Investec Bank Ltd v Ferro Industrial Products (Pty) Ltd (54/LM/Jul11) [2011] ZACT 82 (20 October 2011)
- Citation
- [2011] ZACT 82
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Norman Manoim, Andiswa Ndoni, Medi Mokuena
- Case number
- 54/LM/Jul11
More details
- Court
- Competition Tribunal
- Panel
- Norman Manoim, Andiswa Ndoni, Medi Mokuena
- Case number
- 54/LM/Jul11
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that there is no overlap in the activities of Investec and Ferro, and that Investec does not hold interests in the industrial chemical sector in which Ferro operates. The Commission's analysis confirmed that there is no possibility of vertical integration between the parties. The merger does not raise any major competition concerns, nor does it raise any public interest concerns. Accordingly, the merger was approved without conditions.
Court disposition
Merger approved without conditions.
Orders
- The large merger between Investec Bank Limited and Ferro Industrial Products (Pty) Ltd is approved without conditions.
02
Material facts
Parties
Investec Bank Limited
Applicant Counsel: Paul ClelandFerro Industrial Products (Pty) Ltd
Respondent03
Procedural history
Posture
Merger Approval / Reasons for Decision
04
Questions and positions
Legal issues
- 01
Whether the proposed merger between Investec Bank Limited and Ferro Industrial Products (Pty) Ltd is likely to substantially prevent or lessen competition in any relevant market.
- 02
Whether the transaction raises any public interest concerns under the Competition Act.
Party arguments
- Applicant
- Investec and the Management Shareholders argued that the transaction is an investment in a well-managed and profitable firm, with Investec reacquiring a stake it previously held. They submitted that there is no overlap in the activities of the parties and that the merger would not result in any anti-competitive effects or public interest concerns.
- Respondent
- Ferro and Blackstar Group Plc supported the transaction, with Blackstar seeking to exit its investment. The parties maintained that there is no vertical integration or market overlap between Investec and Ferro, and that the merger would not negatively impact competition or public interest.
05
Court’s reasoning
Legal principles
- 01
Competition Act, No. 89 of 1998
A merger may only be prohibited if it is likely to substantially prevent or lessen competition in any relevant market, or if it raises significant public interest concerns.
- 02
Competition Commission analysis
The absence of horizontal or vertical overlap between merging parties is a key factor in assessing the competitive impact of a merger.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that there is no overlap in the activities of Investec and Ferro, and that Investec does not hold interests in the industrial chemical sector in which Ferro operates. The Commission's analysis confirmed that there is no possibility of vertical integration between the parties. The merger does not raise any major competition concerns, nor does it raise any public interest concerns. Accordingly, the merger was approved without conditions.
Obiter and limits
- Investec previously held a controlling interest in Ferro before disposing of it to Blackstar in 2008, making this transaction a reacquisition of a familiar and profitable firm.
- The merging parties submitted that the proposed transaction raises no public interest concerns, and the Commission agreed with this assessment.
Court disposition
Merger approved without conditions.
- The large merger between Investec Bank Limited and Ferro Industrial Products (Pty) Ltd is approved without conditions.
Source and reliance status
Competition Tribunal
This page organises the available record for research. Confirm quotations, current status, and subsequent treatment against the official source before relying on the case.
Judgment reading view
Judgment text
The complete available source text.
Competition Tribunal
Judgment
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:54/LM/Jul11
In the matter between:
Investec Bank Limited …...........................................................................Acquiring Firm
And
Ferro Industrial Products (Pty) Ltd …...................................................Target Firm
Panel : Norman Manoim (Presiding Member) Andiswa Ndoni (Tribunal Member) Medi Mokuena (Tribunal Member)
Heard on : 21 September 2011
Order issued on : 21 September 2011
Reasons issued on : 20 October 2011
Reasons for Decision
Approval
On 21 September 2011 the Competition Tribunal (“Tribunal”) approved the large merger between Investec Bank Limited (“Investec”) and Ferro Industrial Products (Pty) Ltd (“Ferro”). The Tribunal’s reasons for approving the transaction are set out below.
The Parties to the transaction
The primary acquiring firms are Investec Bank Limited, a firm incorporated under the laws of the Republic of South Africa and the Management Shareholders of Ferro Industrial Products. Investec is controlled by Investec Limited,1 a firm listed on the Johannesburg Stock Exchange.
The primary target firm is Ferro Industrial Products (Pty) Ltd,2 a firm incorporated in terms of the laws of the Republic of South Africa. Ferro is controlled by Blackstar Group Plc (“Blackstar”)
which currently holds 54% share interest therein with the remaining 46% being held by the Management Shareholders.
The parties have concluded a Sale of Shares and Claims Agreement in terms of which (i) Investec will acquire 49% of the issued share capital in Ferro together with a cession of the loan account claims held by Blackstar against Ferro; and (ii) Certain of the Management Shareholders will acquire 5% of the issued share capital in Ferro.
Post merger, Investec will have control of Ferro with its 49% shareholding while the Management Shareholders will collectively
hold 51%.
The activities of the parties
The acquiring firm, Investec is an international specialist banking and asset management group providing a diverse range of services and financial products to a niche client base mainly in the United Kingdom, Australia and South Africa.
Investec operates through 6 main divisions namely Asset Management; Wealth and Investment; Property Activities; Private Banking; Investment Banking and Capital Markets.
The target firm, Ferro manufactures plastics, glass colouring, enamels, ceramics and powder coatings and was initially a subsidiary of Ferro USA until it was bought out from its USA parent company in 1990.
Ferro operates through 5 divisions namely Powder Coatings division; Glass Decorating and Colouring division; Plastic Masterbatch division; Enamels division and the Spectrum Ceramics division.
The Rationale
Investec previously held a controlling interest in Ferro before disposing of it to Blackstar in 2008. Investec therefore sees this transaction as investment in a familiar firm that has proven to be very well managed and profitable.
Blackstar wants to exit from its investment in Ferro and sees this transaction as a means of achieving that objective.
The Relevant Market and the Impact on Competition
There is no overlap in the activities of the parties and even though Investec holds interests in chemical companies, particularly in the supply of resins and chlor-alkali derivative products used for water treatment, it does not hold any interests in the industrial chemical sector in which Ferro operates.
The Commission also found that there is no possibility of vertical integration between the activities of the merging parties.
In light of the above and the Commission’s analysis, the proposed transaction will not likely lead to preventing or lessening
competition in the relevant markets.
Public Interest
The merging parties submitted that the proposed transaction raises no public interest concerns.
Conclusion
In light of the Commission’s analysis and recommendations, the merger does not raise any major competition concerns and furthermore no public interest concerns arise.
Accordingly, the above merger is approved without conditions.
____ 20 October 2011
N Manoim DATE
A Ndoni and M Mokuena concurring.
Tribunal Researcher: Songezo Ralarala
For the Merging Parties: Paul Cleland from Werksmans Attorneys
For the Commission: Lindiwe Khumalo
1http://www.investec.co.za/#home.html
2http://www.ferrosa.co.za/
3
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