COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No.: LM010Apr21
In the matter between:
FFS Refiners (Pty) Ltd Primary Acquiring Firm
And
OTGC Terminals (Pty) Ltd Primary Target Firm
Y Carrim (Presiding Member)
AW Wessels (Tribunal Panel Member)
Panel:
H Cheadle (Tribunal Panel Member)
Heard on: 23 June 2021
Decided on: 23 June 2021
ORDER
Further to the recommendation of the Competition Commission in terms of section
14A(1)(b) of the Competition Act, 1998 (“the Act”) the Competition Tribunal orders that-
1. the merger between the abovementioned parties be approved in terms of section
16(2)(b) of the Act subject to the conditions attached hereto; and
2. a Merger Clearance Certificate be issued in terms of Competition Tribunal rule
35(5)(a).
23 June 2021
Presiding Member
Ms Yasmin Carrim
Date
Concurring: Mr Andreas Wessels and Prof. Halton Cheadle
Date : 23 June 2021
To : Shepstone and Wylie Attorneys
Case Number: LM010Apr21
FFS Refiners (Pty) Ltd And OTGC Terminals (Pty) Ltd
You applied to the Competition Commission on 06 April 2021 for
merger approval in accordance with Chapter 3 of the Competition
Act.
Your merger was referred to the Competition Tribunal in terms of
section 14A of the Act, or was the subject of a Request for
consideration by the Tribunal in terms of section 16(1) of the Act.
After reviewing all relevant information, and the recommendation
or decision of the Competition Commission, the Competition
Tribunal approves the merger in terms of section 16(2) of the Act,
for the reasons set out in the Reasons for Decision.
This approval is subject to:
no conditions.
x the conditions listed on the attached sheet.
The Competition Tribunal has the authority in terms of section 16(3)
of the Competition Act to revoke this approval if
a) it was granted on the basis of incorrect information for which
a party to the merger was responsible.
b) the approval was obtained by deceit.
c)a firm concerned has breached an obligation attached to
this approval.
The Registrar, Competition Tribunal
Notice CT 10
About this Notice
This form is prescribed by the Minister of Trade and Industry in terms of section 27 (2) of the Competition Act 1998 (Act No. 89 of 1998).
Contacting
the Tribunal
The Competition Tribunal
Private Bag X24
Sunnyside
Pretoria 0132
Republic of South Africa
tel: 27 12 394 3300
fax: 27 12 394 0169
e-mail: ctsa@comptrib.co.za
Merger Clearance Certificate
This notice is issued in
terms of section 16 of
the Competition Act.
You may appeal
against this decision to
the Competition
Appeal Court within 20
business days.
CASE NUMBER: LM010APR21
FFS REFINERS (PTY) LTD
AND
OTGC TERMINALS (PTY) LTD
ANNEXURE A – MERGER CONDITIONS
1.DEFINITIONS
The following expressions shall bear the meaning assigned to them below and cognate
expressions bear corresponding meaning:
1.1. “Acquiring Firm” means FFS Refiners (Pty) Ltd;
1.2.“Approval Date” means the date referred to in the Tribunal’s clearance certificate (Form
CT 10);
1.3.“Commission” means the Competition Commission of South Africa;
1.4. “Commission Rules” mean Rules for the Conduct of Proceedings in the Commission;
1.5. “Competition Act" means the Competition Act, No. 89 of 1998, as amended;
1.6.“Conditions” mean the conditions set out herein;
1.7.“Day” means any calendar day which is not a Saturday, a Sunday or an official public holiday
in South Africa;
1.8."Employee" has the same meaning as in the LRA;
1.9.“Implementation Date” means the date, occurring after the Approval Date, on which the
Merger is implemented by the Merging Parties;
1.10.“LRA” means the Labour Relations Act, No. 66 of 1995, as amended;
1.11.“Merger” means the Acquiring Firm’s proposal to acquire 100% of the shares in the Target
Firm;
1.12.“Merging Parties” means the Acquiring Firm and the Target Firm;
1.13.“Moratorium” means the period of 2 (two) years from the Approval Date;
1.14. “Retrenched Employees” means employees retrenched by the Acquiring Firm in November
2020 and April 2021 who indicated, in writing, that they are interested in being called should a
work opportunity arise and are on the Acquiring Firm’s database;
1.15.“Target Firm” means OTGC Terminals (Pty) Ltd;
1.16.“Tribunal” means the Competition Tribunal of South Africa; and
1.17. “Tribunal Rules” mean Rules for the Conduct of Proceedings in the Tribunal.
2. CONDITIONS
2.1. The Merging Parties shall not retrench any Employees because of the Merger for the duration
of the Moratorium.
2.2. For the sake of clarity, retrenchments do not include (i) voluntary retrenchment and/or
voluntary separation arrangements; (ii) voluntary early retirement packages; (iii) unreasonable
refusals to be redeployed in accordance with the provisions of the LRA; (iv) resignations or
retirements in the ordinary course of business; (v) retrenchments lawfully effected for
operational requirements unrelated to the Merger; (vi) terminations in the ordinary course of
business, including but not limited to, dismissals as a result of misconduct or poor
performance; and (vii) any decision not to renew or extend a fixed term contract of a contract
worker or Employee taken in the ordinary course of business.
2.3. Should any vacancy arise at either of the Merging Parties, the relevant Merging Party will use
its reasonable endeavours to inform such employees thereof using the contact details provided
by the Retrenched Employees. For the duration of the Moratorium, and where a Retrenched
Employee applies for a vacant position and the relevant Merging Party is reasonably satisfied
that the Retrenched Employee is suitable for that position, the relevant Merging Party shall
give preference to such Retrenched Employee in the recruitment process although the
Retrenched Employee shall only be appointed if he/she is ultimately the best candidate for the
job.
3. MONITORING OF COMPLIANCE WITH THE CONDITIONS
3.1. The Merging Parties shall circulate a copy of the Conditions to all Employees including their
respective employee representatives and registered trade unions, within 5 (five) Business
Days of the Approval Date.
3.2. As proof of compliance with 3.1, the Merging Parties shall within 5 (five) Business Days of
circulating the Conditions, provide the Commission with an affidavit from a senior official,
attesting to the circulation of the Conditions and attach a copy of the notice sent to the
Employees and/or employee representatives and/or registered trade unions.
3.3. The Merging Parties shall inform the Commission in writing of the Implementation Date, within
7 (seven) Business Days of it becoming effective.
3.4. As proof of compliance with 2.1 above, on each anniversary of the Approval Date, the
Acquiring Firm shall submit an affidavit from a senior official, attesting to compliance with the
Conditions.
3.5. To monitor compliance with these Conditions, the Commission may require the Merging
Parties, to provide any additional information.
4. BREACH
4.1. If the Commission receives any complaint in relation to non-compliance with the above
Conditions, or otherwise determines that there has been an apparent breach by the Merging
Parties of these Conditions, the breach shall be dealt with in terms of Rule 39 of the
Commission Rules read together with Rule 37 of the Tribunal Rules.
5. VARIATION
5.1. The Merging Parties and/or the Commission may at any time, on good cause shown, apply to
the Tribunal for the Conditions to be waived, relaxed, modified and/or substituted.
6. GENERAL
6.1. All correspondence in relation to the Conditions must be submitted to the following email
address: mergerconditions@compcom.co.za and ministry@thedtic.gov.za.
1
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No.: LM010Apr21
FFS Refiners (Pty) Ltd (Acquiring Firm)
and
OTGC Terminals (Pty) Ltd (Target Firm)
REASONS FOR DECISION
[1] On 23 June 2021, the Competition Tribunal conditionally approved a large merger
whereby FFS Refiners (Pty) Ltd (“FFS”) would acquire the entire issued share capital
in OTGC Terminals (Pty) Ltd (“OTGC”) from OTGC Holdings (Pty) Ltd (“OTGC
Holdings”)
[2] FFS, is ultimately controlled by Calulo Petrochemicals (Pty) Ltd and Bud Chemicals
and Minerals (Pty) Ltd. The three companies together are referred to as the “acquiring
group”. The acquiring group is a supplier of industrial heating fuels in South Africa. It
markets, supplies and stores bulk liquids; and offers ancillary packages related to
these activities. Of relevance to this merger assessment are the acquiring group’s bulk
liquid storage tanks at Cape Town port and Durban at Prospecton and Teakwood Road
(which is not situated within the Durban terminal). The acquiring group’s rationale for
the proposed transaction is to diversify the business including making bulk liquid
storage space available to third-party customers.
[3] OTGC Holdings wholly controls OTGC (the “target firm”) and is selling its entire interest
at the behest of OTGC’s largest shareholder, Oiltanking GmbH. 1 OTGC is active as
an independent bulk liquid storage provider for non-hazardous products. It has liquid
bulk terminals within Durban and Cape Town.
[4] Both the acquiring and target firms possess bulk liquid storage facilities in Durban and
Cape Town. The acquiring group’s bulk liquid storage facilities predominately store
hazardous high flash products, whilst the target firm only stores non-hazardous high
flash products; the Tribunal’s prior treatment of these markets was to treat them as
non-substitutable.2 The Commission’s consultations with the Transnet National Ports
Authority (TNPA) and customers confirmed this view. As a result of this and further
Authority (TNPA) and customers confirmed this view. As a result of this and further
investigation, the Commission concluded that the merger does not result in any
horizontal or vertical overlaps.
[5] Third parties were contacted by the Commission and certain customers raised
concerns that OTGC would switch its storage facilities to start storing hazardous high
flash products. The Commission investigated these concerns and found, based on
1 Oiltanking wishes to divest itself of its operations in South Africa because it has identified them as
non-core to its global corporate strategy. As a result of Oiltanking decision, the remainder of OTGC
Holding’s shareholders also wish to divest.
2 Bidvest Group Ltd and Island View Storage Ltd, case no 17LMDec99.
2
FFS’ internal documentation, the incentives for such a move to be lacking.
Furthermore, the role that the TNPA plays in regulating and licensing the provision of
certain types of liquid bulk means that switching from provision of non-hazardous to
hazardous bulk storage (or vice versa) is not simple. These concerns were
ameliorated by the merging parties’ undertaking to honour OTGC’s existing contracts
with customers.
[6] The Commission also investigated the submission by the Chemical, Energy, Paper,
Printing, Wood and Allied Workers' Union (CEPPWAWU) that two sets of proximally
related retrenchments may have been occasioned by the merger; however, the
Commission’s investigation revealed that retrenchments were occasioned by the
deleterious economic effects of the Covid-19 pandemic.
[7] The Commission could not definitively discount the fact that duplications may arise
because of the merger.3 To mitigate against the prospect of any rationalisation arising
from such duplications post-merger, the Commission recommended that the merger
be approved subject to a 2-year moratorium on merger-specific job losses.
[8] In considering the merit of the proposed conditions, the Tribunal sought submission
from both the merging parties and the Commission on the imposition of an additional
employment-related condition that preference will be given when vacancies arise in
the merged entity to any employees that may have been retrenched for operational
reasons. The merging parties were amenable to this.
[9] In relation to the spread of ownership the merging parties submitted that:
a. OTGC’s existing Black ownership is 30%. FFS is majority Black owned as to
51.39%. This merger will therefore give rise to an increase in Black ownership
of the terminal operators in relation to OTGC Durban and OTGC Cape Town.
b. The merger will increase Black female ownership from 16.52% in OTGC to
31.7% Black female ownership.
[10] Based on the above, we concluded that the proposed transaction is unlikely to
[10] Based on the above, we concluded that the proposed transaction is unlikely to
substantially prevent or lessen competition in any relevant market; and as a result of
the conditions undertaken by the merging parties attached hereto marked Annexure
“A” ameliorate any potential public interest concerns.
23 June 2021
Ms Yasmin Carrim Date
Mr Andreas Wessels and Prof Halton Cheadle concurring
Tribunal Case Manager: Mpumelelo Tshabalala
For the Merging Parties: Louise Cleland and Jenny Finnigan
For the Commission: Wiri Gumbie and Tumiso Loate
3 As there may be similarities in the functions of employees operating hazardous and non-hazardous
bulk storage tanks from the same premises