Navitas Holdings (Pty) Ltd v Main Street 1606 (Pty) Ltd (LM072Jul19) [2019] ZACT 71 (21 October 2019)
- Citation
- [2019] ZACT 71
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Enver Daniels, Yasmin Carrim, Andiswa Ndoni
- Case number
- LM072Jul19
More details
- Court
- Competition Tribunal
- Panel
- Enver Daniels, Yasmin Carrim, Andiswa Ndoni
- Case number
- LM072Jul19
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 substantially prevent or lessen competition in the national market for electricity generated through solar panels, as the merged entity's market share would remain below 30% and the accretion would be less than 10%. The parties would be constrained by existing agreements with Eskom, limiting the potential for anti-competitive conduct. Furthermore, the transaction would not result in any job losses or raise other public interest concerns. Accordingly, the Tribunal approved the merger unconditionally.
Court disposition
Merger approved unconditionally.
Orders
- The proposed transaction between Navitas Holdings (Pty) Ltd and Main Street 1606 (Pty) Ltd is approved unconditionally.
02
Material facts
Parties
Navitas Holdings (Pty) Ltd
Applicant Counsel: S van der MeulenMain Street 1606 (Pty) Ltd
RespondentAmounts and remedies
- Post Merger Market Share: 30
- Market Share Accretion: 10
03
Procedural history
Posture
Merger Approval / Final Determination
04
Questions and positions
Legal issues
- 01
Whether the proposed merger would substantially prevent or lessen competition in the market for electricity generated through solar panels.
- 02
Whether the transaction raises any public interest concerns, including employment impacts.
Party arguments
- Applicant
- Navitas Holdings (Pty) Ltd and Main Street 1606 (Pty) Ltd argued that the proposed transaction would not result in any job losses or negative public interest effects. They asserted that the merger would not substantially prevent or lessen competition, as the combined market share post-merger would remain below 30%, with an accretion of less than 10%.
- Respondent
- The Competition Commission submitted that the merged entity's market share and accretion are low, and existing agreements with Eskom would constrain any anti-competitive conduct. The Commission confirmed that there are no employment or other public interest concerns arising from the transaction.
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 any relevant market.
- 02
Competition Act, No. 89 of 1998
Public interest considerations, including employment effects, must be assessed in merger proceedings.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that the proposed transaction would not substantially prevent or lessen competition in the national market for electricity generated through solar panels, as the merged entity's market share would remain below 30% and the accretion would be less than 10%. The parties would be constrained by existing agreements with Eskom, limiting the potential for anti-competitive conduct. Furthermore, the transaction would not result in any job losses or raise other public interest concerns. Accordingly, the Tribunal approved the merger unconditionally.
Obiter and limits
- The Tribunal noted that the renewable energy sector remains subject to government procurement processes, which further limits the potential for anti-competitive behaviour.
- The Tribunal highlighted the importance of ongoing monitoring of market dynamics in the renewable energy sector.
Court disposition
Merger approved unconditionally.
- The proposed transaction between Navitas Holdings (Pty) Ltd and Main Street 1606 (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: LM072Jul19
In the matter between
Navitas Holdings (Pty) Ltd Primary Acquiring Firm
And
Main Street 1606 (Pty) Ltd Primary Target Firm
Panel: Enver Daniels (Presiding Member)
: Yasmin Carrim (Tribunal Member)
: Andiswa Ndoni (Tribunal Member)
Heard on: 18 September 2019
Order Issued on: 18 September 2019
Reasons Issued on: 21 October 2019
REASONS
FOR DECISION
Approval
[1] On 18 September 2019, the Competition Tribunal ("Tribunal") unconditionally approved the proposed transaction involving Navitas Holdings (Pty) Ltd ("Navitas") and Main Street 1606 (Pty) Ltd ("BEE NewCo"), hereinafter collectively referred to as the merging parties.
[2] The reasons for the approval of the proposed transaction follow.
Primary Acquiring Firm
[3] The primary acquiring firm is Navitas, a company incorporated in accordance with the laws of the Republic of South Africa. The shares in Navitas are widely dispersed and as such no single shareholder controls Navitas. Navitas controls a number of firms including Kabi Solar (Pty) Ltd ("Kabi Solar").
[4] Navitas is an energy development and investment company. It also invests in renewable energy projects aimed at the government's
Renewable Energy Independent Power Purchase Procurement Program (REIPPPP). In fact, Kabi Solar has some 600 MW of utility-scale solar PV projects however, the projects are not operational and those that are under development have yet to be selected as Preferred Bidders under REIPPPP.
Primary Target Firm
[5] BEE NewCo is a newly established entity for purposes of the proposed transaction. BEE NewCo was established by Stanlib Infrastructure
Private Equity Fund 1 ("Stanlib Fund"). Stanlib Fund is represented by Stanlib Infrastructure GP 1 (Pty) Ltd in its capacity
as the general partner of the Stanlib Infrastructure GP Partnership I. Stanlib Fund is ultimately controlled by Standard Group Ltd.
[6] Stanlib Fund has investments in many firms. Of relevance to the proposed transaction are its interests in three renewable energy
power stations, hereinafter collectively referred to as the 'Project Companies'.
[7] The Project Companies' sole mandate is to generate power for Eskom as per their 20-year Power Purchase Agreements.
[8] In terms of the Settlement Agreement entered into between the merging parties, Navitas will acquire 69% of the share capital holding in BEE NewCo. Post-me ger, Navitas will exercise joint control over BEE NewCo. Navitas seeks to acquire an interest in the Project Companies hence, the proposed transaction will take place in two stages. The first being the acquisition of ordinary shares in BEE Newco. Secondly, BEE NewCo will acquire negative control in each of the Project Companies.
Impact on competition
[9] The Competition Commission ("Commission") considered the activities of the merging parties and found a horizontal overlap in the national market for the production of electricity generated through solar panels. In its investigation, the Commission found that the merged entity will have a combined post-merger market share of less than 30% with an accretion of less than 10%.
[10] The Commission was of the view that the post-merger market share would unlikely raise competition concerns as the market accretion is low and the merging parties would be constrained by the existing agreements with Eskom from engaging in any anti-competitive
behaviour.
[11] Given the above, the Commission concluded that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market.
Public interest
[12] The merging parties submitted that the proposed transaction would not result in any job losses. In the same vein, the Commission confirmed that the proposed transaction does not raise any employment concerns or any other public interest issues.
[13] In light of the above, we conclude that the proposed transaction is unlikely to prevent or lessen competition in any market. In addition, no other public interest concerns arise from the proposed transaction. Accordingly, we approve the proposed transaction
unconditionally:
21 October 2019
Date
___
Ms Enver Daniels
Ms Yasmin Carrim and Ms Andiswa Ndoni concurring.
Tribunal Researcher:
Holumelo Vazi
For the merging parties: S van der Meulen of Webber Wentzel
For the Commission:
N Myoli and T Mahlangu
Case-aware research
Ask AI about this case
The judgment and available research above are public. New questions open in a separate private conversation grounded in this case.