Upcoming Tribunal cases for January 2016

 

Competition Tribunal hearings to diarise for January 2016

 

Abuse of dominance in vulnerable sectors by merger –  (January 12) Imerys vs Andalusite  

(NOTE: Witness statements and submissions from parties available on the Competition Tribunal website -  http://www.comptrib.co.za/)

This case was referred to the Competition Tribunal after the Competition Commission, in April last year, prohibited the intermediate merger of Imerys South Africa (Pty) Ltd (Imerys) and Andalusite Resources (Pty) Ltd (Andalusite Resources). It did so on the grounds that the two companies were the only miners and suppliers of andalusite, used in the production of steel, aluminum, cement and bricks.

What is Andalusite and why is it important, according to Commission?

 Andalusite forms part of the alumina-silicates group of compounds that possess heat resistant properties and are widely used in high-temperature industrial processes e.g. in furnaces, kilns, crucibles and ladles, which require refractories for steel, cement, aluminum, and glass applications. With the exception of andalusite and chamotte, all other alumina-silicates are not mined in South Africa and are imported from countries such as China, France, Brazil, USA, Russia, Australia and Germany.

The Commission argues that the merging parties are close competitors and the proposed transaction would result in the removal of an effective competitor in the market for fine and medium grade andalusite. It also found that the number of barriers to entry in the mining and supply of andalusite are relatively high. This is because the capital requirements and regulatory requirements are significant, and a new entrant would require access to deposits.

Andalusite is a significant input in the manufacture of refractories used in downstream industries such as steel and cement – sectors that are trying to stay competitive in the markets in which they compete.

The commission said customers are opposed to the merger. The Commission is also of the view that the structural changes in the market brought about by the proposed transaction are not addressed by remedies proposed by the companies concerned.

 

Allens Mescho and others case returns after years of court battles and postponements (January- 22, 2015, and January 26 – January 28)

NOTE: Witness statements and submissions from parties available on the Competition Tribunal website -   http://www.comptrib.co.za/

The Competition Commission on September 2009 referred to the Competition Tribunal findings on collusion by 11 companies involved in the manufacturing and distribution of wire and wire products in South Africa, Botswana, Swaziland, Mozambique and Namibia.

The 11 companies included Cape Gate, Allens Meshco, Hendok, Independent Galvanising and Meshrite. They sell wire and wire products to agricultural co-operatives, fence erectors, hardware stores and resellers. The companies now implicated are: Cape Gate; Consolidated Wire Industries and 10 companies referred to as the Allens Meshco group.

The Commission recommended that the Tribunal imposes an administrative penalty of 10% on each of the respondents, based on their respective annual turnover for the preceding financial year.

Background

 In January 2007, the Commission referred a cartel case to the Tribunal against Allens Mescho, Wireforce Steelbar, Hendok, Galvwire, Independent Galvanising and Meshrite, alleging that the respondents directly or indirectly fixed a purchase or selling price in respect of lightly galvanised wire, nails, wire and various wire products.

Following this referral, during July 2008, Consolidated Wire Industries (CWI), a subsidiary of Scaw South Africa (Pty) Ltd, admitted that its employees participated in price-fixing meetings with their competitors namely Cape Gate, Allens Meshco and Hendok. They agreed on a national price list for wire and wire products, on adjustments to the national price list and in collusive tendering of cable armouring wire. CWI applied for leniency.

CWI and Cape Gate also agreed not to target each other’s customers. Evidence gathered by the Commission through its investigation confirms that, from 2001 to 2008, the respondents contravened the Competition Act by engaging in price-fixing, market allocation and collusive tendering. The tenders involved include tenders from Harmony Gold, African Cables and Malasela Technologies.

Allens Meshco has challenged this case in the Tribunal, the High Court, Supreme Court and the Constitutional Court, on a number of different grounds.

 

Pre-hearings for cases to be heard at a later date:

 

Merger of Roche with genome technology producer Kapa Biosystems (January 13)

The Commission approved, with conditions, the intermediate merger of Roche Molecular System Inc (Roche) would acquire Kapa Biosystems. Post-merger Roche will have sole control of Kapa Biosystems’ business.

Roche is a biotech company with medicines in oncology, immunology, infectious diseases, ophthalmology and neuroscience. Kapa Biosystems is a science and research firm that has developed technologies that assist in DNA sequencing and other genetic analysis methods. 

The Commission has approved the merger with a number of conditions, including that the merged party continues to supply relevant third parties for 10 years. One submission was made by global company Illumina, which is involved in DNA sequencing technologies and buys certain enzymes from Kapa.  

 

Rejection of Raubex merger with OMV Group comes before the Tribunal – (January 18) (Pre-hearing)

The Competition Commission has prohibited the proposed acquisition by Raumix Aggregates, a subsidiary of the listed road construction group Raubex, of Kimberley-based construction quarry and ready-mix firm OMV Group.

Post-merger, Raumix and ultimately Raubex would control the OMV Group.

The merging parties had notified this acquisition in 2014. The Tribunal will hold a pre-hearing on 18 January to determine process going forward.

The Commission found that the merged entity would have the ability and the incentive to raise the costs to its rivals in the downstream market for road surfacing and rehabilitation in the Kimberley area, and these concerns still remain. The Commission believes that transaction would substantially prevent or lessen competition in the market for the supply of aggregates used in the surfacing of national roads in the Kimberley area. They say other than the OMV Group there is no other supplier in Kimberley which supplies the road stones required by government and the South African Road Agency for surfacing of national roads. With the acquisition, Raubex would have the ability and incentive to raise costs to its competitors, Commission argues.

 

Issued by:

Chantelle Benjamin

Communications: Competition Tribunal   

Tel (012)394 1383                                     

Cell: +27 (0) 73 007 5603    

Twitter:comptrib1                                     

E-Mail: chantelleb@comptrib.co.za

 

 

On Behalf Of:

Lerato Motaung                                                   

Registrar: Competition Tribunal                                        

Tel: (012) 394 3355                                             

Cell: +27 (0) 82 556 3221                                              

E-Mail: LeratoM@comptrib.co.za