Glencore International AG v Optimum Coal Purchase Rights held by BHP Billiton Energy Coal South Africa (Pty) Ltd (018010) [2014] ZACT 29 (17 January 2014)

Glencore International AG v Optimum Coal Purchase Rights held by BHP Billiton Energy Coal South Africa (Pty) Ltd (018010) [2014] ZACT 29 (17 January 2014)

The Tribunal found that the proposed transaction results in a horizontal overlap in the international market for the production and export sales of thermal coal. However, the overlap is minimal, with Glencore’s post-merger market share below 14% and market share accretion less than 1%. The Commission’s assessment showed no competition concerns, as the transaction does not grant Glencore additional export capacity and the coal involved is already being exported. Concerns raised by Eskom and SAB regarding potential diversion of coal from domestic to export markets were dismissed, as the coal at Optimum is export grade and not suitable for domestic use. The transaction does not affect...

Citation
[2014] ZACT 29
Parties
Applicant: Glencore International AG; Respondent: Optimum Coal Purchase Rights held by BHP Billiton Energy Coal South Africa (Proprietary) Limited
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
17 January 2014
Case Number
018010
Procedural Posture
Merger Approval / Final Determination
Outcome
Merger approved unconditionally.
Judges
Norman Manoim, Medi Mokuena, Andiswa Ndoni
Legal Topics
Horizontal Merger, Market Power, Public Interest, Export Entitlement, Thermal Coal Market
Competition Law Horizontal Merger Market Power Public Interest Export Entitlement Thermal Coal Market

Case Brief

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Parties

Glencore International AG

Applicant

Optimum Coal Purchase Rights held by BHP Billiton Energy Coal South Africa (Proprietary) Limited

Respondent

Procedural Posture

Merger Approval / Final Determination

Legal Issues

  1. 1 Whether the proposed merger between Glencore International AG and Optimum Coal Purchase Rights held by BHP Billiton Energy Coal South Africa raises competition concerns in the international market for thermal coal.
  2. 2 Whether the transaction will have adverse effects on domestic coal consumers, particularly Eskom and SAB.
  3. 3 Whether the transaction will negatively impact public interest, including employment.

Ratio Decidendi

The Tribunal found that the proposed transaction results in a horizontal overlap in the international market for the production and export sales of thermal coal. However, the overlap is minimal, with Glencore’s post-merger market share below 14% and market share accretion less than 1%. The Commission’s assessment showed no competition concerns, as the transaction does not grant Glencore additional export capacity and the coal involved is already being exported. Concerns raised by Eskom and SAB regarding potential diversion of coal from domestic to export markets were dismissed, as the coal at Optimum is export grade and not suitable for domestic use. The transaction does not affect...

Court Disposition

Merger approved unconditionally.

Orders

  • The merger between Glencore International AG and Optimum Coal Purchase Rights held by BHP Billiton Energy Coal South Africa (Proprietary) Limited is approved unconditionally.