Chemical Services Limited v Chemfit Industrial Holdings (42/LM/Apr08) [2008] ZACT 49; [2008] 2 CPLR 238 (CT) (4 July 2008)

Chemical Services Limited v Chemfit Industrial Holdings (42/LM/Apr08) [2008] ZACT 49; [2008] 2 CPLR 238 (CT) (4 July 2008)

The Tribunal found that the merger between Chemical Services Limited and Chemfit Industrial Holdings is unlikely to substantially prevent or lessen competition in the relevant chemical distribution markets. Although the merged entity will have high market shares in certain products, particularly Epoxidised Soyabean Oil and soil fumigant, customers have access to substitutes and imports, and the increment in market share is minimal. Vertical integration does not raise foreclosure concerns due to the presence of alternative suppliers, ease of importation, and low entry barriers. No significant public interest issues were identified. The merger was therefore approved unconditionally.

Citation
[2008] ZACT 49
Parties
Applicant: Chemical Services Limited; Respondent: Chemfit Industrial Holdings
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
4 July 2008
Case Number
42/LM/Apr08
Procedural Posture
Merger Control / Merger Approval
Outcome
Merger approved unconditionally.
Judges
D Lewis, Y Carrim, N Manoim
Legal Topics
Merger Control, Horizontal Merger Analysis, Vertical Integration, Market Share Assessment, Exclusive Distribution Agreements
Competition Law Commercial and Corporate Merger Control Horizontal Merger Analysis Vertical Integration Market Share Assessment Exclusive Distribution Agreements

Case Brief

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Parties

Chemical Services Limited

Applicant

Chemfit Industrial Holdings

Respondent

Procedural Posture

Merger Control / Merger Approval

Legal Issues

  1. 1 Whether the proposed merger will substantially prevent or lessen competition in the relevant chemical distribution markets.
  2. 2 Whether the merger raises significant public interest concerns.
  3. 3 Whether vertical integration resulting from the merger will lead to customer or input foreclosure.

Ratio Decidendi

The Tribunal found that the merger between Chemical Services Limited and Chemfit Industrial Holdings is unlikely to substantially prevent or lessen competition in the relevant chemical distribution markets. Although the merged entity will have high market shares in certain products, particularly Epoxidised Soyabean Oil and soil fumigant, customers have access to substitutes and imports, and the increment in market share is minimal. Vertical integration does not raise foreclosure concerns due to the presence of alternative suppliers, ease of importation, and low entry barriers. No significant public interest issues were identified. The merger was therefore approved unconditionally.

Court Disposition

Merger approved unconditionally.

Orders

  • The merger between Chemical Services Limited and Chemfit Industrial Holdings is approved without conditions.