ISCOR Limited and Saldanha Steel (Pty) Ltd (67/LM/Dec01) [2002] ZACT 17 (4 April 2002)

ISCOR Limited and Saldanha Steel (Pty) Ltd (67/LM/Dec01) [2002] ZACT 17 (4 April 2002)

The Tribunal found that Saldanha Steel qualifies as a failing firm under section 12A(2)(g) of the Competition Act, given its persistent financial losses, heavy debt burden, and reliance on shareholder support to remain operational. The evidence demonstrated that, absent the merger, Saldanha would likely exit the market, resulting in significant economic harm to the Saldanha region and loss of productive capacity. The Tribunal determined that no viable alternative buyers existed and that the merger would not substantially lessen or prevent competition, as Saldanha's potential to compete with Iscor in the domestic market was remote due to geographic and market constraints. Vertical concerns...

Citation
[2002] ZACT 17
Parties
Applicant: Iscor Limited; Respondent: Saldanha Steel (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
4 April 2002
Case Number
67/LM/Dec01
Procedural Posture
Large Merger / Merger Approval
Outcome
Merger approved subject to conditions.
Judges
N Manoim, P.E. Maponya, M. Holden
Legal Topics
Failing Firm Defence, Horizontal Merger, Vertical Merger Effects, Public Interest, Market Definition, Supply Arrangements
Competition Law Commercial and Corporate Failing Firm Defence Horizontal Merger Vertical Merger Effects Public Interest Market Definition Supply Arrangements

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Parties

Iscor Limited

Applicant

Saldanha Steel (Pty) Ltd

Respondent

Procedural Posture

Large Merger / Merger Approval

Legal Issues

  1. 1 Does the acquisition of IDC's 50% share in Saldanha Steel by Iscor substantially lessen or prevent competition in the relevant market?
  2. 2 Is Saldanha Steel a failing firm within the meaning of section 12A(2)(g) of the Competition Act?
  3. 3 Are there viable less anti-competitive alternatives to the proposed merger?

Ratio Decidendi

The Tribunal found that Saldanha Steel qualifies as a failing firm under section 12A(2)(g) of the Competition Act, given its persistent financial losses, heavy debt burden, and reliance on shareholder support to remain operational. The evidence demonstrated that, absent the merger, Saldanha would likely exit the market, resulting in significant economic harm to the Saldanha region and loss of productive capacity. The Tribunal determined that no viable alternative buyers existed and that the merger would not substantially lessen or prevent competition, as Saldanha's potential to compete with Iscor in the domestic market was remote due to geographic and market constraints. Vertical concerns...

Court Disposition

Merger approved subject to conditions.

Orders

  • The merger between Iscor Limited and Saldanha Steel (Pty) Ltd is approved.
  • Approval is subject to conditions ensuring that Duferco Steel Processing (DSP) has no constraints on its source of supply and is free to compete in the domestic market.