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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case no: LM115Nov21
Raubex (Pty) Ltd Primary Acquiring Firm
And
Bauba Resources Ltd Primary Target Firm
REASONS FOR DECISION
[1] On 27 January 2022, the Competition Tribunal (“Tribunal”) unconditionally
approved a large merger in terms of which Raubex Proprietary Limited
(“Raubex”) intends to acquire control of Bauba Resources Limited (“Bauba”).
[2] The primary acquiring firm is Raubex, a private company incorporated under
the laws of South Africa. Raubex is a wholly owned subsidiary of Raubex Group
Limited (“Raubex Group”), a public company listed on the JSE Limited.
[3] The primary target firm is Bauba, a public company incorporated under the laws
of South Africa. Bauba is not controlled by any single firm or combination of
firms.
Proposed transaction
[4] Raubex currently holds 24% of the issued share capital in Bauba. In terms of
the proposed transaction, Raubex intends to acquire an additional 28% of the
issued share capital in Bauba from the sellers, thereby increasing its
shareholding in Bauba to 52%. Following the implementation of the proposed
transaction, Raubex will therefore have sole control of Bauba.
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Merging parties’ activities
[5] The Raubex Group of companies is an infrastructure development and
construction materials supply group which operates across South Africa and
throughout Southern Africa.
[6] Bauba is a mining and exploration company focusing on the mining of chrome
ore and platinum group metals (“PGM”) exploration.
Competition assessment
[7] The Competition Commission (“Commission”) considered the activities of the
merging parties and found that there is no horizontal overlap between their
activities since the primary target firm is a mining and exploration company
focused on the mining of chrome ore and exploration of PGM, and none of the
Raubex Group firms are engaged in mining or exploration services that are
interchangeable or substitutable with such services.
[8] The Commission noted that Raubex Group has non-controlling interests in firms
that are active in the mining industry. However, the said firms are not active in
mining or exploration of chrome ore and PGM exploration services. Thus, the
Commission found that the proposed transaction is unlikely to result in any
coordinated effects concerns related to cross directorships/shareholdings. In
addition, the parties have indicated that no entity within the Raubex Group has
any interest (controlling or non-controlling) in any entity that competes with
Bauba and/or its subsidiaries.
[9] The Commission found that the proposed transaction does result in a vertical
overlap in that the Raubex Group currently provides Bauba with crushing and
opencast mining services through its wholly owned subsidiary, SPH Kundalila
Proprietary Limited. The Commission however found that input foreclosure is
unlikely given Raubex Group’s low market share in the provision of crushing
and opencast mining services in South Africa. Furthermore, Raubex will not
have incentives to engage in input foreclosure concerns as Bauba accounts for
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a relatively low percentage of Raubex’s turnover from crushing and opencast
mining services.
[10] In relation to potential customer foreclosure, the Commission found that Bauba
does not currently procure crushing and opencast mining services from any
other firms. Thus, the proposed merger is unlikely to result in any customer
foreclosure concerns.
[11] No third party raised any concerns with the proposed transaction.
[12] Based on the above, Commission concluded that the proposed transaction is
unlikely to substantially prevent or lessen competition in any relevant market.
We concur with this finding.
Public interest
Effect on employment
[13] The merging parties confirmed that the proposed transaction will not adversely
affect employment. In particular, the merging parties submitted that they have
no plans to retrench any employees as a result of the proposed transaction.1
Effect on the greater spread of ownership
[14] Raubex Group is a 45.53% black-owned firm listed on the JSE. Raubex will
acquire shares from the sellers who are not owned by Historically
Disadvantaged Persons (“HDPs”). Bauba currently has an HDP ownership of
less than 2.38%. This 2.38% HDP shareholding in Bauba will remain unaffected
by the proposed transaction since Hlabirwa Mining (the current HDP
shareholder) will continue to hold the 2.38% shareholding in Bauba post-
merger.
Other public interest issues
[15] The proposed transaction raises no other public interest concerns.
1 See Record pages 11 and 42.
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Conclusion
[16] For the above reasons, we conclude that the proposed transaction is unlikely
to substantially prevent or lessen competition in any relevant market.
Furthermore, the proposed transaction does not raise any public interest
concerns.
02 February 2022
Mr Andreas Wessels Date
Mr Enver Daniels and Dr. Liberty Mncube concurring
Tribunal Case Managers: Sinethemba Mbeki and Juliana Munyembate
For the Merging Parties: Robert Wilson and Lebogang Makhubedu of
Webber Wentzel
For the Competition
Commission:
Busisiwe Ntshingila and Themba Mahlangu