Government Employees Pension Fund, duly represented herein by the Public Investment Corporation SOC Limited v Mining and Gas Services Proprietary Limited (LM214Jan16) [2016] ZACT 14 (9 March 2016)
The Tribunal found that there is no overlap in the activities of the merging parties, as they are not active in the same markets. The acquiring group's interests in the mining sector are limited to non-controlling stakes in various firms, while the target firm operates in crude oil blending, petroleum gas...
Source-derived case information.
- Citation
- [2016] ZACT 14
- Parties
- Applicant: Government Employees Pension Fund, duly represented herein by the Public Investment Corporation SOC Limited; Respondent: Mining and Gas Services Proprietary Limited
- Court
- Competition Tribunal
- Jurisdiction
- South Africa
- Case Number
- LM214Jan16
- Procedural Posture
- Merger Control / Approval of Large Merger
- Outcome
- Merger approved unconditionally.
- Judges
- Norman Manoim, lmraan Valodia, Fiona Tregenna
- Legal Topics
- Merger Control, Public Interest, Joint Control, Market Overlap, Employment Effects
Source-derived case record
Summary, issues, holding and outcome
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Parties
Government Employees Pension Fund, duly represented herein by the Public Investment Corporation SOC Limited
Applicant
Mining and Gas Services Proprietary Limited
Respondent
Procedural Posture
Merger Control / Approval of Large Merger
Legal Issues
- 1 Whether the proposed acquisition of 49% shareholding in Mining and Gas Services Proprietary Limited by Government Employees Pension Fund, through Kuseni SPV, will substantially prevent or lessen competition in any relevant market.
- 2 Whether the proposed transaction raises any public interest concerns, including adverse effects on employment.
Ratio Decidendi
The Tribunal found that there is no overlap in the activities of the merging parties, as they are not active in the same markets. The acquiring group's interests in the mining sector are limited to non-controlling stakes in various firms, while the target firm operates in crude oil blending, petroleum gas importation, pipeline rehabilitation, and energy systems. The Commission's assessment was accepted, concluding that the transaction is unlikely to substantially prevent or lessen competition. Additionally, the transaction is expected to have a positive impact on employment and raises no other public interest concerns. Accordingly, the merger was approved unconditionally.
Court Disposition
Merger approved unconditionally.
Orders
- The large merger between Government Employees Pension Fund, represented by the Public Investment Corporation SOC Limited, and Mining and Gas Services Proprietary Limited is approved without conditions.
Full Case Text
Judgment text and source record
46 paragraphs
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM214Jan16
In the matter between:
The Government Employees Pension Fund, duly Primary Acquiring Firm
represented herein by the Public Investment
Corporation SOC Limited
And
Mining and Gas- Services Proprietary Limited
Primary Target Firm
Panel
: Norman Manoim (Presiding Member)
: lmraan Valodia (Tribunal Member)
: Fiona Tregenna (Tribunal Member)
Heard on
: 17 February 2016
Order issued on
: 17 February 2016
Reasons issued on : 09 March 2016
Reasons for Decision
Approval
[1] On 17 February 2016, the Competition Tribunal ("Tribunal") unconditionally approved the large merger between The Government
Employees Pension Fund ("GEPF" , duly represented herein by the Public Investment Corporation SOC Limited ("PIC")
and Mining and Gas Services Proprietary Limited ("MOGS"). The reasons for approving the transaction follow.
Parties to the transaction
[2] The primary acquiring firm is GEPF. The GEPF was established in terms of the Government Service Pension Act, 57 of 1973, which has been repealed. It continues to exist as a juristic person by virtue of the Government Employees Pension Law, 1996. The GEPF is a pension fund and has as its purpose the administration and management of pensions and other benefits for its members. The GEPF's funds are invested in a variety of assets, including property.[1] The investment of the GEPF's assets is managed by the Public Investment Corporation SOC Limited ("the PIC") in terms of an investment mandate. The PIC manages the equity, bonds, money market and property portfolios of the GEPF.
[3] The Khuseni SPV (RF) Proprietary Limited ("Khuseni SPV") is a special purpose vehicle, which will be formed solely for the purposes of the proposed transaction and thus currently does not conduct any operations.
[4] The primary target firm is MOGS, which is a South African based, black-owned, BEE accredited company. MOGS is controlled by Royal Bafokeng Holdings Proprietary Limited ("RBH"), which is a community based investment company with the overall objective of maximising returns to enable the delivery of sustainable benefits to the Bafokeng community. RBH achieves this objective through a plethora of subsidiaries and associated companies, such as MOGS. MOGS focuses on providing various services to the mining (coal, gold and platinum), oil and gas sectors through its various interests and subsidiaries, provides services to mining industries both within and outside the borders of South Africa, services to the mining (coal, gold and platinum), oil -and gas sectors. MOGS provides these services via the acquisition of significant interests in and/or the development of companies operating with the above mentioned sectors. These services are provided both within and outside the borders of South Africa. MOGS is active in crude oil blending, operation of petroleum gas importation terminal, pipeline rehabilitation, manufacture of energy systems inter alia.
Proposed transaction
[5] The proposed transaction entails GEPF, through Kuseni SPV, acquiring 49% shareholding in MOGS. Post-merger Kuseni SPV will have joint control over MOGS.
Competition assessment
[6] The Competition Commission ("Commission") considered the activities of the merging parties and found
that no overlaps arises from the proposed transaction. This is because the parties, even through their subsidiaries are not active in the same markets. The acquiring group's activities in the mining sector is limited to non-controlling interests it has in various firms active in contract mining services, material handling, concrete production, logistics, banking, insurance, property, and others. Whilst MOGS is active in crude oil blending, operation of petroleum gas importation terminal, pipeline rehabilitation, manufacture of energy systems inter alia. The Commission thus saw no need to conduct any further analysis. The Commission thus concluded that the proposed transaction is unlikely to substantially prevent or lessen competition in any market. We agree with the Commission on its findings.
Public interest
[7] The merging parties confirmed that the proposed transaction will not have any adverse effect on employment in South Africa, instead it will have a positive impact on employment as it has the potential to create employment in the mining, oil and gas-sectors. [2] The proposed transaction raises no other public intere.st concerns.
CONCLUSION
[8] We agree with the Commission's finding that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market. We therefore approve the proposed transaction without conditions.
09 March 2016
DATE
__________________
Mr Norman Manoim
Prof. lmraan Valodia and Prof. Fiona Tregenna concurring
Tribunal Researcher: Caroline Sserufusa
For the merging parties: Ryan Goodman of ENS
For the Commission: Reabetswe Molotsi
[1] See pages 16, 36 and 37 of the merger record.
[2] See page 71 of the merger record.