Chlor-alkali Holdings (Pty) Ltd v Botswana Ash (Pty) Ltd (34/LM/Apr09) [2010] ZACT 32; [2010] 1 CPLR 130 (CT) (14 May 2010)

Chlor-alkali Holdings (Pty) Ltd v Botswana Ash (Pty) Ltd (34/LM/Apr09) [2010] ZACT 32; [2010] 1 CPLR 130 (CT) (14 May 2010)

The Tribunal found that the proposed merger would result in a monopoly in the supply of chemical grade salt to inland South Africa, removing WBSH as the only effective competitor to Botash and substantially lessening competition. The merger would weaken the bargaining power of customers such as Sasol, likely leading to higher prices and poorer supply conditions. Vertical integration would give the merged entity the incentive and ability to raise rivals' input costs in downstream markets for chlorine and caustic soda. However, the Tribunal concluded that the competition concerns could be adequately remedied by imposing behavioural conditions, including maximum pricing, supply obligations,...

Citation
[2010] ZACT 32
Parties
Applicant: Chlor-Alkali Holdings (Pty) Ltd; Respondent: Botswana Ash (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
14 May 2010
Case Number
34/LM/Apr09
Procedural Posture
Merger Application / Reasons for Conditional Approval of Merger
Outcome
Conditional approval of the merger subject to behavioural remedies.
Judges
Y Carrim, M Holden, A Wessels
Legal Topics
Merger to Monopoly, Input Foreclosure, Market Definition, Behavioural Remedies, Vertical Integration, Countervailing Power
Competition Law Commercial and Corporate Merger to Monopoly Input Foreclosure Market Definition Behavioural Remedies Vertical Integration Countervailing Power

Case Brief

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Parties

Chlor-Alkali Holdings (Pty) Ltd

Applicant

Botswana Ash (Pty) Ltd

Respondent

Procedural Posture

Merger Application / Reasons for Conditional Approval of Merger

Legal Issues

  1. 1 Whether the proposed merger would substantially prevent or lessen competition in the market for chemical grade salt supply to inland South Africa.
  2. 2 Whether the merger raises significant vertical foreclosure concerns in downstream markets for chlorine and caustic soda.
  3. 3 Whether the imposed behavioural conditions adequately remedy the identified competition concerns.

Ratio Decidendi

The Tribunal found that the proposed merger would result in a monopoly in the supply of chemical grade salt to inland South Africa, removing WBSH as the only effective competitor to Botash and substantially lessening competition. The merger would weaken the bargaining power of customers such as Sasol, likely leading to higher prices and poorer supply conditions. Vertical integration would give the merged entity the incentive and ability to raise rivals' input costs in downstream markets for chlorine and caustic soda. However, the Tribunal concluded that the competition concerns could be adequately remedied by imposing behavioural conditions, including maximum pricing, supply obligations,...

Court Disposition

Conditional approval of the merger subject to behavioural remedies.

Orders

  • The merger is approved in terms of section 16(2)(b) of the Competition Act, 1998, as amended, subject to the following conditions:
  • Botash must supply any inland South African-based purchaser of un-bagged and railed chemical grade salt for use in South Africa at the maximum price specified in the pricing matrix, with annual increases not exceeding 50% of the Botswana CPI average for the preceding year.