COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM153Dec23
In the large merger between:
ETG Inputs Holdco Limited
Primary Acquiring Firms
And
Certain Assets of JPB Beleggings Proprietary
Limited
Primary Target Firm
Panel: A Wessels (Presiding Member)
I Valodia (Tribunal Member)
A Kessery (Tribunal Member)
Heard on: 26 March 2024
Date of last submission:
Order issued on:
28 March 2024
2 April 2024
Reasons Issued on: 26 April 2024
REASONS FOR DECISION
Introduction
[1] On 2 April 2024, the Competition Tribunal (“Tribunal”) conditionally approved the
large merger whereby ETG Inputs Holdco Limited (“EIHL”) intends to purchase
100% of the shares held by JPB Beleggings Proprietary Limited (“JPB”) in
Consolidated Limeworks Proprietary Limited (“ Consolidated Limeworks ”),
which includes all of the assets of Nitrophoska Proprietary Limited
(“Nitrophoska”).
[2] Post merger, EIHL will hold 100% of the shares in Consolidated Limeworks.
It
competitiontribunal
SOUTH AFRICA
Parties to the transaction and their activities
Primary acquiring firm
[3] The primary acquiring firm is EIHL, a firm based in the United Arab Emirates.
EIHL’s shareholding is held by ETC Group (“ ETG World”) (51%) and SABIC
Agri-Nutrients Company (49%). Of relevance to the proposed transaction are
EIHL’s wholly owned subsidiaries Kynoch Fertilizer (Pty) Ltd (“ Kynoch”)1 and
Sidi Parani (Pty) Ltd (“Sidi Parani”)2 (collectively referred to as “the Acquiring
Group”).
[4] The Acquiring Group is active in the blending and distribution of fertilizers to the
retail market (farmers) in South Africa and globally through Kynoch and Sidi
Parani. The Acquiring Group is an importer of Nitrogen (N), Phosphorus (P) and
Potassium ( K) based granular fertilizers into South Africa. The fertilizer is
imported, and blended and packaged for distribution in South Africa.
Primary target firm
[5] The primary target firm is 100% of the shares held by JPB in Consolidated
Limeworks including all of the assets of Nitrophoska . JPB is wholly owned by
the Beyers Trust which does not control any other firms in South Africa.
[6] JPB controls Consolidated Limeworks which in turn controls Jupu Investments
(Pty) Limited and Nitrophoska.
[7] Nitrophoska’s activities are relevant to the proposed transaction. Nitrophoska is
largely a blender and distributor of granular fertilizer to farmers in South Africa.
Description of the transaction and rationale
[8] The proposed transaction involves three steps which includes the transfer of
Nitrophoska’s assets to Consolidated Limeworks, distribution of Nitrophoska’s
1 Kynoch imports, blends, and distributes fertili zer products. The of products sold by Kynoch
are imported, blended, packaged and then sold to wholesalers / blenders and/or directly to farmers.
2 Sidi Parani supplies plant nutrition products in South Africa. In particular, it provides dry (granular)
fertilizers.
ordinary shares in Consolidated Limeworks to JPB, and EIHL’s acquisition of
the shares in Consolidated Limeworks from JPB.
[9] The transaction presents the Acquiring Group with an opportunity to expand its
capabilities. Insofar as the target firm is concerned,
the remaining trustees and the beneficiaries of the Beyers Trust wish to sell the
business following the
Competition assessment
[10] There are horizontal overlaps arising from the proposed transaction.
[11] Both merging parties are active in the sale of liquid fertili zers in South Africa .
Nitrophoska’s sales are however negligible in this market (less than % of its
revenue). Further there are sufficient alternate suppliers of liquid fertilizer.
[12] Both merging parties are also active in the blending and distribution of granular
fertilizers. After investigating the merger, t he Competition Commission
(“Commission”) confirmed that the Acquiring Group has an estimated market
share of [20-30]% of the total volume of N, P and K based granular fertili zers
imported for sales in South Africa, whereas Nitrophoska has a [0-10]% market
share.
[13] In addition, there are numerous other competitors active in the distribution of
granular fertilizers and approximately 40 to 50 distributors nationally.
[14] Even though there is no overlap between the merging parties in the upstream
market for importing individual straights of N, P and K based granular fertili zer
products, the Commission noted that the Acquiring Group has been involved in
at least three transactions involving the sale of fertilizer products since 2019.
After considering the market shares of the Acquiring Group 3 as well as the
3 The Acquiring Group had a market share of [20-30]% for the importation of N based granular fertilizers,
[10-20]% for P based granular fertilizers, and [20-30]% for K based granular fertilizers.
I
number of alternate suppliers in each individual straight of granular fertilizer,
the Commission found that there were no competition concerns.
[15] We note that the merging parties have occasionally sold granular fertilizer to
each other for wholesale purposes, on an ad hoc and spot sale basis. They did
not sell to each other Given the limited quantities of
granular fertilizer purchased and the ad hoc supply, the proposed transaction
does not give rise to any foreclosure concerns.
[16] On this basis, we are of the view that the proposed transaction is unlikely to
substantially lessen or prevent competition in any market in South Africa.
Public interest
Employment
[17] The merging parties submitted that th e proposed transaction will not result in
any adverse effect on employment and there will be no job losses as a result of
the proposed transaction.
[18] We are of the view that the proposed transaction is unlikely to raise employment
concerns.
Spread of ownership
[19] Consolidated Limeworks, Jupu and Nitrophoska do not have any ownership by
historically disadvantaged persons (“HDPs”).
[20] The merging parties submitted that post-merger, the target firm will form part of
the Acquiring Group, where the Public Investment Corporation Ltd (“PIC”) holds
% in ETG World on behalf of the Government Employees Pension Fund
(“GEPF”). Consequently, the merging parties relied on the indirect GEPF
shareholding as the basis for submitting that the proposed transaction promotes
a greater spread of ownership and that the target firm will have a % ownership
by HDPs. The Commission disagreed with the merging parties.
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[21] The merging parties nevertheless committed (as reflected in the conditions
attached hereto as Annexure A ) to spending the following amounts over a
period of three years after the implementation date of the merger:
21.1 targeted spend on enterprise and supplier development, by way of
monetary contributions in favour of HDPs in the agricultural sector in
the Western Cape and surrounding areas, of at least ZAR
per annum;
21.2 targeted spend on socio-economic development, comprising initiatives
with the objective of facilitating sustainable access to the economy in
the Western Cape and surrounding areas and specifically for HDPs in
the agricultural sector, of at least ZAR per annum; and
21.3 spend on skills development of at least ZAR per annum.
These initiatives will be directed towards skills development in the
agricultural sector and be applied for the benefit of HDPs in the Western
Cape and surrounding areas.
[22] Based on the above, we do not find it necessary to conclude on whether the
merger promotes a greater spread of ownership.
Conclusion on public interest
[23] We are not aware of any other public interest concerns arising in this case .
Based on the above, we are of the view that the proposed transaction does not
raise any public interest concerns.
Third party views
[24] No third parties expressed concerns about the proposed merger to the Tribunal.4
4 Fertiva (Pty) Ltd (Fertiva), a wholesale supplier of granular fertilizers to the merging parties, did not
express concerns regarding the proposed transaction but submitted to the Commission that in order to
ensure consistency in the industry, remedies imposed on the merging parties must be the same as the
public interest remedies which were imposed in the merger involving Fertiva (under Commission case
number 2023Jan0034). The remedies in this case was considered against the facts and circumstances
of the proposed transaction.
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Conclusion
[25] For the reasons set out above, we conclude that the proposed transaction is
unlikely to substantially prevent or lessen competition in any relevant market
and does not raise any significant competition or public interest concerns.
[26) We therefore approve the proposed transaction subject to the conditions
attached hereto as Annexure A.
Signed by:Anisa Kessery
Signed at:2024-04-26 18:57: 13 +02:00
Reason:Witnesslng Anisa Kessery
Adv. Anisa Kessery
26 April 2024
Date
Mr Andreas Wessels and Prof. lmraan Valodia concurring
Tribunal Case Manager:
For the Merging Parties:
For the Commission:
Sinethemba Mbeki
Katherine McLean and Judd Lurie of Bowmans
Attorneys
Raksha Darji, Grashum Mutizwa, Wiri Gumbie