| Summary | *Competition Tribunal approves Glencore / Xstrata merger but
raises broader non-merger specific public interest concern *
* *
The Competition Tribunal has highlighted a number of trends
in coal supply in and from South Africa which “will no
doubt have an impact on Eskom’s ability to ... produce
competitively priced electricity” in its reasons for
conditionally approving the merger between Glencore
International PLC and Xstrata PLC. The Tribunal found that
although the increasing prices of thermal coal supply to the
domestic market was a very serious concern, given its effect
on electricity prices, and indeed on the entire economy, the
Glencore / Xstrata merger was unlikely to make the situation
worse. Instead, the Tribunal said, these concerns “could
be addressed by other policy instruments, if government
deems it appropriate, and if Government wants to ensure that
the strategic importance of South Africa’s coal reserves
to domestic industries is protected.” The Tribunal also
urged the Competition Commission to use its advocacy role to
engage all the relevant stakeholders, including policy
makers, to advise them on these concerns and their causes.
The Tribunal’s reasons follow its decision, on 22 January
2013, to approve the merger subject to a set of
employment-related conditions. The decision came after a
hearing that took place on 18 January 2013 in which the
Tribunal called a factual witness from Eskom, Ms Kiren
Maharaj, the Divisional Executive for the Primary Energy
Division of Eskom, to testify. She was questioned on the
potential impact of the proposed merger on Eskom’s
procurement of coal for specific coal-fired power stations,
namely the Majuba, Komati and Hendrina power stations.
Before the hearing Eskom, which generates approximately 95%
of the electricity used in South Africa and... |
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