grain with it equal access to its various storage options on identical terms, save
for such differentiation that may legitimately be made under the Competition Act.
[207] No evidence was put up by the Commission to rebut Kruger’s explanation that
the Commission’s calculation of the discount was based on an incomplete data
set. Further, the evidence that the market was broader than contended for by
the Commission remained an issue which could not be sufficiently tested with
farmers. Kruger’s evidence which the Commission seemed to accept was that
farmers first choose who to sell their grain to, with the choice of facility being
secondary.54 This appears consi stent with Prof Kirsten’s view that market
dynamics are changing such that farmers are looking for integrated solutions,
not simply storage.
Market manipulation
[208] This theory of harm was premised on the following , that (i) the Suidwes and
Senwes silos are located in the Free State and the North West; (ii) these two
provinces account for a significant share of white maize production; and (iii)
Senwes will be able to influence the volume of maize which is being out-loaded.
[209] The Commission sought to advance t hree sub -theories under the broad
category of what came to be known as the “market manipulation theory”.
category of what came to be known as the “market manipulation theory”.
53 Competition Commission v Senwes Ltd (110/CR/Dec06).
54 Commission’s Heads of arguments, pages 39-40 paragraphs 76.1.1 and 76.1.2.
50
[210] The first was that the merger could result in the merged entity having power in
the overall market for the sale of maize. According to the Commission:
[211.1] The merged entity would account for the production and storage
of approximately 80% of white maize in the Senwes area which
could facilitate the constructive market foreclosure of competitors as
the supply and stock of white maize available would be cen tralised
in the merged entity post-transaction.
[211.2] The foreclosure could be subtle, taking the form of Senwes
offering its trading rivals inconvenient out-loading slots, or using silo
maintenance and fumigation procedures at certain key points and at
certain key silos to the detriment of trading firms rivalling Senwes’
trading arm.
[211] In this regard, Oberholzer mentioned that OVK had experienced difficulties in
obtaining sufficient slots to out-load grain from the Senwes silos in the past for
which it was pursuing a claim of up to R6 million. 55 The merging parties
submitted that OVK had not (despite requests) provided Senwes with any detail
in relation to the alleged complaint. 56 Nor could it indicate that a complaint had
in fact been filed with the JSE in this regard.
[212] Nhlapo similarly testified that Senwes had in the past been able to act contrary
to the SAFEX rules without incurring penalties. He cited an instance where a
company called Vrystaat Mielies had won a tender to supply white maize to a
trading company and encountered loading issues as Senwes advised Vrystaat
Mielies that it was fumigating the silo at the time that the grain was due to be
loaded, and offered an alternative loading location 60km from the original silo,
thereby increasing the cost for Vrystaat Mielies. It turned out that this incident
was more than 10 years ago.
55 This was also the submission of other market participants such as page 2921 of the
record.
56 Transcript pages 103 and 104.
51
[213] We thus find that the evidence does not support the Commission’s claim of
market manipulation as discussed above.
[214] The second sub -section of the market manipulation theory advanced by the
Commission was that the merged entity would be able to influence maize prices
in South Africa during stock shortages. Oberholzer highlighted instances of
significant price movements for white maize, when he referred to:
“[a]…R1 800 fluctuati on in one day due to the fact that there was a
problem with obtaining physical stock and that’s our submission Sir, that
any silo owner with so much insight in what the quantities in South Africa
is available will have a huge effect of the maize price and at the end of
the day on food prices in South Africa”.
[215] The merging parties’ submitted that the “base price” for maize is determined
from the SAFEX price. The merging parties have no ability to influence the
SAFEX price . They submitted further that such pr ice manipulatio n would fall
within the remit of the JSE to investigate and to take appropriate remedial action.
[216] We have found no evidence in support of this theory.
[217] The third and final theory raised by the Commission was that the merger would
result in a greater ability to engage in anti-competitive conduct. NWK testified to
this concern, noting that once competition in the overlapping area between
Senwes and Suidwes was removed leading to the merged entity being more
profitable (as a result of paying low er prices for grain and receiving higher
storage fees), the merged entity would have a greater ability to undercut NWK
by offering greater premia for farmers’ grain.
[218] While this would benefit farmers in the short-term, so the Commission argued, it
could ultimately cripple NWK (in much the same fashion as predatory behaviour
would) leading to exclusionary effects, or the purchase of NWK by Senwes, both
of which would be to Senwes’ benefit.
52
[219] The merging parties argued that behaviour of this nature on the part of Senwes
would lead to a substantial increase in competition in the NWK area, which the
merging parties argued, was evidence that the proposed transaction was likely
to be pro-competitive.57
[220] In our view, the market manipulation theories of harm were either not supported
by evidence or fell outside our remit, as discussed above.
[221] Although we are not convinced by the Commission’s assertions in this regard,
we are satisfied that the conditions imposed taken as a whole would mitigate
against any potential anti-competitive effects of the merged entity’s increased
market share.
COUNTERFACTUAL: IS SUIDWES A FAILING FIRM?
[222] An area of contestation in the proceedings was the relevant counterfactual, that
is, what would take place in the event that the proposed merger did not proceed.
The merging parties had put up a failing firm defense and indicated that Suidwes’
assets were on the verge of exiting the market if the transaction were not
expeditiously approved.
[223] The approach to the failing firm doctri ne was est ablished in Iscor/Saldanha58
and was reaffirmed in Santam Limited and Emerald Insurance Company
Limited/Emerald Risk Transfer (Pty) Ltd 59 (“Emerald”), in which the Tribunal
noted the following:
“The failing firm doctrine enjoys express statutory recognition in the
Competition Act, 1998 (Act No. 89 of 1998) (the ‘Act’). Section 12A(2)(g)
of the Act directs us to consider ‘whether the business or part of the
business of a party to the merger or proposed merger has failed or is likely
57 Transcript, page 14.
58 Case 67/LM/Dec01.
59 Case 57/LM/Aug09 (para 52-54).
53
to fail’ as part of a non-exhaustive list of factors that must be considered in
merger assessment. As pointed out by the Tribunal in the merger between
Iscor Limited and Saldanha Steel (Pty) Ltd the failing firm doctrin e, as
such, in the Act is not a ‘defense’ to a merger that has been found on an
initial market analysis to be anti -competitive. Rather, it is recognized as
one of a non -exhaustive list of factors that must be taken into account
before one can determine whe ther or not a particular merger is likely to
substantially prevent or lessen competition.
In times of financial and economic distress, such as we are currently
experiencing, many firms could find themselves in some sort of financial
difficulty and these fi rms may seek to safeguard their long -term survival
possibly by merging with (healthier) competitors. The task of the
competition authorities is to assess whether the claim that a firm has failed
or is likely to fail is genuine or a contrivance to obtain ap proval for an
otherwise anticompetitive merger.
The failing fi rm doctrine is internationally recognised in competition law
jurisprudence and, although not applied uniformly in all jurisdictions, has
nevertheless been applied with a considerable degree of uniformity
regarding the salient criteria for a credible failing firm claim. Satisfaction is
required of each of the following criteria, namely that:
(i)the firm is a failing one;
(ii) the reorganisation of the alleged failing firm is not a realistic
option; and
(iii) a less anticompetitive outcome than the proposed transaction is
absent.”
[224] The Commission accepted that Suidwes was unlikely to continue in its current
form given its precarious financial position. It posited several scenarios. Its main
contention was that Suidwes could be placed in business rescue or l iquidation.
Further that even if business rescue (or liquidation) were to fail, Suidwes’ assets
Further that even if business rescue (or liquidation) were to fail, Suidwes’ assets
(i.e. silos) would not exit the relevant market as they could be purchased by third
parties. The Commission submitted that the counterfactual also includes the
OVK offer which was a reasonable offer, but was rejected by the Suidwes board.
54
Another counterfactual included West Street which the Commission submitted
was still interested in making another offer.
Our Analysis
[225] It is common cause between the parties that Suidwes is in financial distress. For
that reason, we do not discuss this question any further.
[226] In its recommendation and opening, the Commission accepted that Suidwes’
attempts to re -organise the business had failed .60 During the hearing it
suggested that, in the counterfactual, Suidwes might elect to be placed under
business rescue. This would permit the business to be turned around as it would
enable the Business Rescue Practitioners (BR practitioners) to delay the
repayment of the debts and therefore, address the liquidity problem.
[227] The merging parties submitted that business rescue was not a viable alternative.
According to Van Schalkwyk he had discussions with various BR practitioners,
and according to them, business rescue was unlikely to be a viable option for
Suidwes for various reasons.61 Van Schalkwyk testified further that there was no
time left for a BR practitioner to come up with a different approach to managing
Suidwes, given its very significant loss-making position.
[228] In closing argument, the Commission appears to have accepted that business
rescue carries uncertainty 62. It maintained the view that OVK presented a
reasonable offer since its concrete silos did not geographically overlap with
Suidwes’ silos. The Commission submitted that i n any event Suidwes’ silo
assets were valuable and if this transaction were not to be approved, there would
be interested buyers for the silos if the transaction is not approved.
[229] We next consider whether Suidwes made good faith efforts to find reasonable
alternatives.
60 Commission’s recommendation, page 117, paragraph 281, transcript page 23.
61 Transcript, page 398.
62 Commission’s heads of arguments, page 62, paragraph 138.
55
Has there been a good faith effort to pursue reasonable alternatives?
[230] In Emerald, the Tribunal stressed that one of the requirements to prove a failing
firm defense took the following form “the assumed failing firm must demonstrate
inter alia that it has made reasonable and verifiable good faith attempts to elicit
reasonable alternative offers and, furthermore, that there is no viable alternative
purchaser that poses less anticompetitive risk than does the proposed
transaction”.
[231] The assessment of whether there is a viable alternative m ust take account of
the factual situation when the alternative offers were made. As the Tribunal
noted in Phodiclinics63:
“This brings us to the proposal or offer tabled by Netcare and Tradeworx
in the course of the hearing … the existence and the terms of this
belated offer are irrelevant to these proceedings and the Tribunal does
not regard it as a valid offer existing at the time when the merger
transaction was concluded. “Reasonable alternatives” as contemplated
in the Iscor case must exist at the time when offers are procured by the
liquidator and a transaction is concluded, not at some indeterminate
time in the future.”
The EU and US guidelines require that a failing firm demonstrate, at the
time when the transaction is being evaluated for competition
implications, to the competition authority that it “has made unsuccessful
good-faith efforts”. The word “has” is the singular present tense of the
word “have”. In the context of the requirement that the mergin g parties
prove the elements of the failing firm doctrine, the parties are required
to show, at the time at which they seek approval from the Competition
Authorities, that they “have made” good faith efforts to find reasonable
alternatives to the offer the y have accepted and for which they seek
63 Phodiclinics (Pty) Ltd & Others and Protector Group Medical Services (Pty) Ltd & Others
(122/LM/Dec05) [2007] ZACT 17 (21 February 2007).
56
approval. The Act does not require parties to provide an undertaking
that they “will continue to make” efforts to find reasonable alternatives.
Such an interpretation would lead to a n absurdity, since the authority
would never be able to approve a transaction to which a party must
continuously strive to find an alternative offer.”
[232] Suidwes received offers from both local and international firms. They included
offers from OVK, NWK and West Street Capital.
[233] We concluded on the evidence before us that neither the NWK or West Street
Capital offer was a reasonable alternative on the basis that each of these offers
had only been for a portion of the Suidwes business. For instance, while NWK
only wanted to purchase the concrete silos and the retail business, West Street
Capital only wanted to purchase the concrete silos. As the Commission correctly
pointed out from the economic literature, only offers made for the entire asset
base of a firm s hould be considered to be valid of fers and form part of the
assessment.
[234] At the hearing, Nhlapo made submissions that West Street Capital had
subsequently approached the IDC for funding in late February 2020 and that it
was still interested in purchasing Suidwes. The Commission’s view was that
even though West Street’s offer was not to purchase the entire business, its
interest in still making an offer shows that Suidwes’ assets will not exit the market
and can find alternative purchasers. We concluded that a remedy that preserves
the Suidwes business in its entirety was in the public interest.
[235] OVK made an offer for the entire business of Suidwes, which entailed a loan
57
[236]
[237] The Commission argued that, “both equity and debt can be used as viable
methods of financing a transaction. In fact, in the majority of inst ances, debt is
cheaper than equity finance. The OVK route woul d have equally been viable
financing option given that what Suidwes benefits in the Senwes option through
lesser interest burden, they lose through diluted equity shareholding in the
merged entity”.
[238]
[239]
64 Transcript, page 125.
65 Transcript, pages 127 and 401.
66 Transcript, page 127.
67 Transcript, page 126.
68 Ibid.
58
[240]
[241] According to the merging parties even if a renewed offer were to be made, it
would require Suidwes’ shareholder approval, a due di ligence and this process
could not be countenanced given Suidwes’ current financial position.
[242] In our view, these factual disputes regarding the counterfactual do not alter our
assessment of the merger.
[243] By its nature, assessing the counterfactual is a predictive exercise. It cannot be
measured with exact precision. In Imerys, the CAC said the following regarding
the Tribunal’s exercise of discretion when weighing up whether to approve a
merger with conditions or to prohibit it:
“I do not think the Tribunal is obliged to approve a merger just because it finds
it more probable than not that the conditions will neutralise the likely SLC. One
should bear in mind, in this regard, the real problem in such case s will not
necessarily be competing views as to the probable future state of the market
but an inability to make reliable predictions at all.”
[244] The CAC further held:
“ [42] I do not say that the Tribunal would be obliged to reject conditional
approval just because there was a reasonable possibility (fal ling short of a
preponderance of probability) that the conditions would fail to remedy the
likely SLC. The Tribunal might properly exercise its discretion in such a case
to give conditional approval. In ex ercising its discretion, the Tribunal could
be expected to take into account, on the one hand, the precise likelihood
and extent of the SLC; and, on the other, the precise extent of the risk that
69 Transcript, page 135.
59
the conditions will fail to remedy the likely SLC. The public interest may also
enter into the balancing exerci se, particularly the public importance of the
markets which would be directly or indirectly prejudiced if the conditions
failed to remedy the likely SLC.”
[245] What would have happened with the OVK offer inclu ding its funding of the
transaction (both now and a t the time it made an offer to the Suidwes Board)
had Senwes not entered the arena with its offer for Suidwes is speculative.
[246] On the contrary the final set of remedies tendered by the merging parties
address the potential competitive harm identified by t he Commission and have
public interest benefits which as the CAC pointed out , may also enter into the
balancing exercise.
[247] As reaffirmed in Emerald referred to above, the failing firm is not a ‘defense’ t o
a merger that has been found on an initial market analysis to be anti-competitive.
Rather it is only one of the non-exhaustive list of factors to be taken into account
before one can determine whether or not a particular merger is likely to
substantially prevent or lessen competition. As indicated, on th e evidence, we
could not conclusively find a substantial prevention or lessening of competition.
[248] We were satisfied that the proposed remedies would address any competition
concerns and the public interest concerns arising from the merger. Whether or
not Suidwes meets all the legal requirements to be regarded a failing firm in
terms of the Act, does not alter this conclusion.
Conclusion on the counterfactual
[249] In light of the above, we are of the view tha t absent the proposed transaction,
Suidwes’ financial position is likely to deteriorate; and that it is unlikely that the
Suidwes business can timeously be turned around through business rescue, or
that liquidation is a viable alternative, or that re -opening the bid for a potential
purchase by OVK or any alternative purchasers is viable.
60
[250] The consequences of such failure will have a negative impact on the public
interest, as discussed later. Whether or not Suidwes’ silo assets would exit the
relevant market if it failed is an issue that we do not have to decide given our
conclusion regarding remedies. Put differently, whether or not Suidwes meets
all the legal requirements for a failing firm does not alter our conclusion that the
merging parties’ final set of tendered remedies address any likely competition
concerns as well as the public interest considerations.
EFFICIENCIES
[251] The merging parties allege d that the proposed transaction would lead to a
number of efficiency gains related to cost savings for the integration of the
merging parties retail businesses. The merging parties however did not
demonstrate how these savings were likely to accrue as benefits to customers.
[252] The Commission argued that the efficiencies claimed by the merging parties
were specul ative in nature and that there was no evidence of any benefits
accruing to customers.
[253] Given the inconclusive evidence on whether the Commission has established a
substantial prevention or lessening of competition, and taking into account the
public interest, it is not necessary for us to deal with efficiencies.
PUBLIC INTEREST
[254] The merging parties claimed that there would be a number of positive public
interest benefits arising from the proposed transaction. The Commission took no
issue with these alleged benefits. However, it was of the view that these could
be achieved by an alternative purchaser. As mentioned, we were not persuaded
by the Commission’s assessment of the counterfactual.
[255] We were persuaded by the following public interest benefits which will arise from
the transaction.
61
Employees and local communities
[256] As indicated, the proposed transaction will secure the employment of
approximately 934 out of 1246 employees. Although it will result in 136 merger-
specific retrenchments mainly due to head office relocation, and 171
retrenchments for operational reasons as Suidwes is loss-making, the net effect
on employment will be positive. The merger will have a beneficial impact not only
on the employees themselves, but also on the communities in which they live
and the indeterminate number of people which they support. The Suidwes
operations are located in rural areas. It is unlikely that they would be able to find
alternative employment absent this transaction.
Effect on relevant regions
[257] We also took note of the impact the failure of Senwes would have on the region.
As was the case in Iscor Ltd/Saldanha, prohibiting the merger could not be
justified given the substantial adverse public interest effects that would ensue
and more particularly the adverse effect such a prohibition would have in the
Saldanha region.
[258] Suidwes submitted that it paid approximately R44 million to municipalities and
R109 million in taxes and these payments would end with the collapse of
Suidwes, resulting in a negative impact on the region.
[259] Suidwes’ further submitted that suppliers that are currently owed R141 million
will be paid in the event that the proposed transaction is approved, whereas they
would only recover “cents in the Rand” in the event that the company were to go
into liquidation.
[260] Based on the testimony before us, Suidwes has numerous retail outlets and
storage facilities in various small towns in the Free State and North-West. The
consequences of it going into liquidation, in our view, would have negative
consequences for the small rural towns and communities in which it operates.
62
In addition, Suidwes also provides income for other local businesses that rely on
Suidwes to continue to operate.
[261] Prof Kirsten reinforced this poi nt by providing his experience as an agricultural
economist: “some experience I have is some rural towns, the whole town
survives on the back of the so-called co-operative or agri business. They invest
in the retail store. They invest in the fuelling depot. They invest in the coffee
shop and in some way they provide life to the town and without that major anchor
in the town, nothing will happen. You know, we had for years this problem of
urbanisation and de -ruralisation of … die ontvolking van die platteland is die
korrekte Afrikaanse woord. So, it is something that is probably the last
opportunity for rural towns to have some activity going.”70
Negative implications for farmers
[262] In relation to the provision of production loans to farmers in the Suidwes area,
the farmers would not be able to obtain funding and this would have a very
significant impact on the production of white maize in South Africa. This would
be particularly more detrimental given that the Land Bank is in financial difficulty
and in the current circumstances is unlikely to extend loans to farmers either.
[263] It is undisputed that the Land Bank is currently in severe financial difficulties and
has total debt of approximately R45 billion. Suidwes established a debtors’ book
with the Land Bank to the value of R3.7 billion in total of which R1.7 billion is
classified as “non-performing”. As a result of its financial difficulties, the Land
Bank has indicated that it may not be in a position to honour various loan
arrangements which it had previously concluded with Suidwes. The merging
parties submitted that the proposed transaction will therefore ensure that these
financing arrangements are honoured.
[264] Further, Senwes has undertaken to assist the Land Bank in recovering the
[264] Further, Senwes has undertaken to assist the Land Bank in recovering the
amounts owing to assist the Land Bank in its current financial difficulties. The
70Transcript, page 1072.
63
Senwes loan also enabled Suidwes to repay its significant debt to the Land
Bank.
[265] Professor Kirsten also noted in his expert report that the failure of Suidwes would
have very detrimental consequences – “As a result, the support and services
network for farmers in the Suidwes production regions will disappear and could
potentially destroy the productive agricultural landscape in those districts”.
[266] The proposed transaction would therefore play an important role in ensuring
food security (through ensuring the replacement of the Land Bank’s production
loans to farmers in the Suidwes area).
Retention of South African agricultural assets in South African hands
[267] The proposed transaction will result in the ongoing operation of a South African
agricultural business to ensure that the country maintains local South African
agricultural infrastructure, given the importance of food security at a national
level.
Conclusion
[268] Based on the above, we were of the view that the merger would result in
substantial public interest benefits in the form of the retention of employment in
rural areas where this is required as well as the retention of investment and
infrastructure in rural communities where it is most needed.
REMEDIES
[269] As mentioned above, a number of remedies were put before the Tribunal during
the course of the proceedings. While the Commission initially agreed to the
remedies tendered by the merging parties in its recommendation before us, it
later rejected the remedies on the basis that once it tested the remedies with
third parties, the remedies were found to be inadequate to address the
competition concerns.
64
[270] We pause to mention that the third parties which the Commission tested the
remedies with were competitors (NWK and OVK) of the merging parties. Both
were also unsuccessful bidders for Suidwes. The other third party was West
Street Capital who was also an unsuccessful bidder for Suidwes.
[271] The remedies were not tested with the farmers as customers of the merging
parties, and as indicated the Commission did not call any farmer as a witness
on either the relevant markets or remedies.
[272] The conditions underwent a number of iterations which we briefly discuss below.
The final offer covered divestiture, pricing, employment and an agricultural
development programme. The latter was a proposed remedy by Professor
Kirsten to promote small farmers.
Divestiture
[273] In its initial recommendation to the Tribunal, the Commission and merging
parties had agreed on the divestiture of the Senwes silo (Jan Ke mpdorp) in the
Christiana geographic market and two Suidwes silos (i.e. Suidwes Amalia and
Suidwes Vryburg concrete silos) falling outside of the identified overlap area of
40km of the Ottosdal and Leeuringsstad geographic markets.
[274] The final offer proposed was the divestiture of the Suidwes Strydpoort silo
located in the Ottosdal area, Suidwes Wolmaransstad silo (as well as the
Africum Mill located in Wolmaransstad) located in the Leeudoringstad area, and
the Senwes Jan Kemp Dorp silo located in the Christiana area. These silos have
a combined silo storage capacity of 178 000 tons.
[275] During the hearing, the Commission questioned the viability of the silos to
provide a new entrant with the scale to become an efficient competitor.
According to its witness, Nh lapo, a new entrant would require at least 500 000
tons to be able to enter and compete effectively. Nhlapo’s evidence became the
basis for the Commission’s contentions on the issue of the minimum efficient
scale.
65
[276] The merging parties challenged this evidence and pointed out that there were a
number of players in the market who were operating successfully with less than
178 000 tons. In particular, the merging parties put up Exhibit NH7, reproduced
below which showed that there were a number of players operating in the market
with less than 500 000 ton capacity.
Table 14: SAFEX registered storage capacity of relevant role players in the market
Relevant Role
Players
SAFEX Registered
Storage capacity
(tonnes)
WOL+STRYDP+JAN
KEMP Storage
Capacity
% of Operational
Businesses
Obaro 164 621 178 000 108,1%
AllemBrothers 160 000 178 000 111,3%
Bester Feed & Grain 35 000 178 000 508,6%
BKB 292 740 178 000 60,8%
GWK 165 000 178 000 107,9%
Kaap Agri 350 506 178 000 50,8%
Keystone Milling 11 550 178 000 1541,1%
OVK 412 253 178 000 43,2%
Schoeman Boerdery 58 000 178 000 306,9%
Standerton Oil Mills 80 000 178 000 222,5%
SSK 230 500 178 000 77,2%
TWK 145 000 178 000 122,8%
Source: Exhibit NH7 submitted 3 July 2020
[277] While the Commission challenged the alleged minimum scale referred to by
Kruger, it also did not put up any evidence to contradict Exhibit NH7, save to say
that 500 000 tons was the minimum viable scale for a new entrant. Absent this
scale, the Commission contended, the merger should be prohibited.
[278] We note that the capacity of the revised silos proposed by the Commission after
its initial recommendation to us (which were not accepted by the merger parties)
had a capacity of 249 923 instead. Table 12 below shows the silos proposed for
divestiture by the parties and those proposed by the Commission, while Table
13 shows the respective capacities of these silos.
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Table 12: Proposed divestiture package of the Commission and the merging parties
Silos to be divested
Geographic
Market 1
(Ottosdal)
Geographic
Market 2
(Leeudoringsta
d)
Geographic
Market 3
(Christiana)
Merging parties
proposed divestiture
package
Suidwes
Strydpoort
Suidwes
Wolmaransstad
Senwes Jan Kemp
Dorp
Commission’s
Proposed divestiture
package
Suidwes
Bamboesspruit
and/or Senwes
Bothaville
Suidwes
Wolmaransstad
Suidwes
Christiana
Source: Letter from the Merging parties dated 19 June 2020 and letter from the Commission dated 30
June 2020.
[279] The merging parties’ proposed silos have the following capacity capabilities:
Table 13:
[280] We now turn to c onsider the silos to be divested in each of the relevant
geographic areas.
Ottosdal
[281] The merging parties proposed the divestiture of Strydpoort, which the
Commission rejected. It submitted that the Strydpoort silo offered, on the
merging parties’ own submissions had low utilization rates and was seen more
as an overflow silo to that of the Bamboesspruit silo. The Commission proposed
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to the merging parties that they instead divest of the Suidwes Bamboesspruit
and/or Senwes Bothaville silo located instead.
[282] The merging parties submitted that the Strydpoort silo and (Wolmaranstad silo)
provided a guaranteed flow of grain to the Africum Mill (which forms part of the
divestiture) as the Africum mill is an end-processor and a well-located producer
of maize-meal. Both Strydpoort (and Wolmaransstad) silos fall within a 40km
radius of the Bamboesspruit silo. Strydpoort also has road and rail access.
Finally, they submitted that Strydpoort had been p rofitable over the past five
years as shown in Table 15 below.
[283] As to Senwes Bothaville, they submitted that it fell outside of the geographic
overlaps identified by the Commission 60km. The Suidwes Bamboesspruit silo
is located approximately 28km from the Suidwes Wolmaransstad silo, and 6km
from the Strydpoort silo.
Leeuringdoringstad
[284] Although the Commission also had concerns regarding the Suidwes
Wolmaransstad silo in this geographic market it remained part of the
Commission’s preferred silos for divestiture . The Commission’s concern was
that this silo was in an area with declining wheat production.
[285] The merging parties disagreed with the Commission’s contentions. They
submitted that there was no evidence to support the Commission’s contentions
that grain in the Wolmaransstad area is on the decline. They submitted that, like
Strydpoort, it is also well located on the N12 and adjacent to several producing
areas. The merging parties submitted further that the Commission also did not
take account of the existence of alternative storage capacity in these areas or
the Silostrat facilities located in the areas proximate to the Leeudoringstad silo
which would constrain the merging parties’ behaviour.
68
Christiana
[286] Finally, with respect to the Senwes Jan Kemp Dorp silo in this geographic market
located within 40km of Suidwes’ Christiana silo, the Commission submitted that
this silo is in a wheat and barley area, with maize production declining due to
changes in weather patterns. Further that the merging parties had also indicated
that they were going to mothball this silo in t he near future as it was not
profitable. Instead of the Jan Kemp Dorp silo the Commission sought the
divestiture of Suidwes Christiana.
[287] In oral evidence Kruger said plans to mothball the Jan Kemp Dorp silo had been
contemplated some five to six years ago due to an aeration issue they had been
experiencing at the time. Sinc e then, Suidwes had taken the decision not to
mothball it and instead invested in the silo by introducing six aeration facilities .
Kruger submitted that Jan Kemp Dorp was profitable.71
[288] The merging parties further submitted that the Commission’s suggested remedy
package sought to introduce a significantly more costly and onerous remedy
package which would require the merging parties to divest of the most significant
assets of Suidwes (the C hristiana and Bamboesspruit silos) as well as a large
Senwes asset (the Bothaville silo), in circumstances where Senwes is
attempting to save a failing firm in Suidwes. Importantly, the Bothaville silo did
not even fall within the overlapping areas identified by the Commission.
[289] The Commission’s other issue with the proposed silos, apart from scale, was
that the silos tendered by the parties for divestiture were not profitable.
[290] The merging parties disputed this. They put up the profitability figures for all the
silos to be divested for the preceding five years. Reproduced below are the
profitability figures for the year ended 2019/2020, which showed each of the silos
were profitable.
71 Transcript, page 718.
69
Table 15:
[291] The Commission disputed that the silos were profitable. However, it was unable
to provide a detailed assessment of the pro fitability of the silos in the time
available.
[292] We were not persuaded, on the evidence, that the Commission had made out a
case for prohibition. This is because the Commission’s conclusions regarding
the proposed merger resulting in a substantial preventio n or lessening of
competition were premised on relevant product and geographic markets which
were not adequately tested. The evidence in this regard, was mixed and
inconclusive.
[293] In light of this evidence, the financial position of Suidwes which was not disputed,
and the the counterfactual, i.e. that business rescue or the liquidation of
Suidwes would not be in the public interest, we concluded that the divestiture of
the silos tendered by the merging parties with a capacity of 178 000, in the
absence of data to the contrary, combined with the other conditions in their
totality, would ameliorate any competition and public interest concerns that arise.
The pricing condition
[294] The proposed pricing condition was as follows:
“following the implementation date, Senwes must ensure that for a
period of 5 years, the differential between (i) the handling and storage
70
tariffs applicable at the Leeudoringstad, Christiana and Bamboesspruit
silos and (ii) those applicable at the Regina, Werda and Melliodora silos
must remain the same as the differential applicable on the day before
the Implementation Date, unless Senwes invests into the
Leeudoringstad, Christiana and Bamboesspruit silos to (i) increase the
loading and outloading speed by 10% from the existing rate or (ii)
increase the ability to handle higher moisture grain from the existing rate
by 10%, or (iii) a 10% increase in the efficiency of the silo by way of
installing 1 0% more stock measurement equipment (i.e. Crux laser
technology), replacing the existing g rading machinery or installing
temperature strings and CO 2 meters for more than 10% of the bins at
the silo in which case this provision must no longer apply to the s ilo in
respect of which the investment has been made.”
[295] This condition sought to address the concern raised by the Commission that
Senwes charged significantly more than Suidwes for storage and handling.
According to the Commission, this differential was a direct function of the
savings and efficiencies benefitting those farmers using those facilities at which
Senwes had implemented technological improvements. It is for this reason that
the pricing condition contained a carve out in respect of improvements made by
Senwes.
[296] Throughout the hearing we heard evidence on the growth of alternative storage
In particular, alternative storage facilities have been placing an increasing
competitive constraint on concrete silos especially in the last three to five years.
Further there still remained the issue that because of the history of concrete silos
and the fact that these have been built in regions where grain production may
be declining there was a possibility that this could affect the pricing at these silos
through increased storage and handling fees.
[297] Absent clear evidence of a substantial prevention or lessening of competition, in
[297] Absent clear evidence of a substantial prevention or lessening of competition, in
order to address the potential of Senwes increasing its handling fees charged at
silos without any concomitant technological benefit to the farmers, we were
71
satisfied that the condition tendered was sufficient to allay any concerns at least
for a period of five years subject to there being no technological investment
which may improve the silos for customers in this period.
The employment condition
[298] With the exception of the 136 positions which Senwes has identified as being
potentially duplicative, the parties have undertaken not to retrench any
employees as a result of the merger for a period of 24 months from the date on
which the transaction is implemented (the “implementation date”).
[299] We are satisfied that this addresses any employment concerns arising from the
proposed transaction.
Agricultural development programme
[300] According to Professor Kirsten, a more effective remedy would be one that
facilitates an agricultural development programme for black farmers in the region
as such a condition could have a much more long-term impact on agriculture in
the region from the perspective of inclusive growth and transformation. He was
of the view that this would have more of a long-term impact on agriculture from
the perspective of inclusive growth and transformation in the region.
[301] The Commission disagreed with Prof Kristen’s proposed remedy as it alleged it
would not address any competition concerns resulting from the structural change
to the market. The Commission was of the view that emerging black farmers
were likely to be confronted with the anti-competitive effects from the merger in
the relevant markets as they would have to participate within a more
concentrated industry and would not have viable alternative storage for their
grain.
[302] However, for the reasons discussed, the Commission’s theories of harm were
not sufficiently supported by the evidence before us.
72
[303] Regarding the establishment of a fund as proposed by Professor Kirsten, the
merging parties tendered a condition in which they committed an amount of R20
million per annum for a period of three years in the form of production loans to
emerging black farmers.
[304] In light of the evidence regarding access to funding for emerging farmers, the
financial difficulties experienced by the Land Bank on whom farmers rely for
funding, the precarious financial position of Suidwes which further reduces
funding opportunities for farmers, we considered this condition taken overall with
the other conditions, to be in the public interest.
[305] We strengthened this condition through the monitoring provision which requires
the parties to report to the Commission, on an annual basis, inter alia, the
number of loans to emerging black farmers (from the pre-merger baseline),
whether such farmers are new or existing customers of the merging parties as
well as confirmation that an aggregate amount of at least R20 million has been
advanced to emerging black farmers for the preceding year.
Conclusion
[306] We found that the Commission’s theories of harm were not sufficiently supported
by the evidence before us. We concluded that the public interest benefits
outweigh the counterfactual which is the likely failure of Suidwes.
[307] The consequences of such failure will have a negative impact on the public
interest. Whether or not Suidwes’ silo assets would exit the relevant market if it
failed is not an issue that we have to decide given our conclusion regarding
remedies.
[308] The final set of tendered remedies address any likely competition concerns as
well as the public interest considerations.
[309] We are satisfied that these conditions, when considered in their totality, are
appropriate in the context of the proposed transaction.
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[310] We accordingly approved the proposed transaction subject to the conditions
attached in Annexure “A” hereto.
12 April 2021
Ms Mondo Mazwai Date
Mr Enver Daniels and Prof. Imraan Valodia concurring
Tribunal Case Manager:
Busisiwe Masina
Tribunal Economists: Karissa Moothoo-Padayachie and Lumkisa
Jordaan
For the Commission: Romeo Kariga and Grashum Mutizwa
For the Merging Parties Anthony Norton and Anton Roets of Nortons Inc.