Lereko Capital (Pty) Ltd v Andru Mining (Pty) Ltd (LM179Jan21) [2021] ZACT 10 (24 February 2021)
- Citation
- [2021] ZACT 10
- Status
- Order
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Enver Daniels, Mondo Mazwai, Halton Cheadle
- Case number
- LM179Jan21
More details
- Court
- Competition Tribunal
- Panel
- Enver Daniels, Mondo Mazwai, Halton Cheadle
- Case number
- LM179Jan21
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that the proposed transaction would not result in any substantial prevention or lessening of competition in any relevant market. Lereko Capital already holds a significant shareholding in Andru Mining, and the acquisition of veto rights does not alter the market structure or competitive dynamics. There are no horizontal or vertical overlaps between the parties, and the market share of Andru Mining remains unchanged post-merger. Furthermore, public interest factors, including Broad-Based Black Economic Empowerment and worker ownership, are unaffected, with the pre-merger level of 53.5% remaining the same after the transaction. No third parties raised concerns, and the merger parties will continue to face competition from other market participants. Accordingly, the Tribunal approved the merger unconditionally.
Court disposition
Merger unconditionally approved.
Orders
- The large merger between Lereko Capital (Pty) Ltd and Andru Mining (Pty) Ltd is approved without conditions.
02
Material facts
Parties
Lereko Capital (Pty) Ltd
Applicant Counsel: J Lurie and K McLeanAndru Mining (Pty) Ltd
Respondent Counsel: J Lurie and K McLeanAmounts and remedies
- Pre Merger Broad Based Black Economic Empowerment and Worker Ownership Percentage: 53.5
03
Procedural history
Posture
Merger Application / Approval
04
Questions and positions
Legal issues
- 01
Whether the proposed merger would substantially prevent or lessen competition in any relevant market.
- 02
Whether the transaction would negatively affect public interest factors, including Broad-Based Black Economic Empowerment and worker ownership.
Party arguments
- Applicant
- The applicant argued that the transaction would not result in any change to the market structure, as Lereko Capital already holds a significant shareholding in Andru Mining. There are no horizontal or vertical overlaps between the parties, and competition in the market will remain unaffected. The level of Broad-Based Black Economic Empowerment and worker ownership will not decrease as a result of the merger.
- Respondent
- The respondent, Andru Mining, supported the applicant's position, confirming that there are no overlaps in activities and that the transaction will not alter the competitive landscape. The respondent also emphasized that public interest considerations, including empowerment and worker ownership, will remain unchanged post-merger.
05
Court’s reasoning
Legal principles
- 01
Competition Act, No. 89 of 1998
A merger may not be approved if it substantially prevents or lessens competition in any relevant market, unless technological, efficiency, or other pro-competitive gains outweigh the anti-competitive effects.
- 02
Competition Act, No. 89 of 1998
Public interest considerations, such as Broad-Based Black Economic Empowerment and worker ownership, must be assessed in merger proceedings.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed transaction would not result in any substantial prevention or lessening of competition in any relevant market. Lereko Capital already holds a significant shareholding in Andru Mining, and the acquisition of veto rights does not alter the market structure or competitive dynamics. There are no horizontal or vertical overlaps between the parties, and the market share of Andru Mining remains unchanged post-merger. Furthermore, public interest factors, including Broad-Based Black Economic Empowerment and worker ownership, are unaffected, with the pre-merger level of 53.5% remaining the same after the transaction. No third parties raised concerns, and the merger parties will continue to face competition from other market participants. Accordingly, the Tribunal approved the merger unconditionally.
Obiter and limits
- The Tribunal noted that the parties will continue to face competition from other mining service providers such as Moolmans, Trollope, and Stefanutti Stocks Mining.
- No concerns were raised by third parties regarding the effects of the proposed transaction on competition or public interest.
Court disposition
Merger unconditionally approved.
- The large merger between Lereko Capital (Pty) Ltd and Andru Mining (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
Order
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case no: LM179Jan21
Lereko Capital (Pty) Ltd (Primary Acquiring Firm)
and
Andru Mining (Pty) Ltd (Primary Target Firm)
Heard on: 24 February 2021
Order Issued on: 24 February 2021
REASONS
FOR DECISION
[1] On 24 February 2021, the Competition Tribunal unconditionally approved a large merger between Lereko Capital (Pty) Ltd (âLereko Capitalâ) and Andru Mining (Pty) Ltd (âAndru Miningâ).
[2] The transaction involves Lereko Capital acquiring veto rights over certain reserved matters of Andru Mining, such that Lereko Capital will have negative control over Andru Mining.
[3] Lereko Capital is a private equity fund, whose investment portfolio consists of investments in, amongst others, the renewable energy and student accommodation sectors. [â¦].[1]
[4] Andru Miningâs activities are focused on contract mining operations in different commodities, such as opencast coal mining and hardrock opencast mining. Andru Mining is currently not controlled by any individual or firm.
[5] There are no horizontal or vertical overlaps between the activities of the merger parties. Despite this, the Commission assessed a notional horizontal overlap in the national market for the provision of open cast mining services, to the extent that Lereko Capital already holds 49% of the shares in Andru Mining. The Commission concluded that there would no change to the structure of the market. Andru Mining has an estimated market share of [â¦]. Post-merger, there will be no accretion to the market share.
[6] The merger parties will continue to face competition from other players.[2]
[7] No third parties raised concerns regarding the effects of the proposed transaction on competition or the public interest.
[8] We concluded that the proposed transaction does not substantially prevent or lessen competition in any relevant market.
[9] In relation to public interest considerations, we note specifically that the proposed transaction will not have a negative effect on the level of Broad-Based Black Economic Empowerment or worker ownership, which pre-merger is 53.5%, and will remain the same post-merger.
08 March 2021
Mr Enver Daniels
Date
Ms Mondo Mazwai and Mr Halton Cheadle concurring
Tribunal Case Manager: Duduetsang Mogapi
For the Merging Parties: J Lurie and K McLean of Bowman Gilfillan
For the Commission: M Aphane and T Masithulela
[1] [â¦]
[2] Moolmans, Trollope, and Stefanutti Stocks Mining.
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