DH Brothers Industries (Pty) Ltd and Another v Russellstone Protein (Pty) Ltd (LM061Jun20) [2021] ZACT 110 (29 October 2021)

DH Brothers Industries (Pty) Ltd and Another v Russellstone Protein (Pty) Ltd (LM061Jun20) [2021] ZACT 110 (29 October 2021)

The Tribunal found that the evidence did not support the Commission's theory that the joint venture would result in a substantial lessening or prevention of competition. The market for soya meal is characterized by transparent pricing, significant excess crushing capacity, and the presence of large, sophisticated customers able to switch suppliers. Import competition remains a constraint, and barriers to entry for traders are low. The parties have different cost structures and pricing models, making sustained coordination unlikely. No evidence of existing collusion was presented. The Tribunal accepted confidentiality conditions to regulate information exchange but did not impose...

Citation
[2021] ZACT 110
Parties
Applicant: DH Brothers Industries (Pty) Ltd; Applicant: Seaboard Corporation; Respondent: Russellstone Protein (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
29 October 2021
Case Number
LM061Jun20
Procedural Posture
Merger Review / Reasons for Conditional Approval After Contested Hearing
Outcome
Conditional approval of the merger; the Commission's recommendation for prohibition was rejected.
Judges
Y Carrim, A Wessels, H Cheadle
Legal Topics
Joint Venture Merger, Coordinated Effects, Market Concentration, Information Exchange, Public Interest Assessment, Remedies and Conditions
Competition Law Commercial and Corporate Joint Venture Merger Coordinated Effects Market Concentration Information Exchange Public Interest Assessment Remedies and Conditions

Case Brief

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Parties

DH Brothers Industries (Pty) Ltd

Applicant

Seaboard Corporation

Applicant

Russellstone Protein (Pty) Ltd

Respondent

Procedural Posture

Merger Review / Reasons for Conditional Approval After Contested Hearing

Legal Issues

  1. 1 Whether the proposed joint venture between Willowton (DH Brothers) and Seaboard in Russellstone Protein is likely to result in a substantial prevention or lessening of competition in the market for soya meal.
  2. 2 Whether the transaction raises coordinated effects concerns, including information sharing and market division.
  3. 3 Whether the merger would negatively impact public interest, particularly employment and the poultry sector.

Ratio Decidendi

The Tribunal found that the evidence did not support the Commission's theory that the joint venture would result in a substantial lessening or prevention of competition. The market for soya meal is characterized by transparent pricing, significant excess crushing capacity, and the presence of large, sophisticated customers able to switch suppliers. Import competition remains a constraint, and barriers to entry for traders are low. The parties have different cost structures and pricing models, making sustained coordination unlikely. No evidence of existing collusion was presented. The Tribunal accepted confidentiality conditions to regulate information exchange but did not impose...

Court Disposition

Conditional approval of the merger; the Commission's recommendation for prohibition was rejected.

Orders

  • The merger is approved subject to confidentiality conditions regulating the exchange of competitively sensitive information between Willowton and Seaboard, extended to soya hulls and crude soya oil.
  • No structural undertakings allocating products among competitors are imposed.