African Rainbow Minerals Limited v The Machadodorp Works ferrochrome and ferromanganese division of Assmang (Pty) Ltd (LM232Jan19) [2019] ZACT 6 (20 February 2019)
- Citation
- [2019] ZACT 6
- Status
- Order
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Yasmin Carrim, Mondo Mazwai, lmraan Valodia
- Case number
- LM232Jan19
More details
- Court
- Competition Tribunal
- Panel
- Yasmin Carrim, Mondo Mazwai, lmraan Valodia
- Case number
- LM232Jan19
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed transaction did not give rise to a horizontal overlap, as ARM and the Target Business are considered a single economic entity. The transaction would not alter the pre-merger structure or increase ARM's market share. The Commission's investigation confirmed that the merger was unlikely to substantially prevent or lessen competition in any relevant market. Furthermore, the merging parties confirmed that there would be no negative effects on employment and no other public interest concerns. Accordingly, the Tribunal approved the transaction unconditionally.
Court disposition
The proposed merger was approved unconditionally.
Orders
- The proposed transaction between African Rainbow Minerals Limited and the Machadodorp Works ferrochrome and ferromanganese division of Assmang (Pty) Ltd is approved without conditions.
02
Material facts
Parties
African Rainbow Minerals Limited
Applicant Counsel: X NyaliThe Machadodorp Works ferrochrome and ferromanganese division of Assmang (Pty) Ltd
Respondent03
Procedural history
Posture
Merger Approval / Final Determination
04
Questions and positions
Legal issues
- 01
Whether the proposed merger would substantially prevent or lessen competition in any relevant market.
- 02
Whether the proposed merger raises any public interest concerns, including effects on employment.
Party arguments
- Applicant
- The applicant submitted that the acquisition would not alter the pre-merger structure, as ARM already exercises control over the Target Business through its joint control of Assmang. The transaction would not result in any increase in market share or change in competitive dynamics. The applicant further confirmed that there would be no negative impact on employment and no other public interest concerns.
- Respondent
- The Competition Commission argued that the transaction did not give rise to a horizontal overlap because ARM and the Target Business are considered a single economic entity. The Commission concluded that the merger would not substantially prevent or lessen competition and raised no public interest concerns, including employment effects.
05
Court’s reasoning
Legal principles
- 01
Competition Act, No. 89 of 1998
A merger will not be prohibited if it does not substantially prevent or lessen competition in any relevant market.
- 02
Competition Act, No. 89 of 1998
Public interest factors, including employment effects, must be considered in merger assessments.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed transaction did not give rise to a horizontal overlap, as ARM and the Target Business are considered a single economic entity. The transaction would not alter the pre-merger structure or increase ARM's market share. The Commission's investigation confirmed that the merger was unlikely to substantially prevent or lessen competition in any relevant market. Furthermore, the merging parties confirmed that there would be no negative effects on employment and no other public interest concerns. Accordingly, the Tribunal approved the transaction unconditionally.
Obiter and limits
- The Tribunal noted that the Target Business had ceased its production and smelting operations and was only active in the recovery of manganese from historical slag dumps.
- The Tribunal acknowledged the merging parties' confirmation that the transaction would not negatively affect employment in South Africa.
Court disposition
The proposed merger was approved unconditionally.
- The proposed transaction between African Rainbow Minerals Limited and the Machadodorp Works ferrochrome and ferromanganese division of Assmang (Pty) Ltd is approved without conditions.
Source and reliance status
Competition Tribunal
This page organises the available record for research. Confirm quotations, current status, and subsequent treatment against the official source before relying on the case.
Judgment reading view
Judgment text
The complete available source text.
Competition Tribunal
Order
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: LM232Jan19
In the matter between
African Rainbow Minerals Limited
Primary Acquiring Firm
And
The Machadodorp Works ferrochrome and
ferromanganese division of Assmang (Pty) Ltd Primary Target Firm
Panel
: Yasmin Carrim (Presiding Member)
: Mondo Mazwai (Tribunal Member)
: lmraan Valodia (Tribunal Member)
Heard on
: 6 February 2019
Order Issued on : 6 February 2019
Reasons Issued on : 20 February 2019
REASONS FOR DECISION
Approval
[1] On 6 February 2019, the Competition Tribunal ("Tribunal") unconditionally approved the proposed transaction involving African Rainbow Minerals Limited ("ARM") and the Machadodorp Works ferrochrome and ferromanganese division ("Target Business") of Assmang (Pty) Ltd ("Assmang"), hereinafter collectively referred to as the merging parties.
[2] The reasons for the approval of the proposed transaction follow.
Parties to the transaction
Primary Acquiring Firm
[3] ARM is a public entity listed on the Johannesburg Stock Exchange. ARM is ultimately controlled by Patrice Motsepe through various trusts. ARM directly and indirectly controls numerous firms including Assmang.
[4] ARM is a diversified mining and minerals holding company. ARM, through its subsidiaries and joint ventures, mines and beneficiates iron ore, manganese ore, chrome ore, platinum group metals,[1] copper, nickel and coal. ARM also produces manganese and chrome alloys.
Primary Target Firm
[5] The Target Business is a wholly-owned division of Assmang. Assmang is jointly controlled by ARM and Assore Limited.
[6] The Target Business used to be a vertically integrated ferrochrome and ferromanganese business active in the mining of chrome and manganese ore, the smelting of ferrochrome and ferromanganese, and the production and sale of chrome and manganese alloys into the international market. The Target Business has ceased its production and smelting operations. It is now only active in the recovery of manganese from historical slag dumps. The recovered manganese is used to produce low-grade ferrochrome fines and chips which are then sold to the stainless-steel market.
Proposed transaction and rationale
[7] ARM will acquire the Target Business through a sale of shares.[2] Post-merger, the Target Business will be housed directly under ARM and ARM will have sole control over the Target Business.
Impact on competition
[8] The Competition Commission ("Commission") found that the proposed transaction did not give rise to a horizontal overlap as ARM and the Target Business are considered a single economic entity.
[9] Given that the proposed transaction would not alter the pre-merger structure and that the market shares of ARM would not increase, the Commission concluded that the proposed transaction was unlikely to substantially prevent or lessen competition in any relevant market. We concurred with this conclusion.
Public interest
[10] The merging parties confirmed that the proposed transaction would not have any negative effects on employment in South Africa.[3] The proposed transaction raised no other public interest concerns.
Conclusion
[11] In light of the above, we approved the proposed transaction unconditionally.
Ms Yasmin Carrim
Ms Mondo Mazwai and Prof. lmraan Valodia concurring.
20 February 2019
Date
Tribunal Researcher
: Hlumelo Vazi
For the merging parties : X Nyali of Bowman Gilfillan Inc
For the Commission
: I Mhlongo and W Gumbi
[1] Platinum group metals are six pure metals with high melting points which consist of the following: platinum, (Pt), palladium (Pd), Rhodium (Rh), Iridium (Ir), Osmium (Os), ruthenium (Ru) as well as gold (Au) based metals such as nickel, copper and cobalt.
[2] Transcript, page 4.
[3] Merger Record, pages 9 and 83.
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