Brookfield Asset Management Inc. v TerraForm Global Inc. (LM079Jun17) [2017] ZACT 55 (18 August 2017)
- Citation
- [2017] ZACT 55
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Yasmin Carrim, Anton Roskam, Enver Daniels
- Case number
- LM079Jun17
More details
- Court
- Competition Tribunal
- Panel
- Yasmin Carrim, Anton Roskam, Enver Daniels
- Case number
- LM079Jun17
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that there was no geographic overlap between Brookfield and TerraForm in the South African renewable energy market, as Brookfield did not own or operate any solar or wind power plants in South Africa prior to the transaction. The Commission's investigation confirmed that the merger would be Brookfield's first investment in the sector locally, and thus the transaction would not substantially prevent or lessen competition. Furthermore, the Tribunal accepted the parties' submissions and the Commission's findings that no job losses, retrenchments, or redundancies would result from the merger, and that no other public interest concerns were raised. Accordingly, the Tribunal approved the merger unconditionally.
Court disposition
The proposed merger between Brookfield Asset Management Inc. and TerraForm Global Inc. was unconditionally approved.
Orders
- The merger is approved unconditionally.
02
Material facts
Parties
Brookfield Asset Management Inc.
Applicant Counsel: Sivuyise Lutshiti and Tamara Dini of Bowman GilfillanTerraForm Global Inc.
Respondent Counsel: Candice Upfold and Marianne Wagener of Norton Rose Fulbright03
Procedural history
Posture
Large Merger / Approval
04
Questions and positions
Legal issues
- 01
Whether the proposed merger between Brookfield and TerraForm is likely to substantially prevent or lessen competition in any relevant market.
- 02
Whether the proposed merger raises any adverse public interest concerns, including employment effects.
Party arguments
- Applicant
- Brookfield argued that the transaction would allow it to invest in the South African renewable energy market and that TerraForm would continue its business operations in South Africa. The merging parties submitted that there would be no negative effect on employment, as no retrenchments were envisaged as a direct result of the merger.
- Respondent
- TerraForm, through its representatives, supported the view that the transaction would not result in job losses, retrenchments, or redundancies, as there would be no integration of the businesses post-merger. The Commission concurred, finding no adverse public interest effects and no substantial lessening of competition.
05
Court’s reasoning
Legal principles
- 01
Competition Act 89 of 1998
A merger may only be prohibited if it is likely to substantially prevent or lessen competition in any relevant market.
- 02
Competition Act 89 of 1998
Public interest considerations, including employment effects, must be assessed in merger proceedings.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that there was no geographic overlap between Brookfield and TerraForm in the South African renewable energy market, as Brookfield did not own or operate any solar or wind power plants in South Africa prior to the transaction. The Commission's investigation confirmed that the merger would be Brookfield's first investment in the sector locally, and thus the transaction would not substantially prevent or lessen competition. Furthermore, the Tribunal accepted the parties' submissions and the Commission's findings that no job losses, retrenchments, or redundancies would result from the merger, and that no other public interest concerns were raised. Accordingly, the Tribunal approved the merger unconditionally.
Obiter and limits
- The Tribunal noted that the merging parties' activities in South Africa are limited and that the transaction represents Brookfield's entry into the local renewable energy market.
- No integration of the businesses post-merger was anticipated, further reducing any risk to employment or competition.
Court disposition
The proposed merger between Brookfield Asset Management Inc. and TerraForm Global Inc. was unconditionally approved.
- The merger is approved unconditionally.
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
Judgment
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: LM079Jun17
In the large merger between:
Brookfield Asset Management Inc.
Primary Acquiring Firm
andTerraForm Global Inc.
Primary Target Firm
Panel
: Yasmin Carrim (Presiding Member)
: Anton Roskam (Tribunal Member)
: Enver Daniels (Tribunal Member
Heard on
: 26 July 2017
Order Issued on
: 26 July 2017
Reasons Issued on : 18 August 2017
Reasons for Decision
Approval
[1] On 26 July 2017, the Competition Tribunal ("Tribunal") unconditionally approved the proposed transaction between Brookfield Asset Management Inc ("Brookfield") and TerraForm Global Inc. ("TerraForm").
[2] The reasons for approving the proposed transaction follow.
Parties to the Proposed Transaction
Primary Acquiring Firm
[3] The primary acquiring firm is Brookfield, a firm incorporated in accordance with the laws of Canada and is not controlled by any firm. Brookfield controls a number of firms including GrafTech International Holdings Inc ("GrafTech"). Brookfield is active in South Africa through its control of GrafTech, which controls GrafTech South Africa (Pty) Ltd ("GrafTech SA"), a South African entity.
[4] Brookfield is a global asset management company which owns and operates assets on behalf of shareholders and clients with a focus on property, renewable energy, infrastructure and private equity. GrafTech SA is mainly active in the manufacture and supply of graphite electrodes and refractories, which are sold to construction companies and to operations in the high temperature environment. GrafTech produces silicon and moulds which have applications in solar and wind energy generation. Neither of these products are produced in South Africa.
Primary Target Firm
[5] The primary target firm is TerraForm, a public company incorporated in accordance with the laws of the United States and is controlled by SunEdison Holdings Corporation ("SunEdison"). TerraForm indirectly holds shares in about 12 South African companies.
[6] TerraForm has interests in firms that own and operate solar and wind power plants located in a number of countries, including South Africa. In South Africa, TerraForm has interests in five solar plants and one wind power plant.
Proposed Transaction and Rationale
[7] Brookfield intends to acquire the entire issued share capital of TerraForm. Post transaction, Brookfield will exercise sole control over Terraform.
[8] According to the merging parties, the proposed transaction will, inter a/ia, allow Brookfield to invest in the South African renewable energy market and will allow TerraForm to continue its business operations in South Africa.
Relevant Market and Impact on Competition
[9] The Commission found a horizontal overlap in the global market for the provision of renewable energy. However, it found that Brookfield does not have an interest in any firm that owns and operates solar and wind power plants in South Africa. The proposed
transaction will be Brookfield's first investment in the South African renewable energy market. Therefore, the Commission found that there is no geographic overlap between the business activities of Brookfield and TerraForm.
[10] The Commission was therefore of the view that the proposed transaction is unlikely to substantially prevent or lessen competition in the relevant market.
[11] Based on the above, we concurred with the Commission's finding that the proposed transaction is unlikely to substantially prevent or lessen competition in any of the relevant markets.
Public Interest
[12] The merging parties submit that proposed transaction will have no negative effect on employment as no retrenchments are envisaged as a direct result of the proposed transaction.[1] The Commission found that no job losses, retrenchments or redundancies would arise as a result of the transaction as there will be no integration of the businesses of the merging parties post-merger.[2]
[13] The Commission was of the view that the proposed transaction is unlikely to raise concerns on any other public interest grounds.
Conclusion
[14] In light of the above, we concluded that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market or raise any adverse public interest issues. Accordingly, we approved the proposed transaction unconditionally.
18 August 2017
DATE
________
Mr Enver Daniels
Ms Yasmin Carrim and Mr Anton Roskam concurring
Tribunal Researcher: Hayley Lyle
For the merging parties: Sivuyise Lutshiti and Tamara Dini of Bowman Gilfillan for the acquiring firm. Candice Upfold and Marianne Wagener of Norton Rose Fulbright on behalf of the target firm.
For the Commission: Rethabile Ncheche
[1] Merger Record page 955.
[2] Transcript 26 July 2017 at page 3.
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