Barloworld Coatings (Pty) Ltd and Prostart Investments (Pty) Ltd t/a Marouns (99/LM/Oct05) [2006] ZACT 25 (23 March 2006)

Barloworld Coatings (Pty) Ltd and Prostart Investments (Pty) Ltd t/a Marouns (99/LM/Oct05) [2006] ZACT 25 (23 March 2006)

The Tribunal found that the merger is a vertical integration between an upstream manufacturer/importer (Barloworld Coatings) and a downstream distributor (Marouns) in the automotive refinish coatings market. The evidence showed that Barloworld Coatings held a 27% share in the upstream market, but there were numerous credible alternative suppliers. Marouns accounted for no more than 30% of the distribution market, with only seven outlets out of 185 nationally. Barloworld's presence in the panel beating market was minimal, owning only eight out of approximately 3000 panel shops. Third-party concerns about foreclosure and discriminatory pricing were not substantiated, as most complainants...

Citation
[2006] ZACT 25
Parties
Applicant: Barloworld Coatings (Pty) Ltd; Respondent: Prostart Investments (Pty) Ltd t/a Marouns
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
23 March 2006
Case Number
99/LM/Oct05
Procedural Posture
Large Merger / Merger Clearance
Outcome
Merger approved without conditions.
Judges
N Manoim, Y Carrim, M Mokuena
Legal Topics
Vertical Merger, Market Definition, Foreclosure, Public Interest, Distribution Agreements
Competition Law Commercial and Corporate Vertical Merger Market Definition Foreclosure Public Interest Distribution Agreements

Case Brief

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Parties

Barloworld Coatings (Pty) Ltd

Applicant

Prostart Investments (Pty) Ltd t/a Marouns

Respondent

Procedural Posture

Large Merger / Merger Clearance

Legal Issues

  1. 1 Whether the proposed merger between Barloworld Coatings and Marouns will substantially prevent or lessen competition in any relevant market.
  2. 2 Whether the transaction raises any public interest concerns under the Competition Act.
  3. 3 Whether the merger will result in foreclosure of competitors or discriminatory treatment of distributors.

Ratio Decidendi

The Tribunal found that the merger is a vertical integration between an upstream manufacturer/importer (Barloworld Coatings) and a downstream distributor (Marouns) in the automotive refinish coatings market. The evidence showed that Barloworld Coatings held a 27% share in the upstream market, but there were numerous credible alternative suppliers. Marouns accounted for no more than 30% of the distribution market, with only seven outlets out of 185 nationally. Barloworld's presence in the panel beating market was minimal, owning only eight out of approximately 3000 panel shops. Third-party concerns about foreclosure and discriminatory pricing were not substantiated, as most complainants...

Court Disposition

Merger approved without conditions.

Orders

  • The transaction between Barloworld Coatings (Pty) Ltd and Prostart Investments (Pty) Ltd t/a Marouns is approved unconditionally.
  • No conditions are imposed on the merger.