Moody Blue Trade and Invest 147 (Pty) Ltd v South Africa Roll Company (Pty) Ltd (102/LM/Sep08) [2008] ZACT 95 (24 November 2008)
The Tribunal found that there is no product overlap between the activities of the merging parties. The acquiring firm is a newly formed entity with controlling shareholders who do not operate in the same product markets as the target firm. The target firm produces steel rollers for the manufacturing of flat steel...
Source-derived case information.
- Citation
- [2008] ZACT 95
- Parties
- Applicant: Moody Blue Trade and Invest 147 (Pty) Ltd; Respondent: South Africa Roll Company (Pty) Ltd
- Court
- Competition Tribunal
- Jurisdiction
- South Africa
- Case Number
- 102/LM/Sep08
- Procedural Posture
- Merger Application / Merger Approval
- Outcome
- Merger approved without conditions.
- Judges
- D Lewis, N Manoim, Y Carrim
- Legal Topics
- Merger Notification, Substantial Prevention or Lessening of Competition, Public Interest, Product Market Definition
Source-derived case record
Summary, issues, holding and outcome
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Parties
Moody Blue Trade and Invest 147 (Pty) Ltd
Applicant
South Africa Roll Company (Pty) Ltd
Respondent
Procedural Posture
Merger Application / Merger Approval
Legal Issues
- 1 Whether the proposed merger between Moody Blue Trade and Invest 147 (Pty) Ltd and South Africa Roll Company (Pty) Ltd is likely to substantially prevent or lessen competition.
- 2 Whether the transaction raises any significant public interest concerns.
Ratio Decidendi
The Tribunal found that there is no product overlap between the activities of the merging parties. The acquiring firm is a newly formed entity with controlling shareholders who do not operate in the same product markets as the target firm. The target firm produces steel rollers for the manufacturing of flat steel products, while the acquiring firm's shareholders are involved in private equity and financial services, which do not compete with the target firm's business. The proposed transaction is therefore unlikely to substantially prevent or lessen competition. Furthermore, no significant public interest concerns were identified. The merger was accordingly approved.
Court Disposition
Merger approved without conditions.
Orders
- The merger between Moody Blue Trade and Invest 147 (Pty) Ltd and South Africa Roll Company (Pty) Ltd is approved unconditionally.
Full Case Text
Judgment text and source record
35 paragraphs
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 102/LM/Sep08
In the matter between:
Moody Blue Trade and Invest 147 (Pty) Ltd Acquiring Firm
and
South Africa Roll Company (Pty) Ltd Target Firm
Panel : D Lewis (Presiding Member), N Manoim (Tribunal
Member) and Y Carrim (Tribunal Member)
Heard on : 29 October 2008
Order issued on : 29 October 2008
Reasons issued on : 24 November 2008
Reasons for Decision
Introduction
On 29 October 2008 the Tribunal approved the merger between Moody Blue Trade and Invest 147 (Pty) Ltd and South Africa Roll Company (Pty) Ltd. The reasons follow below.
The transaction and parties
Moody Blue Trade 147 (Pty) Ltd (“Moody Blue”) intends to acquire South African Roll Company (Pty) Ltd (“SA Roll Company”) as a going concern.
Moody Blue, a special purpose vehicle company, is jointly controlled by BOE, a subsidiary of Nedbank Ltd, and Medu Capital Fund II Partnership, a private equity firm controlled by Medu Holdings. Its remaining shareholder is SARCO Management Trust.
SA Roll Company is controlled by UEFC Inc (“United Foundries”), a company based in the United States of America which owns three plants, two plants in the United States of America and the primary target firm in South Africa.
Rationale for the transaction
The shareholders of the acquiring firm regard the transaction as an attractive investment opportunity that will expand their investment portfolio.
The shareholders of the target firm are selling the company because they are retiring.
Effect on Competition
There is no product overlap in the activities of the merging parties. The target firm, SA Roll Company, produces steel rollers used to flatten the steel during the manufacturing process of flat steel
products.
The acquiring company, Moody Blue, is a newly formed company which has not traded before. Its controlling shareholders, BOE and Medu Capital are private equity firms that manage private equity. The firms in which they are invested do not compete in the same product markets than the target firm. Nedbank Group operates within the broader financial services industry.
The proposed transaction is unlikely to substantially prevent or lessen competition.
PUBLIC INTEREST
The transaction does not raise any significant public interest concerns.
___________________ 24 November 2008
D Lewis Date
N Manoim and M Mokuena concurring.
Tribunal Researcher: R Badenhorst
For the merging parties: Fluxmans Attorneys
For the Commission: M Matsimela
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