Draslovka Holdings A.S. and Another v Competition Commission of South Africa and Others (IM139Dec21) [2024] ZACT 31 (1 February 2024)

Draslovka Holdings A.S. and Another v Competition Commission of South Africa and Others (IM139Dec21) [2024] ZACT 31 (1 February 2024)

The Tribunal found that the proposed merger would result in a substantial anti-competitive and public interest harm by causing a significant and indefinite price increase for liquid sodium cyanide supplied to South African gold mining companies. This price increase is merger-specific, arising from the vertical de-integration of the sodium cyanide business from Sasol and the shift to import parity pricing for key inputs, particularly caustic soda. The Tribunal rejected the applicants' argument that recent price increases were unrelated to the merger, finding that Sasol's change in pricing methodology was directly attributable to the sale process and Draslovka's demands. The Tribunal...

Citation
[2024] ZACT 31
Parties
Applicant: Draslovka Holdings A.S.; Applicant: Sasol South Africa Limited; Respondent: Competition Commission of South Africa; Respondent: Harmony Gold Mining Company Limited; Respondent: Sibanye Stillwater Limited; Respondent: Pan African Resources PLC
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
1 February 2024
Case Number
IM139Dec21
Procedural Posture
Intermediate Merger Prohibition / Final Decision After Full Hearing and Submissions
Outcome
Merger prohibited.
Judges
Wilson, Mncube, Wessels
Legal Topics
Merger Control, Vertical Deintegration, Import Parity Pricing, Public Interest Assessment, Market Power, Remedies and Conditions
Competition Law Commercial and Corporate Merger Control Vertical Deintegration Import Parity Pricing Public Interest Assessment Market Power Remedies and Conditions

Case Brief

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Parties

Draslovka Holdings A.S.

Applicant

Sasol South Africa Limited

Applicant

Competition Commission of South Africa

Respondent

Harmony Gold Mining Company Limited

Respondent

Sibanye Stillwater Limited

Respondent

Pan African Resources PLC

Respondent

Procedural Posture

Intermediate Merger Prohibition / Final Decision After Full Hearing and Submissions

Legal Issues

  1. 1 Whether the proposed merger would result in a substantial prevention or lessening of competition in the market for liquid sodium cyanide in South Africa.
  2. 2 Whether the merger would cause a significant price increase for liquid sodium cyanide supplied to South African gold mining companies.
  3. 3 Whether the vertical de-integration of the sodium cyanide business from Sasol would result in adverse public interest effects, particularly on the gold mining sector.

Ratio Decidendi

The Tribunal found that the proposed merger would result in a substantial anti-competitive and public interest harm by causing a significant and indefinite price increase for liquid sodium cyanide supplied to South African gold mining companies. This price increase is merger-specific, arising from the vertical de-integration of the sodium cyanide business from Sasol and the shift to import parity pricing for key inputs, particularly caustic soda. The Tribunal rejected the applicants' argument that recent price increases were unrelated to the merger, finding that Sasol's change in pricing methodology was directly attributable to the sale process and Draslovka's demands. The Tribunal...

Court Disposition

Merger prohibited.

Orders

  • The proposed intermediate merger between Draslovka Holdings A.S. (through Draslovka SA) and the sodium cyanide business of Sasol South Africa Limited is prohibited.
  • No approval is granted for the transaction under section 16(1)(a) of the Competition Act.