Mondi Limited and Kohler Cores and Tubes a division of Kohler Packaging Limited (06/LM/Jan02) [2002] ZACT 40 (20 June 2002)

Mondi Limited and Kohler Cores and Tubes a division of Kohler Packaging Limited (06/LM/Jan02) [2002] ZACT 40 (20 June 2002)

The Tribunal found that the proposed vertical merger between Mondi Limited and Kohler Cores and Tubes would likely substantially prevent or lessen competition in both the upstream market for core board and the downstream market for heavy industrial cores and tubes. The merger would enable Mondi to largely self-deal, restricting sales of Ndicore to its own downstream division and leaving non-integrated manufacturers dependent on Sappi, which could then exercise monopoly pricing. The incentives of Mondi and Sappi are closely aligned, facilitating tacit coordination without explicit collusion. The transaction would also foreclose potential imports and new entrants, further entrenching the...

Citation
[2002] ZACT 40
Parties
Applicant: Mondi Limited; Respondent: Kohler Cores and Tubes a division of Kohler Packaging Limited
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
20 June 2002
Case Number
06/LM/Jan02
Procedural Posture
Large Merger Prohibition / Final Decision
Outcome
Merger prohibited.
Judges
D Lewis, N Manoim, S Zilwa
Legal Topics
Vertical Merger, Input Foreclosure, Customer Foreclosure, Coordinated Conduct, Market Definition, Dominance
Competition Law Commercial and Corporate Vertical Merger Input Foreclosure Customer Foreclosure Coordinated Conduct Market Definition Dominance

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Parties

Mondi Limited

Applicant

Kohler Cores and Tubes a division of Kohler Packaging Limited

Respondent

Procedural Posture

Large Merger Prohibition / Final Decision

Legal Issues

  1. 1 Whether the proposed vertical merger between Mondi Limited and Kohler Cores and Tubes is likely to substantially prevent or lessen competition in the relevant upstream and downstream markets.
  2. 2 Whether the transaction will facilitate coordinated conduct between Mondi and Sappi, leading to anti-competitive effects.
  3. 3 Whether input and customer foreclosure will result from the merger, raising rivals' costs and foreclosing market entry.

Ratio Decidendi

The Tribunal found that the proposed vertical merger between Mondi Limited and Kohler Cores and Tubes would likely substantially prevent or lessen competition in both the upstream market for core board and the downstream market for heavy industrial cores and tubes. The merger would enable Mondi to largely self-deal, restricting sales of Ndicore to its own downstream division and leaving non-integrated manufacturers dependent on Sappi, which could then exercise monopoly pricing. The incentives of Mondi and Sappi are closely aligned, facilitating tacit coordination without explicit collusion. The transaction would also foreclose potential imports and new entrants, further entrenching the...

Court Disposition

Merger prohibited.

Orders

  • The proposed merger between Mondi Limited and Kohler Cores and Tubes a division of Kohler Packaging Limited is prohibited.