Nampak Products Limited and Burcap Plastics (Pty) Ltd (1/LM/Oct06) [2007] ZACT 42; [2007] 2 CPLR 373 (CT) (25 June 2007)

Nampak Products Limited and Burcap Plastics (Pty) Ltd (1/LM/Oct06) [2007] ZACT 42; [2007] 2 CPLR 373 (CT) (25 June 2007)

The Tribunal found that the merger would likely result in a substantial prevention or lessening of competition in the industrial container market, particularly in the segment for plastic containers for paint. The merger eliminates Burcap as a potential independent competitor and consolidates control over key plastic container technology within Nampak. The Tribunal noted that while barriers to entry for traditional plastic containers are low, the market is moving towards advanced PET technology, for which Nampak holds exclusive rights. This could further entrench Nampak's market power and limit future competition. To mitigate these concerns, the Tribunal imposed a condition prohibiting...

Citation
[2007] ZACT 42
Parties
Applicant: Nampak Products Limited; Respondent: Burcap Plastics (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
25 June 2007
Case Number
1/LM/Oct06
Procedural Posture
Merger Application / Reasons for Conditional Approval of Merger
Outcome
Merger conditionally approved subject to undertakings regarding exclusive licensing of PET technology.
Judges
N Manoim, Y Carrim, M Mokuena
Legal Topics
Merger Control, Market Definition, Barriers to Entry, Exclusive Licensing, Potential Competition
Competition Law Commercial and Corporate Merger Control Market Definition Barriers to Entry Exclusive Licensing Potential Competition

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Parties

Nampak Products Limited

Applicant

Burcap Plastics (Pty) Ltd

Respondent

Procedural Posture

Merger Application / Reasons for Conditional Approval of Merger

Legal Issues

  1. 1 Whether the proposed merger between Nampak Products Limited and Burcap Plastics (Pty) Ltd would substantially prevent or lessen competition in the relevant markets.
  2. 2 Whether the merger would result in anti-competitive exclusive licensing arrangements for PET technology.
  3. 3 Whether the merger would eliminate potential competition in the industrial container market.

Ratio Decidendi

The Tribunal found that the merger would likely result in a substantial prevention or lessening of competition in the industrial container market, particularly in the segment for plastic containers for paint. The merger eliminates Burcap as a potential independent competitor and consolidates control over key plastic container technology within Nampak. The Tribunal noted that while barriers to entry for traditional plastic containers are low, the market is moving towards advanced PET technology, for which Nampak holds exclusive rights. This could further entrench Nampak's market power and limit future competition. To mitigate these concerns, the Tribunal imposed a condition prohibiting...

Court Disposition

Merger conditionally approved subject to undertakings regarding exclusive licensing of PET technology.

Orders

  • The merger between Nampak Products Limited and Burcap Plastics (Pty) Ltd is approved subject to the following condition: Save for the exclusive license agreement concluded between Nampak Products Limited and the Plastic Can Company Limited (PCC), neither Nampak Limited nor any of its subsidiary companies may, for a...
  • Nampak shall, after 12 calendar months from the approval of the transaction and annually thereafter for the duration of the condition, provide the Competition Commission with an affidavit confirming compliance with the condition.