Ferro South (Pty)Ltd v Revertex South Africa (LM261Mar16) [2016] ZACT 69; [2016] 2 CPLR 851 (CT) (17 August 2016)

Ferro South (Pty)Ltd v Revertex South Africa (LM261Mar16) [2016] ZACT 69; [2016] 2 CPLR 851 (CT) (17 August 2016)

The Tribunal found that the merger does not substantially prevent or lessen competition in the market for water-based dispersions and emulsions, as Ferro's pre-merger market share was negligible and significant competitors remain. However, in the powder coatings market, the merger creates a structural link between Ferro and Akzo Nobel through the joint venture Arkem, raising the risk of coordinated effects and information exchange. To address this, the Tribunal imposed a divestiture condition requiring the disposal of the relevant shareholding in Arkem, either by Akzo Nobel or the merged entity, within specified periods and subject to oversight by an independent trustee. The conditions...

Citation
[2016] ZACT 69
Parties
Applicant: Ferro South Africa (Pty) Ltd; Respondent: Revertex South Africa (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
17 August 2016
Case Number
LM261Mar16
Procedural Posture
Large Merger Application / Tribunal Approval With Conditions
Outcome
Merger approved subject to divestiture conditions.
Judges
Norman Manoim, Imraan Valodia, Andiswa Ndoni
Legal Topics
Large Merger Review, Divestiture Conditions, Information Sharing, Horizontal Overlap, Coordinated Effects
Competition Law Commercial and Corporate Large Merger Review Divestiture Conditions Information Sharing Horizontal Overlap Coordinated Effects

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Parties

Ferro South Africa (Pty) Ltd

Applicant

Revertex South Africa (Pty) Ltd

Respondent

Procedural Posture

Large Merger Application / Tribunal Approval With Conditions

Legal Issues

  1. 1 Does the merger substantially prevent or lessen competition in the market for water-based dispersions and emulsions?
  2. 2 Does the merger create a risk of coordinated effects or information exchange in the powder coatings market?
  3. 3 Are the proposed divestiture conditions sufficient to remedy identified competition concerns?

Ratio Decidendi

The Tribunal found that the merger does not substantially prevent or lessen competition in the market for water-based dispersions and emulsions, as Ferro's pre-merger market share was negligible and significant competitors remain. However, in the powder coatings market, the merger creates a structural link between Ferro and Akzo Nobel through the joint venture Arkem, raising the risk of coordinated effects and information exchange. To address this, the Tribunal imposed a divestiture condition requiring the disposal of the relevant shareholding in Arkem, either by Akzo Nobel or the merged entity, within specified periods and subject to oversight by an independent trustee. The conditions...

Court Disposition

Merger approved subject to divestiture conditions.

Orders

  • The merger between Ferro South Africa (Pty) Ltd and Revertex South Africa (Pty) Ltd is approved subject to the divestiture condition set out in Annexure A.
  • The merging parties must comply with all obligations and timelines specified in the divestiture conditions, including appointment of an independent trustee if required.