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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM185Feb23
In the matter between:
KOMATSU MINING CORP. Acquiring Firm
and
GHH GROUP GMBH Target Firm
Approval
[1] On 25 July 2023, the Competition Tribunal conditionally approved a large merger
in which Komatsu Mining Group Corp ( Komatsu), intends to acquire 100% of
the issued shares of GHH Group GMBH (the GHH Group).
Panel: : Prof. Imraan Valodia (Presiding Member)
: Adv Geoff Budlender SC (Tribunal Member)
Prof. Fiona Tregenna (Tribunal Member)
Heard on
Decided on
: 24 July 2023
25 July 2023
Order issued on : 25 July 2023
Reasons issued on : 02 August 2023
REASONS FOR DECISION
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Parties to the transaction and their activities
Primary acquiring firm
[2] The primary acquiring firm is Komatsu. Komatsu is a company incorporated in
terms of the laws of the United States of America. K omatsu is ultimately
controlled by K.K Komatsu Seisakusho ( Komatsu Seisakusho), a public
company listed on the Tokyo Stock Exchange. As a publicly listed entity,
Komatsu Seisakusho is not controlled by any firm or any individual shareholder.
[3] Komatsu, Komatsu Se isakusho, all the firms controlled by K omatsu and
Komatsu Seisakusho , all the firms controlling K omatsu, and all of the firms
controlled by those firms will be collectively referred to as the “ Acquiring
Group”.
[4] The Acquiring Group is a global manufacturer of construction, mining and
forestry equipment as well as diesel engines and industrial machinery. In relation
to its mining equipment activities, the Acquiring Group develops and
manufactures equipment used for surface mining ope rations1 and for
underground hard and soft rock mining 2 operations. Of relevance to this
transaction is the Acquiring Group’s underground mining equipment
manufacturing activities.
[5] In South Africa, The Acquiring Group is active through its control of Komatsu
Africa Holdings Proprietary Limited, Modular Mining Systems Proprietary
Limited, Mine Site Technologies Proprietary Limited, MW Monitoring Proprietary
Limited, Komatsu South Africa Proprietary Limited ( Komatsu SA), Immersive
Technologies Proprietary Limited and Joy Global (Africa) Proprietary Limited.
1 Equipment such as dozers, draglines, excavators etc.
2 Equipment such as such as shaft sinking equipment, bolters, drills and underground hard rock
haulage.
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Primary target firm
[6] The primary target firm is the GHH Group. The GHH Group is wholly controlled
by Schmidt, Kranz & Co. Gesellschaft mit beschrankter Haftung ( Schmidt).
Schmidt is a company incorporated in terms of the laws of Germany. In South
Africa, the GHH Group is active through Mine Machines SA Proprietary Limited,
PYT Props 348 Proprietary Limited, GHH Mining Machines Holdings Proprietary
Limited (GHHMM), Mine Equipment Investments Proprietary Limited, GHHMM
Manufacturing Proprietary Limited, GHH MM Technical Services Proprietary
Limited and GHH Mining Machines Proprietary Limited.
[7] Globally, the GHH Group develops and manufactures vehicles for underground
mining and tunnelling activities. Unlike Komatsu, the GHH Group is not active in
the provision of any surface mining.
Proposed transaction and rationale
[8] In terms of the proposed transaction , Komatsu intends to acquire 100% of the
issued share capital of the GHH Group. Post transaction, Komatsu will exercise
sole control over the GHH Group.
[9] In terms of the rationale, Komatsu submits that historically, it has focused on
equipment for soft rock mining and, as it looks into the future, it seeks to increase
its footprint in underground hard rock mining. To this end, the proposed
transaction presents it with an opportunity to broaden and expand its offering
and accelerate new product development.
Relevant market and impact on competition
[10] The Competition Commission (Commission) considered the South African
activities of the merging parties and concluded that while the merging parties
both offer underground mining activities, no firm within the Acquiring Group
provides underground mining equipment or renders any mining services that can
be deemed interchangeable or substitutable with those offered by the GHH
Group in South Africa.
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Product market
[11] The Commi ssion found that the proposed transaction will result in a limited
horizontal overlap in the market for the provision of on and on underground
mining Load Haul Dumpers3 (LHDs).
[12] As part of its analysis, the Commission found that there is no pre -existing
relationship or vertical overlap arising as a result of the proposed transaction.
[13] The Commission, i n accordance with the Tribunal’s approach in the Komatsu
America Corp. and Joy Global Inc 4 merger concluded that the market for the
provision of underground mining equipment and the market for the provision of
surface mining equipment are separate and distinct markets and assessed the
market for the provision of underground mining separately. In addition, and in
accordance with the European Commission’s approach in the merger between
Caterpillar and Bucyrus5 where it was found that different pieces of underground
mining equipment such as hard rock LHDs, soft rock LHDs, underground mining
trucks and soft rock underground haulage vehicles are different and separate
markets, the Commission assessed the market for the provision of ton LHDs
and the market for the provision of on LHDs as separate markets.
3 Load Haul Dumpers are one of the main ore transporting machineries used in underground mining
industry.
4 Tribunal Case No. LM174Nov16.
5 EC Case No. COMP/M.6097.
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Geographic market
[14]
The Commission
considered the effect of the proposed transaction
in the market
for the provision of
on LHDs and in the market for the provision of
on LHDs
on a national basis
.
[15]
The merging parties submitted that the proposed transaction will not result in
any substantial lessening
or prevention of competition in any market
because,
as stated earlier,
Given this, the merging
parties submitted that
the GHH Group
’
s market share
in the market for the
provision of
and
LH
Ds
in the South African market is
[16]
Although the Commission was unable to perform its own market share
calculation
s
due to
a
lack of publicly available information
and
independent
sources, it
relied
on and accepted
the merging parties’ market share estimates
and sales information and found that
the GHH Group in the
South African market
and
also found that Komatsu’s entry in the South African
market
is unlikely to change the competitive landscape of the
on and
on
LHDs
markets
given the GHH Group’s market share in the South African
market
i
s
nominal.
[17]
The Commis
sion also considered the size of the merging parties at a global
level. The merging parties submitted that n
o publicly available market share
information covers the mar
ket for the provision of
on LHDs and the market for
the provision of
ton LHDs
. However, the merging parties estimated that the
merged entity
will have an estimated market share of with an accretion of
in the global market
.
[18]
The
Commission’s
previous investigations found that the countervailing power
of customers in the mining sector is high as customers
(many of which are
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multinationals) exercise significant countervailing buyer power in negotiations
often resulting in conditions that are more advantageous to the customer than
the supplier. Further, the Commission found that there is no accretion in the
market share as a result of the proposed transaction in the South African market
given that Komatsu does not currently have any on and on underground
mining LHDs in South Africa.
[19] In addition to the above, the commission received no competition concerns from
customers and competitors of the merging parties.
[20] Given the above, the Commission found that the proposed transaction is unlikely
to substantially prevent or lessen competition in any relevant market.
Public interest
Employment
[21] The merging parties submitted that the proposed transaction will not give rise to
any job losses in South Africa. In assessing the effect of the proposed
transaction on employment, the Commission engaged with Solidarity and
NUMSA who represent a substantial number of Komatsu’s employees. NUMSA
and Solidarity raised no employment concerns with the proposed transaction.
[22] The GHH Group’s employees are not represented by any trade union. The
Commission engaged with an employee representative who raised no concerns
about the proposed transaction.
[23] The Commission found that the proposed transaction is unlikely to have a
negative impact on employment.
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Effect on the promotion of a greater spread of ownership, in particular, to increase
the levels of ownership by historically disadvantaged persons (HDPs) and workers in
firms in the market
[24] At present, GHHMM has an apprenticeship programme in place. Post
transaction, Komatsu will extend the apprenticeship programme beyond
GHHMM to include the broader GHH Group. This, by agreement between the
merging parties and the Commission , was made a condition of the proposed
transaction’s approval.
Conclusion
[25] In light of the above, we conclude that the proposed transaction is unlikely to
substantially prevent or lessen competition in any relevant market. In addition,
no significant public interest issues arise from the proposed transaction.
[26] Accordingly, we approve the proposed transaction subject to the condition
attached to the order.
02 August 2023
Prof. Imraan Valodia
Date
Prof. Fiona Tregenna and Adv. Geoff Budlender SC concurring.
Tribunal case manager
: Ofentse Motshudi
For the merging parties
: Judd Lurie and Disebo Leokaoke of Bowmans
Attorneys.
For the Commission
: Zanele Hadebe.
ANNEXURE A
IN THE LARGE MERGER BETWEEN:
KOMATSU MINING CORP.
AND
GHH GROUP GMBH
CASE NUMBER: LM185FEB23
1. DEFINITIONS
In this document, the expressions used below will have the appropriate meaning assigned to
them and the following and related expressions will bear the following meaning:
“Apprentices” means participants in the Apprenticeship Programme who meet the Eligibility
Criteria;
“Apprenticeship Programme” means the Apprenticeship training programme to be
extended across GHH South Africa by no later than the Apprenticeship Programme Extension
Date;
“Apprenticeship Programme Extension Date” means 12 (twelve) months from the
Implementation Date;
“Approval Date” means the date referred to on which the Tribunal’s Merger clearance
certificate (Notice CT10) ;
“Artisan” means auto -electricians, boiler makers, diesel mechanics, fitter and tuner,
millwrights, welders and/or others with skilled trade qualifications;
“Commission” means the Competition Commission of South Africa, a statutory body
established in terms of section 19 of the Competition Act;
“Commission Rules” means the Rules for the Conduct of Proceedings in the Commission;
“Competition Act” means the Competition Act, No. 89 of 1998, as amended;
“Conditions” means the conditions in this Annexure A;
“Days” means any day that is not a Saturday, Sunday or public holiday in South Africa;
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“Eligibility Criteria” means persons who are at least 16 (sixteen) years of age, have at least
a Grade 10 (ten) school qualification or equivalent NQF level 2 qualification recognised by the
Department of Higher Education and Training, and who are: (i) staff of GHH South Africa who
are Artisan assistants, or other staff wishing to obtain Artisan skills, including their family
members; or (ii) candidates who have completed a learnership programme with GHHMM or
GHH Technical; or (iii) members of the public, and which criteria may be amended from time
to time.
“GHH” means GHH Group GmbH;
“GHH Manufacturing” means GHH Manufacturing (Pty) Ltd;
“GHHMM” means GHH Mining Machines (Pty) Ltd;
“GHH Technical” means GHH Technical Services (Pty) Ltd;
“GHH South Africa” means collectively GHH Manufacturing, GHHMM and GHH Technical;
“HDP” means a historically disadvantaged person as defined in section 3(2) of the
Competition Act;
“Implementation Date” means the date on which the Merger is implemented by the Merging
Parties;
“KMC” means Komatsu Mining Corp.;
“Merger” means the acquisition by KMC of GHH;
“Merging Parties” means KMC and GHH;
“South Africa” means the Republic of South Africa;
“Tribunal” means the Competition Tribunal of South Africa, a statutory body established in
terms of section 26 of the Competition Act; and
“Tribunal Rules” mean the Rules for the Conduct of Proceedings in the Tribunal.
2. TRAINING, DEVELOPMENT AND DIRECT EMPLOYMENT CREATION
GHHMM currently has an apprenticeship programme in place in which apprentices
are enrolled, reflecting a ratio apprentice for every Artisans employed.
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By no later th an the Apprenticeship Programme Extension Date, and for a period of no less
than years, KMC will extend the Apprenticeship Programme beyond GHHMM to
include GHH South Africa. In this regard, for every Artisans that GHH South Africa
employs, the Apprenticeship Program will offer a place to at least Apprentice.
KMC will also procure that:
The majority of Apprentices to be enrolled in the Apprenticeship Programme within GHH
South Africa are HDPs;
GHH South Africa, based on its organisational staffing needs, will offer no less than
% of Apprentices who have satisfactorily completed the Apprenticeship Programme
employment opportunities within GHH South Africa, thereby contributing to d irect
employment creation in South Africa; and
For Apprentices who are not offered employment opportunities, GHH South Africa
undertakes to assist, either directly or through a third -party, such Apprentices with the
drafting of their resumes and with interview skills.
The commitment in Clause 2.3.2 is subject to GHH South Africa’s operational and staffing
requirements, having regard to actual and projected financial performance and anticipated
order books.
Within 30 (thirty) Days of each anniversary of the Apprenticeship Programme Extension Date
up until the 4th (fourth) anniversary thereof, KMC shall procure that a suitable and appropriately
detailed annual report regarding compliance with this Clause 2 is provided to the Commission.
Reports shall be accompanied by an affidavit of a senior official of GHH South Africa attesting
to its accuracy.
4. MONITORING
GHH shall procure that a non -confidential version of the Conditions is circulated to staff of
GHH South Africa within 10 (ten) Days after the Approval Date, ask ing that they inform
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individuals who they may know and who would be eligible to participate in the Apprenticeship
Programme about it. As proof of compliance, GHH shall, within 5 (five) Days of the Conditions
being circulated, submit to the Commission an af fidavit by a senior official of GHH or GHH
South Africa attesting to the circulation of the Conditions to staff and provide a copy of the
notice that was circulated.
KMC shall notify the Commission in writing of the Implementation Date within 10 (ten) Day s
following its occurrence.
Reporting regarding compliance with Clause 2 will occur in line with Clause 2.5.
The Commission may request additional information from the Merging Parties, which the
Commission may reasonably deem necessary for the purposes of monitoring the extent of
compliance with these Conditions.
5. VARIATION OF CONDITIONS
The Merging Parties and/or the Commission may at any time, and on good cause shown,
apply to the Tribunal for any of the Conditions to be waived or relaxed, including any resultant
modification or substitution thereof.
6. APPARENT BREACH
If the Merging Parties appear to have breached the Conditions or if the Commission
determines that there has been an apparent breach by the Merging Parties of any of the
Conditions, this shall be dealt with in terms of Rule 39 of the Commission Rules read together
with Rule 37 of the Tribunal Rules.
7. GENERAL
All correspondence concerning these Conditions must be submitted to the following email
address: mergerconditions@compcom.co.za.