The Competition Tribunal (Tribunal) has prohibited a merger between Greif International Holding B.V. (Greif) and Rheem South Africa (Pty) Ltd (Rheem) in South Africa.

In terms of the proposed transaction, Greif would acquire a majority interest in Rheem.

Both Greif and Rheem are suppliers of industrial packaging products which include knock-down drums for export, large steel drums and steel pails. Rheem has manufacturing facilities in Prospecton (Durban), Alrode (Johannesburg) and Cape Town. Greif’s main production sites are in Vanderbijlpark and in Mobeni.

On 17 March 2017, the companies notified the intermediate merger to the Competition Commission (Commission). On 13 June 2017, the Commission -- after investigating the matter -- prohibited the proposed intermediate merger on grounds that the merger would constitute a near monopoly in the market for the manufacture and supply of large steel drums. On 03 July 2017, the merging parties applied to the Tribunal for a reconsideration of the matter.
 
 The proposed merger was previously notified to the Commission and prohibited in 2004.  The basis for the Commission’s prohibition in those circumstances are materially the same in the current matter. The Commission found that it was likely that the merged entity would be able to unilaterally increase prices and remove an effective competitor from the market.
 
Greif and Rheem  argued that the merger would not lead to substantial lessening of competition and that there were alternative suppliers in the market. They also argued that any potential competition concern would be cured by the behavioural and/or structural remedies they had proposed.  
 
The Tribunal heard evidence from a number of witnesses, including experts, and engaged extensively with Greif and Rheem on whether a potential remedy could be found to address the Commission’s competition concerns. Their proposed remedies were canvassed with various stakeholders in the market. However, despite the different remedies proposed, no appropriate remedy was tendered which would cure the substantial lessening of competition that would arise as a result of the proposed transaction.
 
The Tribunal has therefore prohibited the proposed merger.
 
Full reasons for prohibiting the transaction will be issued in due course.