COMPETITION TRIBUNAL OF SOUTH AFRICA
Case no. : LM156Dec21/INT045May22
In the intervention application between:
NORTHAM PLATINUM HOLDINGS LIMITED Applicant
And
IMPALA PLATINUM HOLDINGS LIMITED First Respondent
ROYAL BAFOKENG PLATINUM LIMITED Second Respondent
COMPETITION COMMISSION OF SOUTH AFRICA Third Respondent
THE MINISTER OF TRADE, INDUSTRY AND
COMPETITION
Fourth Respondent
Case no.: LM156DEC21
In re the large merger between:
IMPALA PLATINUM HOLDINGS LIMITED Primary Acquiring Firm
And
ROYAL BAFOKENG PLATINUM LIMITED Primary Target Firm
Panel: Y Carrim (Presiding Member)
E Daniels (Tribunal Member)
I Valodia (Tribunal Member)
2
INTRODUCTION
[1] This matter concerns an intervention application filed by Northam Platinum
Holdings Limited (“Northam”), seeking to participate in the Tribunal’s large
merger proceedings between Impala Platinum Holdings Limited (“Implats”) and
Royal Bafokeng Platinum Limited (“RBPlats”) under case number LM156Dec21
(“the proposed merger”) in terms of section 53(c)(v) of the Competition Act
No 89 of 1998, as amended (“the Act”).
[2] The Competition Commission (“Commission”) recommended the conditional
approval of the proposed merger whereby Implats will acquire all of RBPlats’
issued share capital 1 (that it does not already own 2) from the other
shareholders – a transaction that will be implemented by way of mandatory
offer.
[3] Northam sought admission as an intervenor in the Tribunal’s consideration of
the proposed merger on competition and public interest grounds. The
application was opposed by the merger parties. The Commission indicated
that it would abide by the Tribunal’s decision but filed an explanatory affidavit
detailing the extent of its engagement with Northam during the investigation.
The Minister of the Department of Trade, Industry and Competition (“dtic”) is
cited in its capacity as a participant in the proposed merger proceedings.
1 Excluding treasury shares.
2 35.3%.
Heard on: 8 June 2022
Order issued on: 22 June 2022
Reasons issued on: 20 July 2022
REASONS FOR DECISION
3
[4] The Tribunal after hearing Northam's application granted it limited participation
rights to making written and oral submissions regarding two potential theories
of harm:
4.1 the vertical effects of the proposed merger, including the effect on
competition in the local upstream market for the production and sale of
primary concentrate; and
4.2 the extent to which the merger effects could be prejudicial to junior
miners in South Africa.
[5] These are the reasons for our decision.
Background
[6] On 15 December 2021 the merger parties - Implats and RBPlats - notified the
proposed merger to the Commission.
[7] Northam is a rival bidder for the target firm: RBPlats. It first approached
RBPlats in February 2021. On 27 August 2021, Northam submitted a non-
binding expression of interest; and on 6 September 2021 RBPlats confirmed,
by way of letter, reciprocal interest. On 11 October 2021, Northam submitted
its non-binding offer letter; which offer RBPlats rejected on 18 October 2021.
However, on 27 October 2021, Implats and RBPlats released a SENS joint
cautionary announcement on the JSE’s Stock Exchange News Service
informing shareholders that they were in discussions about Implats acquiring
100% of the ordinary shares of RBPlats.
[8] On 19 November 2021, Implats and RBPlats concluded a co-operation
agreement under cover of exclusivity which prevented RBPlats from being able
to progress any discussions regarding a future, proposed merger with Northam.
4
[9] Implats has made a public offer to all shareholders of RBPlats as contemplated
in section 117(1)(c)(v) of the Companies Act No. 71 of 2008 and Chapter 5 of
the Companies Regulations,3 with a long stop date of 8 August 2022.
[10] Just prior to Implats’ mandatory offer, Northam acquired the majority of the
shares previously held by Royal Bafokeng Holdings Proprietary Limited, and
now holds a 34.52% stake in RBPlats and has a right of first refusal, put and
call options which, if exercised by the relevant counterparty, will result in
Northam acquiring further shares in RBPlats.
[11] Thus, Northam is currently an active rival bidder for RBPlats and confirmed this
by bringing an application to make a separate merger notification in terms of
Commission Rule4 28(1) of a Northam and RBPlats merger transaction.
[12] However, Northam has not yet made an offer to all shareholders.
[13] On 26 April 2022, the Commission recommended the conditional approval of
the proposed merger to the Tribunal. The conditions relate to employment,
greater spread of ownership, and the promotion of small and medium sized
businesses.
[14] The Commission identified horizontal and vertical overlaps in the activities of
the merger parties, and ultimately found that the proposed merger is unlikely to
substantially prevent or lessen competition in the relevant markets and its
public interest concerns were satisfied by the proposed conditions.
[15] The Commission's investigation involved extensive engagements with the
merger parties, their customers, competitors and other stakeholders,5 including
Northam.
3 Merger Filing ‘Annexure B3 - SENS response to Firm Intention by RBplat’ (29 November 2021) large
merger record, LM156Dec21 at p143).
4 Competition Commission Rules published in GG 22025 in GN 1 on1 February 2001.
5 We note the National Union of Mineworkers’ contributions which lead to the signature of a
Memorandum of Understanding with the merger parties to address concerns about employment, the
Memorandum of Understanding with the merger parties to address concerns about employment, the
wage agreement, and the “Employee Share Ownership Planto”; as well as, the merger parties’
engagements with and submissions of the Royal Bafokeng Nation. During the merger investigation,
the Commission also received of a notice of intention to participate from the dtic.
5
[16] Other than Northam, concerns were raised by one of Implats’ platinum group
metals (“PGM”) concentrate suppliers, Barplats Mines (Pty) Limited
(“Barplats”), during the course of the Commission’s investigation. However,
Barplats did not seek to participate further in merger proceedings before the
Tribunal as it had nothing to add to the submissions it made to the Commission
during the Commission’s investigation.6 Barplats’ concerns primarily revolved
around ensuring its contractual supply terms post -merger.
[17] Northam sought leave to intervene in the proceedings for the proposed merger
on a number of grounds, challenging almost every finding of the Commission,
including:
17.1 The relevant market definition;
17.2 The relevant counterfactual applicable to the vertical effects of the
proposed merger;
17.3 The vertical effects of the proposed merger, including the effect on
competition in the local upstream market for the production and sale of
primary concentrate;
17.4 The relevant counterfactual applicable to the horizontal effects of the
proposed merger;
17.5 The horizontal effects of the proposed merger, including Implats’, and
similarly placed firms’, incentives to shut mines and decrease
production as a result of the proposed merger;
17.6 The conditions applicable to the proposed merger, including whether
the conditions are implementable.7
[18] It sought comprehensive procedural rights, including rights of discovery,
leading evidence and cross-examining witnesses. Northam also sought a costs
order, including costs of senior and junior counsel, in the event that the merger
parties opposed the application.
6 Email from Dave Goosen of Barplats to the Tribunal on 9 June 2022.
7 Northam Replying Affidavit (6 June 2022) hearing bundle p305-306 para 30.
6
Parties Arguments
[19] The papers in these proceedings are voluminous. In order to avoid prolixity,
we summarise only the key submissions made by the parties at the hearing of
the matter.
Northam’s submissions
[20] Northam argued that it had an interest in participating in the merger
proceedings on multiple grounds namely as a market participant in the various
PGM markets; 8 an occasional and existing customer of Implats; an existing
shareholder of RBPlats (with a shareholding of 34.52%); and an alternative
acquirer of RBPlats.
[21] In relation to its interests as a market participant, at the hearing Northam
clarified that it was advancing concerns purportedly on behalf of junior miners.
It argued that because it occupies a unique position in the market as an
intermediate miner between junior miners and the larger miners, it could assist
the Tribunal in understanding the state of competition at the different levels of
the value chain.
[22] Northam argued that the Commission’s findings contain significant errors which
have affected the assessment of the relevant markets. From these errors
multiple theories of harm were inappropriately overlooked.
[23] Northam also submitted that the Commission did not give it enough time to
submit a meaningful and complete submission during the investigation of the
proposed merger.
[24] Northam’s concerns could broadly be categorised as vertical, horizontal and
public interest. We deal with these in turn below.
8 It is an integrated PGM producer active in the mining, concentrating and smelting of PGMs, operates
mining complexes, and recycles PGMs through Northam Recovery Services.
7
The merger parties’ submissions
[25] The merger parties argued that although Northam claims to have an interest as
a market participant in various PGM markets, it does not claim to be prejudiced
by the merger qua competitor or as a participant in any of those markets.
Northam also makes no claim that the proposed merger will affect its rights as
an RBPlats shareholder. Rather Northam’s main theory of harm implies
prejudice to third-party junior miners, none of whom have requested leave to
intervene in these proceedings. On this basis alone, Northam did not satisfy
the requirements of section 53(c) read with Tribunal Rule9 46(1) and ought not
be permitted to intervene.
[26] As to the vertical and horizontal concerns, the merger parties submitted that
Northam had not put up any facts to support its allegations of adverse vertical
or horizontal effects. Ultimately Northam’s application was based on
speculative theories of harm.
[27] The merger parties argued that Northam’s application was made for the sole
purpose of causing delays to the proposed merger which contained a public
offer that was time sensitive. Northam was well aware of this and had brought
the application simply to scupper the deal.
[28] We turn now to consider each of these grounds in detail.
ANALYSIS
[29] Before turning to the specific theories of harm advanced by Northam we deal
with the debate between the parties as to whether an applicant was required to
show a material interest in the proceedings for purposes of intervention.
9 Competition Tribunal Rules published in GG 22025 in GN 2 on 1 February 2001.
8
[30] The merger parties argued that Northam has not adequately demonstrated a
material interest in the proposed merger as required by Tribunal Rule 46(1).10
[31] Adv Ngcukaitobi, for the merger parties, argued that the test for intervention in
merger proceedings provided in section 53(1)(c) of the Act – “if the hearing is
in terms of [merger control] … any other person whom the Tribunal recognised
as a participant” – is given teeth through Tribunal Rule 46(1)(a) – “at any time
after an initiating document is filed with the Tribunal, any person who has a
material interest in the relevant matter may apply to intervene in the Tribunal
proceedings by filing a Notice of Motion in Form CT 6, which must include a
concise statement of the nature of the person’s interest in the proceedings, and
the matters in respect of which the person will make representations”
(emphasis added).
[32] The merger parties alleged that Northam failed to demonstrate a material
interest. It is inappropriate for a potential intervenor to argue, as Northam has,
that it does not have the evidence but hopes to obtain it after gaining access to
the record.
[33] Northam, on the other hand, argued that Tribunal Rule 46(1) which requires a
party to have a material interest cannot be read to qualify the provisions of
section 53(c)(v) which do not require a party to have a material interest. At
intervention stage, all that Northam should be required to show is that its
competition and public interest concerns are genuine and plausible.
[34] Adv Le Roux stated that the test as characterised by Adv Ngcukaitobi is too
stringent an interpretation of the jurisprudence on determining the scope and
10 Rule 46(1) reads:
“At any time after an initiating document is filed with the Tribunal, any person who has a material
interest in the relevant matter may apply to intervene in the Tribunal proceedings by filing a Notice
of Motion in Form CT 6, which must –
of Motion in Form CT 6, which must –
(a) include a concise statement of the nature of the person's interest in the proceedings, and the
matters in respect of which the person will make representations; and
(b) be served on every other participant in the proceedings.”
9
substance of merger intervention. In Anglo v IDC, 11 where the CAC held as
follows, is particularly instructive on the point:
“The language of the statute is clear. There is no reference to interest at
all. The mere requirement is that a party must be recognized by the
Tribunal as a participant. The recognition could be on the basis of some
other grounds, other than an interest in the matter as stipulated in the
common law. Even if it were to be argued that the party must have an
interest, such interest is not qualified. In other words, there is no
threshold for the interest for a party to participate. In the absence of
specified criteria for participation this Court should be reluctant to read
in a test such as ‘substantial and material interest’.”12
[35] In our view, the provisions of section 53(c)(v) are clear - all that is required is
for a party to be recognised as a participant by this Tribunal.
[36] Furthermore, there is a distinction between the intervention regime in mergers
and in restricted practice proceedings. In Community Healthcare 13 the CAC
made a distinction between the intervention regime in merger proceedings and
restrictive practices. It held that the intervention regime in mergers is more
liberal than that provided in Tribunal Rule 46(1) and while the threshold for
admission may not be as high as in restrictive practices, this does not mean
that the Tribunal should let in any party seeking leave to intervene. 14 A party
seeking leave to intervene must justify such application based on evidence.
Intervention is not there simply for the asking and this is why the Tribunal is
required to enquire whether a party applying to intervene will assist in its section
12A enquiry.
11 Anglo South Africa Capital (Pty) Ltd and Others v Industrial Development Corporation of South
Africa and Another [2003] ZACAC 2; [2003] 1 CPLR 10 (CAC) (28 March 2003) (“Anglo v IDC”),
12 Anglo v IDC at p 16.
12 Anglo v IDC at p 16.
13 Community Healthcare Holdings (Pty) Ltd and Another v Competition Tribunal and Others
(44/CAC/Feb05) [2005] ZACAC 3; [2005] 1 CPLR 38 (CAC) (26 April 2005) (“Community
Healthcare”).
14 Community Healthcare at para 28.
10
[37] This is a matter of the Tribunal’s discretion. In Anglo v IDC the CAC confirmed
this and that while such discretion was wide it was not unfettered. It must be
exercised judicially in accordance with the rules of reason and justice.15
[38] In the recent case of ADC v Digital Titan, 16 the CAC confirmed the principles
enunciated in Anglo v IDC and Community Healthcare and held that when the
Tribunal assesses whether a party is able to assist it in its section 12A enquiry
it must take into account–
“the likelihood of assistance promised by the prospective intervenor,
balanced against the consequences of the intervention in terms of the
expedition and resolution of the proceedings. If the likelihood of the
prospective intervener is doubtful, while the impact of the intervention is
more than likely to impact on the expedition of the proceedings then the
Tribunal should decline intervention or curtail its extent.”17
[39] This much is now settled law.
[40] Notwithstanding its status of a rival bidder, Northam has raised theories of harm
and we turn now to consider the merits of these.
Vertical concerns
[41] As we stated earlier, Northam’s vertical concerns are located in what it alleges
are the interests of junior miners (which it purports to represent).
[42] It argued that there were several errors in the Commission’s market definition
which led to its vertical assessment being deficient. The Commission had
incorrectly conflated the smelting of primary concentrate stage and refining of
PGM concentrate and had defined both as international markets.
15 Anglo v IDC at p 22.
16 Africa Data Centres SA Development (Pty) Ltd v Digital Titan (Pty) Ltd and Others
(200/CAC/May22) [2022] ZACAC 6 (8 July 2022) (“ADC v Digital Titan”).
17 ADC v Digital Titan at para 17 (emphasis added).
11
42.1 As opposed to two, there are three functional stages of the PGM
production cycle. The Commission’s recommendation incorrectly
conflates smelting in stage 2, for which there is local South African
trade in respect of primary concentrate (this stage 2 input); and refining
in stage 3, for which there is international trade of PGM concentrate
(this stage 3 input).
42.2 Primary concentrate is too heavy to transport over large distances.
Therefore, junior minors are constrained by the South African options
available namely Amplats, Implats, Sibanye and Northam (with
Northam holding 5% market share with the next rival holding over
10%).
42.3 The Commission, in concluding that the market for primary
concentrate was international, also misinterpreted Sibanye/Lonmin; 18
it is not precedent for an international upstream market. Rather, the
Tribunal in the Sibanye/Lonmin decision found that the market for the
junior miner’s production of primary concentrate was local.19
18 Sibanye Gold Limited (T/A Sibanye-Stillwater) v Lonmin PLC (LM315Mar18) [2018] ZACT 102 (13
December 2018).
19 The Tribunal in Sibanye (id.) explained:
“the proposed transaction leads to horizontal overlaps in the upstream regional (SADC)
market for the production of different PGM concentrates as well as the market for the
12
42.4 Regarding the second level of the supply chain – smelting, converting
and base metal removal – the Commission has limited its consideration
to platinum, palladium and rhodium (“3E metals”); paying insufficient
attention to the other PGMs and other valuable by-products, such as
nickel and copper, that are also extracted for sale at this level.
[43] Northam argued that due to its participation at this level of the value chain, it
has vital insight into local market dynamics.
[44] Related thereto is Northam’s concern that the Commission did not review the
contracts that junior miners have with smelters, namely the off-take / return of
metal / purchase of concentrate (“POC”) agreements.
[45] The Commission is also mistakenly assessed the smelting market and its
associated capacity issues, says Northam. For example, by suggesting that
Kellplant is a purchaser of significant amounts of primary concentrate for
processing.
[46] Pre-merger RBPlats uses Amplats for processing its primary concentrate.
Northam claims that the proposed merger will create incentives for Implats to
shift as much of RBPlats’ present primary concentrate output as is feasible to
Implats' own downstream smelting facilities. If Implats were to take on RBPlats’
concentrate, this would result in the displacement of junior miners who are
currently using Implats. They would thus have fewer options available and
would likely pay higher prices because Implats traditionally offered better terms
and conditions to junior miners.
[47] This in turn would result in significant reduction in competition in PGM
processing and refining markets which will reduce furthermore the incentives
for junior miners to invest, enter, and develop at the level of mining and
concentrating PGMs.
production and supply of other precious metals … that are considered by-products to the
PGM production process” (at para 17).
13
[48] According to Northam, the Commission rejected on an incorrect basis
Northam's submission that the proposed merger will result in foreclosure of
smelting capacity for the local South African trade. The Commission had
calculated Implats’ market share at the refining level as 17% PGM refining
leaving 83% in the market for junior miners to sell PGM concentrate to 20 – a
finding based on the Commission conflating the smelting and refining stages
into one market.
[49] Northam argued further that it could assist the Tribunal in the merger
proceedings by providing and eliciting foundational facts which could lead to
anti-competitive effects whereby: a move of RBPlats’ primary concentrate from
Amplats to Implats might not free up that much capacity for junior miners at
Amplats; even a neat shift of primary concentrate volume from one firm to
another can harm competition; and that exhausting Implats' primary
concentrate processing capacity is bad for competition from the perspective of
these customers and perhaps overall.
[50] Northam submitted that even if junior miners could obtain alternative smelting
or refining capacity, they would not be able to access these on the same terms
as those offered by Implats, which were more favourable than others.21
[51] This theoretical harm to junior miners put forward by Northam however is
rebutted by both the merger parties and the Commission.
[52] Furthermore, it is clear from the Commission’s recommendation that it did not
overlook the likelihood of post-merger foreclosure for junior miners. The
Commission in its investigation found, primary concentrate processing was
subject to contracts of long duration, and contracts for processing of PGM
concentrate could at times be for life of mine. Hence third parties such as junior
miners are: (i) contractually protected; (ii) account for very small volumes for
which there would be competing options for processing (including Anglo
which there would be competing options for processing (including Anglo
20 Northam citing the Commission’s Recommendation at paragraph 205, (Northam Founding Affidavit
(27 May 2022) hearing bundle p109-110 para 73-74).
21 Northam Founding Affidavit hearing bundle p113-114 paras 84.3, 87 and 88.
14
Platinum, Sibanye and Northam, with Trafigura also having offered Platreef
processing capacity); and (iii) are too small to affect the downstream price in a
manner sufficient to incentivise the merged entity to foreclose them. If
concentrate is directed from one processor to another, it will open up additional
capacity at the processor from which it is being moved.
[53] Hence at a structural level there would be no loss of capacity. If there was any
foreclosure at all which was unlikely, this was likely to be very insignificant.
[54] The merger parties put up factual evidence to demonstrate why foreclosure of
junior miners was unlikely to occur. Meroonisha Kerber, Implats’ CFO22 in her
answering affidavit to this application, averred that even if there was an
incentive (for argument’s sake) on the part of Implats to move RBPlats primary
concentrate away from Amplats to Implats post-merger this could only happen
at the earliest in 2027. 23 Furthermore, such a move would, firstly, free up
capacity at Amplats. Secondly, Northam’s theory of harm ignores Implats’
availability of significant additional domestic capacity as there is anticipated
decrease in output of Implats’ Impala Rustenburg mine. Implats has already
announced its planned increase in capacity.24
[55] Even if, as argued by Northam, Implats had traditionally given better contractual
terms and conditions to specific PGM miners (which Northam has not proved
that this holds true for all PGM miners), Implats would retain the capacity and
desire to do so, because Implats is increasing capacity and has no incentive to
keep this capacity from third-party miners.
[56] Northam in its replying affidavit did not dispute this evidence. However, it went
on to challenge the Commission’s conclusion that the transfer of volumes from
Amplats to Implats would not result in an overall reduction in capacity on the
basis that the Commission’s calculations did not take into account that:
22 Chief Financial Officer.
22 Chief Financial Officer.
23 Implats Answering Affidavit (31 May 2022) hearing bundle p168-169 paras 30 and 33.
24 Implats Answering Affidavit hearing bundle p 162-163 para 16.2.
15
56.1 Capacity utilisation is not a zero-sum game. A smelter’s capacity
depends on the mix of different primary concentrates being fed into the
smelter, and “may be over/understated” according to the Commission;
56.2 It does not take account of the fact that spare capacity is not even
between firms, and a shift may change the distribution of spare capacity
and allow one firm to unduly influence price where it is the firm with the
only available capacity and can therefore determine price (as a demand
monopsonist); and
56.3 It does not take account of new, unallocated volumes of primary
concentrate, which are not tied into an agreement with any smelting
and concentrating firm. These new and unallocated volumes may
emerge in the future with the discovery of reserves or the issue of
mining rights.
[57] The last point is completely speculative – how could the Commission take into
account “new and unallocated volumes” which may or may not emerge in the
future. As to the issue of distribution of spare capacity and the ability of one
firm to unduly influence price, Northam could not provide any facts to support
the likelihood of this occurring as a result of this merger.
[58] Implats, on the other hand, was able to show that it would have spare capacity
and as a consequence would be incentivised to make this available to third
parties.
[59] However, we do appreciate the fact that Northam occupies that unique
intermediate position in the PGM market and that it could assist the Tribunal in
gaining deeper insights.
16
Horizontal concerns
[60] Northam accused the Commission of simply accepting the merger parties’ say-
so that post-merger there would be no shaft closures and it ought not to have
accepted Implats’ evidence regarding efficiencies. 25 Northam posits that the
merger would likely result in shaft closures.
[61] However, Northam does not say why the Commission ought not to have
accepted this and why the merger parties’ commitments not to close shafts
post-merger should be doubted.
[62] If the counterfactual is indeed that there will be mine closure, Northam has
produced nothing to refute Implats’ evidence on this. In argument, Northam’s
representatives averred that they will provide facts which demonstrate Implats’
past approach to closing down mines and reducing production; and, by way of
cross-examination of Implats’ witness, would assist in determining if the
counterfactual is the one Implats contends.26
[63] Mere arguments put up by legal representatives as to what cross-examination
of witnesses might elicit does not suffice to establish a plausible theory of harm
for purposes of intervention.
[64] In any event, the Commission is entitled to rely on submissions and
commitments made by merger parties in its assessment, which if found to be
false and misleading could form the basis of a revocation of the merger.
[65] Northam argued further that the Commission’s emphasis on only the 3E PGM
metals and ignoring nickel and copper failed to fully explore the competitive
dynamics of the market. But an examination of the Commission’s analysis
demonstrates that the emphasis on the 3E PGM metals, and not including
copper and nickel in the competition assessment, has a rational basis. These
are by-products of PGM mining and are not the merging parties’ main business.
25 Tribunal Transcript of Proceedings LM156Dec21/INT045May22 (8 June 2022) p45-46.
26 Northam Note for Argument (8 June 2022) at para 32.
17
Being by-products of PGM production the quantities in which these other metals
are mined as part of the PGM production process is insignificant relative to the
markets in which they are primarily sold. The Commission found that the
merging parties’ estimated post-merger market shares in the supply of gold is
0.75%, 0.78% in nickel %, copper 0.06%, and cobalt 0.12%. Thus, not much
store could be put on Northam’s alleged basis of competitive dynamics in this
regard.
[66] Finally, Northam submits that RBPlats is one of the most promising junior
miners and we should guard against Implats’ – one of the big three - acquiring
it.
[67] In reiterating this point, Northam emphasises the gap between the top 3 –
Amplats, Sibanye and Implats – and the rest of the market. However, these
concerns fail to take account of the fact that, on Northam’s own version, the
combined shares are only 20% with an increment of 3% in the market for the
share of the global supply of primary 3E concentrate from South African
producers for 2021.27
[68] It was argued further that the test on competitive effects also includes an
analysis of whether competition will be prevented (not only lessened) and that
by this standard it is would be significant if RBPlats’ exit would result in the
prevention of any competitive constraint. 28 These submissions were put up
without any facts about the type of constraints placed by RBPlats on Implats in
the first instance; and how the merger would somehow prevent RBPlats from
remaining a competitive constraint. In light of Northam’s own ambition to
acquire RBPlats, one would have expected to it demonstrate a little more
knowledge of the alleged constraints imposed by RBPlats on Implats or why its
removal would result in a prevention of competitive constraints. Ultimately, its
concern was summarised in the submission that the “the opportunity for a
27 Northam Note for Argument at para 26 and Transcript at p47.
28 Transcript at p18.
18
potentially smaller mining house (itself) to purchase the best junior miner is
lost”.29
Public interest concerns
[69] Northam posits its interest as a shareholder as a strength because Northam
can provide guidance on the most workable version of the proposed RBPlats
employee share ownership scheme (“ESOS”). It argued that Northam's input
on these issues will help the Tribunal because as a shareholder its consent or
approval would need to be obtained for the implantation of the proposed RBPlat
ESOS.
[70] It was not completely clear to us whether Northam was suggesting that it would
prevent the implementation of the proposed ESOS, which if true would be
contrary to the public interest.
[71] However, the merger parties submitted that the proposed ESOS was adopted
pursuant to an entirely independent and separate process between RBPlats
and the relevant trade union; and RBPlats’ management and the trade unions
will be responsible for the implementation thereof.
Insufficient consultation
[72] There were several residual complaints by Northam about obstructiveness on
the part of the RBPlats’ independent board. The merger parties on the other
hand pointed out that Northam could have stolen a march on Implats’ offer if it
made an offer to all shareholders (as Implats had done) but it had not done
so.30 Instead it has elected to derail the Implats/RBPlats transaction. While all
these matters emphasise the hostility between the rival bidders, it is sufficient
for our purposes to note that Northam is a rival bidder and has attempted to
29 Northam Note for Argument at para 30 and footnote 34.
30 RBPlats Answering Affidavit (31 May 2022) hearing bundle p184 para 13.
19
suggest we delay these proceedings to await the Commission’s investigation
of its own notification.31
[73] This leaves us with the last ground relied upon by Northam to justify its
intervention application namely that it had not been afforded sufficient time to
make submissions to the Commission during its investigation.
[74] The Commission in its answering papers set out details of its engagements with
Northam, referring to specific dates and the nature of the engagement it had
with Northam.32 All of these are included in the merger record.
[75] The Commission initiated contact with Northam in pursuit of investigation less
than a month after merger notification on 15 December 2022. 33 Where
Northam’s operatives were unavailable, the Commission issued formal
information request to Northam on 20 January 2022 and Northam first
submitted its merger concerns on 9 February 2022. Amid quarrels between
parties regarding the confidential nature of their submissions, the Commission
was only able to share the merger parties’ response to Northam’s concerns
with Northam by 9 March 2022. On 17 March 2022, Northam submitted a more
substantive overview of its concerns but, before a non-confidential version
could be generated to put to the merger parties, the Commission recommended
the merger’s conditional approval on 26 April 2022.34
[76] The Commission also avers that it had investigated Northam’s alleged theories
of harm and found them to be unlikely. We have already dealt with those under
the relevant theories of harm.
31 Northam Founding Affidavit at para 63 and Northam Replying Affidavit at para 8.4. This point is
later disavowed during argument (see Transcript at p7).
32 The Commission did not oppose this application and abides with the Tribunal’s decision; but it filed
an explanatory affidavit detailing the steps taken to investigate the merger and engage with Northam -
rejecting the allegations that it did not provide Northam with sufficient time to make submissions and
did not properly engage with Northam’s submissions.
33 Keeping in mind also that the Commission was closed over the holiday season from 23 December
2021 until 3 January 2022.
34 Commission Answering Affidavit (2 June 2022) hearing bundle p275-280 paras 10-35.
20
[77] What is patently evident from the Commission’s affidavit is that there is no basis
for Northam to claim that it had not been afforded sufficient time to make
meaningful submissions to the Commission.
[78] It is appropriate to emphasise here that the Act places the obligation of
investigation squarely on the shoulders of the Commission. If the Commission
would neglect to consult relevant third parties adequately, this would only serve
to suggest that the Commission’s investigation was rushed and inadequate
(which is what it ultimately argued by Northam). But even if arguably Northam
had some basis to complain about deficiencies in the Commission’s
engagement with it (which we do not accept), Northam was unable to
demonstrate how it or the junior miners on behalf of whom it seeks to intervene,
were prejudiced as a result. The Commission has, as is evident in its report,
assessed any likely harm to junior miners.
CONCLUSION
[79] In exercising our discretion whether to permit Northam participation rights, if
any, we engaged in weighing up the following factors.
[80] The first is to note that the PGM mining industry, like the gold mining industry
has been the subject of close interrogation by the competition agencies. This
sector is familiar to competition agencies the world over.
[81] As discussed earlier, Northam’s alleged horizontal effects of alleged shaft
closures and questionable efficiencies was completely speculative. Its
suggestion that the Commission’s competition assessment was defective was
not supported by the findings (among others) on the low market shares.
[82] As to the alleged vertical theory of harm, Northam’s foreclosure of capacity for
third parties (junior miners) was challenged by the Commission’s assessment
that capacity arrangements were governed by contracts and the unlikelihood of
foreclosure. Its theory of foreclosure was further weakened by Implats’
21
evidence that any move away from Amplats could only occur in 2027 (if at all)
and of increased capacity in its own processor.
[83] Overall, we found that Northam’s horizontal effects had little to offer. On the
vertical, while its theory was challenged by both the Commission and Implats,
we took cognisance of its unique position as a mid-level miner and that it might
be able to provide. Its central concern relates to the potential effects of the
merger on junior minors, including concerns related to remaining smelting
capacity. As both customer of the larger players and supplier to the junior
miners, Northam presumably has insights related to, in particular, POC, offtake
and smelting agreements. This could assist the Tribunal in its deliberations.
[84] On the public interest grounds, we found that Northam has little to add.
Northam as shareholder can provide input into the ESOS process in that
capacity if it so wishes. Northam could not point to any other public interest
concerns which were not adequately addressed by the proposed conditions to
the merger. It was not clear in which way Northam could meaningfully
contribute to this process as an intervenor in these proceedings.
[85] The fact that Northam is a rival bidder, is relevant to the exercise of our
discretion in this matter, balanced against the possible assistance an intervenor
could provide us with.
[86] As a rival bidder for RBPlats, Northam has every incentive to delay and scupper
the deal. It is aware that Implats’ public offer is time sensitive with a longstop
date of 8 August 2022. 35 Furthermore Northam as a rival bidder also stands
the most to gain, commercially, than any other market participant, from access
to Implats’ confidential information, which in this case would include
competitively sensitive information.
[87] Northam conceded that it was a rival bidder. It went as far as suggesting that
the Tribunal ought to delay the assessment of the proposed merger, wait until
the Tribunal ought to delay the assessment of the proposed merger, wait until
35Annexure “PB1”: “Implats’ SENS announcement of Friday, 27 May 2022” Northam Replying Affidavit
hearing bundle p308 para 2(d).
22
the Commission has completed its assessment of the Northam proposed
merger and then somehow consolidate the two matters into one hearing at
some future date.36 (A point which is later disavowed during argument.37)
[88] There is no certainty that Northam will be allowed to submit a separate merger
filing under Commission Rule 28, so the Commission’s investigation into its
transaction has not taken place. Moreover, there is no legal basis for such a
consolidation of merger proceedings at the Tribunal between two rivals as if
this was a bidding process for a licence. The Tribunal is enjoined to assess the
effects of a particular merger as set out in section 12A, and not to choose
between winners and losers in a bidding war.
[89] However, it may be that Northam, from its own experiences and its unique
position in the market could assist the Tribunal in improving its understanding
of the market dynamics at a local level. Recall that Northam is a miner that
straddles the gap between the junior and the major players. As a mid-sized
miner, it is both a customer of the larger players and a supplier to the smaller
junior players.
[90] In balancing the potential delays that could occasion the expedition of
proceedings, especially in the context of a public offer, were Northam to be
granted the full suite of procedural rights against the degree of assistance that
Northam as a mid-level miner, who is both customer of the larger players and
supplier to the junior miners, could provide us with, we have limited its
participation in such a way as to grant it entry on the issues that will be of most
assistance to Tribunal’s deliberation, while limiting Northam’s access to the
confidential recommendation.
36 Northam Founding Affidavit hearing bundle p25 para 63:
“I note by way of introduction that concerning Northam’s interests as a suitor and its Rule 28
Application, there are public policy reasons of regulatory and public resource efficiency, as
Application, there are public policy reasons of regulatory and public resource efficiency, as
well as reasons of convenience and expedition, for the Tribunal to hear the two merger
applications concurrently or by way of consolidation. There are resource conservation
reasons for doing this as well as substantive reasons for doing this: …”
37 Adv Le Roux: “But nowhere do we insist that you consolidate, and hear the two transactions
together. Nowhere do we say that you should wait until our transaction is ripe for hearing. That is all
premature for today.” (Transcript at p7.)
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[91] Accordingly, we granted Northam limited rights to participate in the large
merger proceedings between hearing as per the following order:
24
ORDER
HAVING read the documents placed on record and having heard counsel for the
parties, the Tribunal makes the following order:
[1] The applicant, Northam Platinum Holdings Limited (“Northam”) is permitted to
participate in the large merger proceedings before the Tribunal under the above
case number in terms of section 53(c) of the Competition Act No 89 of 1998.
[2] Northam’s participation in the aforementioned large merger proceedings shall
be limited to making written and oral submissions on the following potential
theories of harm:
2.1 the vertical effects of the proposed merger, including the effect on
competition in the local upstream market for the production and sale of
primary concentrate; and
2.2 the extent to which the merger effects could be prejudicial to junior
miners in South Africa.
[3] Northam's participation in the merger hearing before the Tribunal shall include
the right:
3.1 of Northam's independent legal representatives and economic advisors
(“Northam’s advisors”) to access the confidential version of the
Competition Commission of South Africa’s (“Commission”) large
merger recommendations: subject to Northam’s advisors furnishing the
appropriate confidentiality undertakings and the Commission obtaining
the consent of the information’s owner, where required;
3.2 to make written submissions, within fifteen (15) business days of this
order;
3.3 to make oral submissions not exceeding one (1) hour at the merger
hearing, the date of which will be decided in due course.
[4] Any party who wishes to respond to Northam’s written submissions must do so
within ten (10) business days of receipt of Northam’s submissions.
25
[5] Northam's participation as detailed above will be subject to adherence by
Northam to any timetable or time allocation set by the Tribunal for the large
merger proceedings before it.
[6] There is no order as to costs.
20 July 2022
Ms Yasmin Carrim Date
Mr Enver Daniels and Prof Imraan I. Valodia concurring.
Tribunal case managers: Mpumelelo Tshabalala and Sinethemba Mbeki
For Northam: Adv Michelle Le Roux assisted by Adv Kerry
Williams instructed by Webber Wentzel
For the merger parties: Adv Tembeka Ngcukaitobi assisted by Adv
Sarah Pudifin-Jones instructed by Northam for
the merger parties
For the Commission: Ms Maya Swart assisted by Beverly Chomela
and Omphemetse Kgaladi