Tribunal grants Mpact leave to intervene in Corruseal, Neopak merger consideration proceedings

The Tribunal has issued an order granting Mpact Operations (Pty) Ltd (“Mpact”) leave to intervene in the consideration of the intermediate merger proceedings before the Tribunal involving Corruseal Group (Pty) Ltd (“Corruseal”) and Neopak Holdings (Pty) Ltd (“Neopak”).

Corruseal and Neopak opposed Mpact’s intervention application heard by the Tribunal last week on 22 June 2022.

Mpact is a competitor to Corruseal and Neopak in the market for the supply of recycled containerboard and is also active in (downstream) corrugating activities.

Scope of intervention

The Tribunal’s order limits Mpact’s participation in the proceedings in terms of the merits to the following issues or theories of harm:

• That the proposed transaction will increase the concentration of the 100% recycled containerboard market with the result that there will be a substantial lessening or prevention of competition in this market.
• That the proposed transaction will give rise to input foreclosure in the corrugated board and corrugated packaging market (“the corrugating market”) in that the customers of Corruseal and Neopak will be foreclosed from access to the merging parties’ 100% recycled containerboard, whether on the terms that they currently enjoy or at all, in consequence of the merging parties supplying their 100% corrugated containerboard to Corruseal’s corrugator activities, and Corruseal expanding its corrugator activities.
• That the proposed transaction will result in co-ordinated effects in the corrugating market in that Corruseal will have the incentive and power, from its increased supply of sheetboard to the Everest Group, to exercise disciplining power over the Everest Group in the corrugating market.

Background

In March 2022, the Competition Commission prohibited the proposed (intermediate) merger. The merger parties then filed a request for consideration with the Tribunal, seeking to have the proposed merger unconditionally approved or, alternatively, to have it approved with conditions deemed appropriate by the Tribunal. Thereafter, Mpact sought to be recognised as a participant in the request for consideration, inter alia, on the basis that it would be able to assist the Tribunal in determining the competitive effects of the merger in the relevant markets.

Issued by:

Gillian de Gouveia, Communications Officer
On behalf of the Competition Tribunal of South Africa
Cell: +27 (0) 82 410 1195
E-Mail: GillianD@comptrib.co.za
Twitter: @comptrib