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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case no: LM052Aug21
K2021544474 (South Africa) (Pty) Ltd (to be renamed
Sandvik SRP RSA (Pty) Ltd)
And
Kwatani Global (Pty) Ltd
Primary Acquiring Firm
Primary Target Firm
Heard on: 14 October 2021
Order Issued on: 14 October 2021
Reasons issued on: 29 October 2021
REASONS FOR DECISION
[1] On 14 October 2021, the Competition Tribunal (“Tribunal”) conditionally approved a
large merger involving K2021544474 (South Africa) (Pty) Ltd (to be renamed Sandvik
SRP RSA (Pty) Ltd) (“Sandvik SRP”) and Kwatani Global (Pty) Ltd (“Kwatani Global”).
Merging parties and their activities
[2] Sandvik SRP is a newly formed company incorporated in accordance with the laws of
the Republic of South Africa and does not control any firms. Sandvik SRP is controlled
by Sandvik Holdings Southern Africa Limited (“Sandvik Holdings”). Sandvik Holdings
is in turn controlled by Sandvik Aktiebolag plc (“Sandvik AB”). Sandvik AB is listed on
the Stockholm Stock Exchange and is not controlled by any individual shareholder.
Sandvik SRP and the firms directly or indirectly controlling it will be referred to as the
“Sandvik Group”. In South Africa, the Sandvik Group controls several entities1.
[3] Globally the Sandvik Group is active in several areas including tools and tooling
systems for industrial metal cutting, advanced stainless steel, and special alloys as
well as products for industrial heating. The Sandvik Group also provides products and
services for the mining and construction sector s to customers throughout Africa. In
South Africa, the Sandvik Group (through the different entities it controls) provides rock
processing products, including horizontal screens, grizzly feeders, and pan feeders to
mining customers and inclined screens, grizzly feeders and pan feeders to quarry
customers.
[4] Kwatani Global, is a newly established company incorporated in accordance with the
[4] Kwatani Global, is a newly established company incorporated in accordance with the
laws of the Republic of South Africa and is controlled by an individual,
Subsequent to a number of internal steps resulting from
the proposed transaction, Kwatani Global will control Kwatani (Pty) Lt d, Kwatani
Holdings (Pty) Ltd and Mine and Quarry Supplies (Pty) Ltd.
1 Sandvik Holdings Southern Africa (Pty) Ltd; Sandvik (Pty) Ltd; Sandvik Mining RSA (Pty) Ltd; Seco Tools South
Africa; Sandvik Financial Services (Pty) Ltd; and South Africa Newtrax (Pty) Ltd.
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Kwatani Global and all the firms controlled by it will be referred to as the "Kwatani
Group".
[5] The Kwatani Group is an original equipment manufacturer of custom -engineered
vibrating equipment including screens and feeders to both local and international
customers operating in the heavy and precious metals and minerals sectors. The
Kwatani Group exports products from South Africa to many other African countries. In
South Africa, the Kwatani Group supplies multislope screens, horizontal screens,
inclined screens, grizzly screens, other screens, pan feeders, electromagnetic feeders,
and other feeders to mining customers. The Kwatani Group also provides horizontal
screens to quarry customers.
Proposed transaction
[6] The proposed transaction
will ultimately result in Sandvik SRP acquiring
in Kwatani Global from the seller, Upon implementation of the
proposed transaction, Kwatani Global will be solely controlled by Sandvik SRP.
Competition assessment
[7] The Competition Commission (“Commission”) considered the activities of the merger
parties and identified horizontal overlap s in respect of the supply of (i) horizontal
screens to mining customers; and (ii) pan feeders to mining customers.
[8] The Commission found that the merging parties will have combined national market
shares of 10-20% in the supply of (i) horizontal screens; and (ii) pan feeders and that
the Sandvik Group is a small player in these markets. Furthermore, the merging parties
will continue to face competition from several other players active in these markets in
South Africa, such as Vibramech, Metso (Outotec), Osborn Engineering and Schenck
Process.
[9] Customers and competitors raised no concerns regarding the effects of the proposed
transaction on competition.
[10] The Commission concluded that the merger is unlikely to substantially prevent or
lessen competition in the abovementioned markets . We have no reason to disagree
with this conclusion.
Public interest
with this conclusion.
Public interest
[11] Regarding potential employment effects, the merger parties submitted that the
proposed transaction will not have a negative effect on employment.
[12] We note that employees have been retrenched within the Sandvik Group (but not
at the primary acquiring fi rm) in South Africa in the 12 months prior to the proposed
transaction. The Commission investigated this and found no evidence suggesting that
the retrenchments are merger specific or in anticipation of the merger. Twelve of these
retrenchments were at the Sandvik Drilling Consumable Division
This is also evidenced by the fact that the se retrenched
employees were later re-employed
[13] Regarding the spread of ownership , as mentioned Sandvik SRP is a newly
incorporated company established for the purposes of the proposed merger. Sandvik
Holdings and Sandvik AB, the firms controlling Sandvik SRP, do not have any
shareholding by historically disadvantaged persons (“HDPs”, also referred to as “BEE
shareholding”).
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[14] The Commission, after assessing the pre -merger BEE shareholding, found that the
proposed transaction results in a reduction in ownership by HDPs in the target fi rms
[15] The Commission therefore recommended the approval of the proposed transaction
subject to the condition that Sandvik Holdings SA ensure that from
the implementation date of the transaction, a shareholding of at least
share in Sandvik SRP (the primary acquiring firm) will be transferred, on mutually
acceptable commercial terms, to one or more B-BEEE shareholder/s. We have
approved the proposed transaction subject to this condition.
[16] The proposed transaction raises no other public interest concerns.
Conclusion
[17] The proposed transaction raises no competition concerns. We have approved the
proposed transaction subject to the abovementioned condition relating to the spread
of ownership.
29 October 2021
Mr Andreas Wessels Date
Mr Enver Daniels and Dr Thando Vilakazi concurring
Tribunal Case Manager: Junior Khumalo
For the Merger Parties: Marianne Wagener of Norton Rose Fulbright
For the Commission: Yolanda Okharedia and Themba Mahlangu