Hesteel International Holdings Co. Limited and Others v Smart Union Resources (Hong Kong) Co. Limited (LM233Mar17) [2017] ZACT 43; [2017] 1 CPLR 302 (CT) (25 May 2017)

Hesteel International Holdings Co. Limited and Others v Smart Union Resources (Hong Kong) Co. Limited (LM233Mar17) [2017] ZACT 43; [2017] 1 CPLR 302 (CT) (25 May 2017)

The Tribunal found that the proposed transaction presented both horizontal and vertical relationships in the iron ore market. However, the acquiring group only produces iron ore for internal use, and Phalaborwa Copper exports the vast majority of its production, with negligible domestic market share. The Commission's investigation revealed no concerns from domestic customers and concluded that foreclosure effects were unlikely. Furthermore, the transaction did not raise any public interest concerns, including employment effects. The Tribunal concurred with the Commission's findings and approved the merger unconditionally, as it was unlikely to substantially prevent or lessen competition...

Citation
[2017] ZACT 43
Parties
Applicant: Hesteel International Holding Co., Limited; Applicant: Hesteel Group Co., Limited; Applicant: Xuanhua Construction Machinery Co., Limited; Respondent: Smart Union Resources (Hong Kong) Co., Limited; Respondent: Competition Commission
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
25 May 2017
Case Number
LM233Mar17
Procedural Posture
Large Merger Notification / Approval
Outcome
Merger approved unconditionally.
Judges
Medi Mokuena, Andiswa Ndoni, Fiona Tregenna
Legal Topics
Large Merger, Horizontal Overlap, Vertical Relationship, Foreclosure Effects, Public Interest, Iron Ore Market
Competition Law Commercial and Corporate Large Merger Horizontal Overlap Vertical Relationship Foreclosure Effects Public Interest Iron Ore Market

Case Brief

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Parties

Hesteel International Holding Co., Limited

Applicant

Hesteel Group Co., Limited

Applicant

Xuanhua Construction Machinery Co., Limited

Applicant

Smart Union Resources (Hong Kong) Co., Limited

Respondent

Competition Commission

Respondent

Procedural Posture

Large Merger Notification / Approval

Legal Issues

  1. 1 Whether the proposed merger would substantially prevent or lessen competition in any relevant market.
  2. 2 Whether the transaction would result in foreclosure effects in the iron ore market.
  3. 3 Whether the transaction raises any adverse public interest concerns, including employment.

Ratio Decidendi

The Tribunal found that the proposed transaction presented both horizontal and vertical relationships in the iron ore market. However, the acquiring group only produces iron ore for internal use, and Phalaborwa Copper exports the vast majority of its production, with negligible domestic market share. The Commission's investigation revealed no concerns from domestic customers and concluded that foreclosure effects were unlikely. Furthermore, the transaction did not raise any public interest concerns, including employment effects. The Tribunal concurred with the Commission's findings and approved the merger unconditionally, as it was unlikely to substantially prevent or lessen competition...

Court Disposition

Merger approved unconditionally.

Orders

  • The large merger between Hesteel International Holding Co., Limited, Hesteel Group Co., Limited, Xuanhua Construction Machinery Co., Limited and Smart Union Resources (Hong Kong) Co., Limited is approved unconditionally.