Coleus Packaging (Pty) Ltd and Rheem Crown Plant (a division of Highveld Steel and Vanadium Corporation Limited) (75/LM/Oct02) [2003] ZACT 7 (11 February 2003)

Coleus Packaging (Pty) Ltd and Rheem Crown Plant (a division of Highveld Steel and Vanadium Corporation Limited) (75/LM/Oct02) [2003] ZACT 7 (11 February 2003)

The Tribunal found that the merger would likely result in a substantial lessening of competition in the market for crown closures, primarily due to SAB's dominance as a purchaser and the risk of foreclosure of MCG, the only domestic rival. However, the Tribunal determined that outright prohibition was not viable, as it would likely lead to Rheem's exit from the market and a reduction in domestic supply. The Tribunal accepted that the proposed behavioural conditions, negotiated with input from competitors and the Commission, would adequately address concerns regarding confidentiality, non-discriminatory supply, price parity, and plant innovation. The Tribunal rejected the Commission's...

Citation
[2003] ZACT 7
Parties
Applicant: Coleus Packaging (Pty) Ltd; Respondent: Rheem Crown Plant, a division of Highveld Steel and Vanadium Corporation Limited
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
11 February 2003
Case Number
75/LM/Oct02
Procedural Posture
Large Merger / Merger Approval Hearing
Outcome
Merger approved subject to detailed behavioural conditions.
Judges
N. Manoim, D.H. Lewis, Prof. M. Holden
Legal Topics
Vertical Merger, Customer Foreclosure, Input Foreclosure, Behavioural Remedies, Black Economic Empowerment, Market Definition
Competition Law Commercial and Corporate Vertical Merger Customer Foreclosure Input Foreclosure Behavioural Remedies Black Economic Empowerment Market Definition

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Parties

Coleus Packaging (Pty) Ltd

Applicant

Rheem Crown Plant, a division of Highveld Steel and Vanadium Corporation Limited

Respondent

Procedural Posture

Large Merger / Merger Approval Hearing

Legal Issues

  1. 1 Whether the proposed vertical merger would substantially lessen competition in the market for crown closures for glass bottles.
  2. 2 Whether the merger would result in customer or input foreclosure, harming competitors and customers.
  3. 3 Whether behavioural conditions can adequately ameliorate the anticompetitive effects of the merger.

Ratio Decidendi

The Tribunal found that the merger would likely result in a substantial lessening of competition in the market for crown closures, primarily due to SAB's dominance as a purchaser and the risk of foreclosure of MCG, the only domestic rival. However, the Tribunal determined that outright prohibition was not viable, as it would likely lead to Rheem's exit from the market and a reduction in domestic supply. The Tribunal accepted that the proposed behavioural conditions, negotiated with input from competitors and the Commission, would adequately address concerns regarding confidentiality, non-discriminatory supply, price parity, and plant innovation. The Tribunal rejected the Commission's...

Court Disposition

Merger approved subject to detailed behavioural conditions.

Orders

  • SAB must dispose of not less than 40% of Coleus's issued share capital to a suitable black empowerment partner within two years, subject to rehabilitation of the crown plant.
  • SAB and Coleus must furnish the Commission with six-monthly written reports regarding rehabilitation progress, commencing 1 October 2003.