Moody Blue Trade and Invest 147 (Pty) Ltd v South Africa Roll Company (Pty) Ltd (102/LM/Sep08) [2008] ZACT 95 (24 November 2008)
- Citation
- [2008] ZACT 95
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- D Lewis, N Manoim, Y Carrim
- Case number
- 102/LM/Sep08
More details
- Court
- Competition Tribunal
- Panel
- D Lewis, N Manoim, Y Carrim
- Case number
- 102/LM/Sep08
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
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.
02
Material facts
Parties
Moody Blue Trade and Invest 147 (Pty) Ltd
Applicant Counsel: Fluxmans AttorneysSouth Africa Roll Company (Pty) Ltd
Respondent03
Procedural history
Posture
Merger Application / Merger Approval
04
Questions and positions
Legal issues
- 01
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.
- 02
Whether the transaction raises any significant public interest concerns.
Party arguments
- Applicant
- The acquiring firm argued that the transaction is an attractive investment opportunity and that there is no product overlap between the merging parties. Moody Blue is a newly formed company with controlling shareholders who do not compete in the same product markets as the target firm. The transaction will not affect competition adversely.
- Respondent
- The target firm did not oppose the merger and indicated that the sale was motivated by the retirement of its shareholders. No concerns were raised regarding 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 the relevant market.
- 02
Competition Act, No. 89 of 1998
The Tribunal must consider public interest factors when assessing a merger, including the effect on employment and the ability of small businesses to compete.
06
Ratio, limits and disposition
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.
Obiter and limits
- The Tribunal noted that the rationale for the transaction was the retirement of the target firm's shareholders, which does not raise competition concerns.
- It was observed that the acquiring firm's shareholders are private equity firms and a financial institution, none of which compete in the relevant product market.
Court disposition
Merger approved without conditions.
- The merger between Moody Blue Trade and Invest 147 (Pty) Ltd and South Africa Roll Company (Pty) Ltd is approved unconditionally.
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: 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
2
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