Dow Chemical Company and Union Carbide Corporation (50/LM/Apr00) [2000] ZACT 24 (2 June 2000)
- Citation
- [2000] ZACT 24
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- N.M. Manoim, C Qunta, U. Bhoola
- Case number
- 50/LM/Apr00
More details
- Court
- Competition Tribunal
- Panel
- N.M. Manoim, C Qunta, U. Bhoola
- Case number
- 50/LM/Apr00
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the merger between Dow Chemical Company and Union Carbide Corporation does not raise competition concerns in South Africa, as the relevant products are fully imported and the merger has already been approved in other jurisdictions where the products are manufactured. The overlap in product markets is academic, given the international nature of the transaction and the limited powers of the Tribunal in such circumstances. Furthermore, the Commission's recommendation to approve the merger was accepted, and no significant public interest issues were identified. Accordingly, the merger was approved without conditions.
Court disposition
Merger approved without conditions.
Orders
- The merger between The Dow Chemical Company and Union Carbide Corporation is approved without conditions.
02
Material facts
Parties
The Dow Chemical Company
ApplicantUnion Carbide Corporation
Respondent03
Procedural history
Posture
Large Merger Review / Merger Clearance
04
Questions and positions
Legal issues
- 01
Whether the merger between Dow Chemical Company and Union Carbide Corporation raises competition concerns in the relevant South African market.
- 02
Whether the merger raises any significant public interest issues.
Party arguments
- Applicant
- The merging parties argued that the products in question—Polyethylene Glycol Liquids, Triethylenetetramine, and E-Series Glycol Ethers—are not manufactured in South Africa but are fully imported for distribution. They contended that the merger would not affect competition in South Africa, as the relevant market is international and the transaction has already been approved by competition authorities in other jurisdictions.
- Respondent
- The Competition Commission found that the merger does not raise competition concerns regarding the three product categories and recommended approval. No significant public interest issues were identified, and the Commission supported the merger proceeding without conditions.
05
Court’s reasoning
Legal principles
- 01
Competition Act, 89 of 1998
A merger may be approved if it does not substantially prevent or lessen competition in any relevant market.
- 02
Competition Act, 89 of 1998
Public interest considerations must be assessed, but approval is appropriate where no significant public interest issues arise.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the merger between Dow Chemical Company and Union Carbide Corporation does not raise competition concerns in South Africa, as the relevant products are fully imported and the merger has already been approved in other jurisdictions where the products are manufactured. The overlap in product markets is academic, given the international nature of the transaction and the limited powers of the Tribunal in such circumstances. Furthermore, the Commission's recommendation to approve the merger was accepted, and no significant public interest issues were identified. Accordingly, the merger was approved without conditions.
Obiter and limits
- The Tribunal noted that its powers are limited in cases involving multinational mergers already approved elsewhere, especially where the products are not manufactured locally.
- Even if the merger were prohibited in South Africa, the parties would merge elsewhere, and a single firm would control the subsidiaries and importation of the products.
Court disposition
Merger approved without conditions.
- The merger between The Dow Chemical Company and Union Carbide Corporation is approved without conditions.
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
REPUBLIC
OF SOUTH AFRICA
Case No: 50/LM/Apr00
In the large merger between:
The Dow Chemical Company
and
Union Carbide Corporation
Reasons for the Competition Tribunalâs Decision
Approval
The Competition Tribunal issued a Merger Clearance Certificate on 17 May 2000 approving the merger between The Dow Chemical Company (Dow) and Union Carbide Corporation (Union Carbide) without conditions. The reasons for our decision to approve the merger without conditions are set out below.
The merger transaction
The primary acquiring firm is Dow and the primary target firm is Union Carbide.
Dow is a US multinational chemical producer and its operations in South Africa are conducted by a subsidiary, the Dow/Sentrachem Group. Union Carbide is a US multinational firm whose business is in chemicals and polymers.
Dow is acquiring Union Carbide South Africa (Pty), a wholly owned subsidiary of Union Carbide. This transaction is part of a merger agreement between Dow and Union Carbide with Union Carbide ultimately becoming a subsidiary of Dow.
This international merger has been approved by the European Commission and the antitrust authorities in Australia, New Zealand and Poland.
Evaluating the merger
In terms of the information given by the parties there are three areas of product overlap between the South African subsidiaries of the merging firms. The products where there is an overlap are chemical products known as Polyethylene Glycol Liquids (PEG Liquids), Triethylenetetramine (Teta) and E-Series Glycol Ethers (E-Series GEs). PEG Liquids are used as components of products such as adhesives ceramics, cosmetics and related products. Teta is used as a component of products such as epoxy-curing agents and oil and fuel additives. E-Series GEs are applied as solvents in paints, inks and industrial cleaners.
According to the merging parties none of the products referred to in paragraph 6 are manufactured in South Africa, all the products are imported for distribution.
The relevant product/services market
The relevant product market is the market for the supply of Polyethylene Glycol Liquids Triethylenetetramine and E-Series Glycol Ethers.
The relevant geographic market
The relevant geographic market is international. The relevant products are fully imported.
Impact on competition
This is an international merger that has already been approved in other jurisdictions around the world. The fact that overlap in the product market between the merging parties exists in products that are fully imported makes our decision largely academic. Our powers are somewhat limited when we deal with mergers between multinational companies that have already been approved in other jurisdictions. This is especially the case where the products concerned are merely distributed in South Africa and the merger has been approved in the countries where the products are manufactured. Even if we prohibit the merger in South Africa the parties will merge elsewhere and a single firm will control the two subsidiaries and the importation and distribution of the three product categories in South Africa.
We note that on the merits the Commission found that the merger raises no competition concerns as far as the three product categories are concerned and recommended that the merger be approved. We have no reason to disagree with this conclusion.
Public Interest Considerations
The merger raises no significant public interest issues.
02 June 2000
N.M. Manoim Date
Concurring: C Qunta, U. Bhoola
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