Precrete Holdings (Pty) Ltd v Platchro Holdings (Pty) Ltd (LM199Jan17) [2017] ZACT 39 (19 April 2017)
- Citation
- [2017] ZACT 39
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Competition Tribunal
- Panel
- Yasmin Carrim, Andiswa Ndoni, Medi Mokuena
- Case number
- LM199Jan17
More details
- Court
- Competition Tribunal
- Panel
- Yasmin Carrim, Andiswa Ndoni, Medi Mokuena
- Case number
- LM199Jan17
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The Tribunal found that although there is a horizontal overlap in the provision of secondary support solutions in the platinum mining sector, Platchro's contribution to this market is minimal, accounting for less than 10% of its revenue and resulting in a market share accretion of less than 2% for the merged entity. The market is characterized by strong competition from several large firms and operates primarily as a tender market, which ensures competitive parity among participants. No adverse public interest effects, including employment losses, were identified. Accordingly, the Tribunal concluded that the merger would not substantially prevent or lessen competition nor raise public interest concerns, and approved the transaction unconditionally.
Court disposition
The proposed merger is approved unconditionally.
Orders
- The merger between Precrete Holdings (Pty) Ltd and Platchro Holdings (Pty) Ltd is approved without conditions.
02
Material facts
Parties
Precrete Holdings (Pty) Ltd
Applicant Counsel: Nazeera MiaPlatchro Holdings (Pty) Ltd
RespondentAmounts and remedies
- Estimated Market Share Accretion Post Merger: ZAR 2
03
Procedural history
Posture
Merger Approval / Final Determination
04
Questions and positions
Legal issues
- 01
Whether the proposed merger between Precrete Holdings and Platchro Holdings is likely to substantially prevent or lessen competition in the relevant market.
- 02
Whether the merger raises any public interest concerns, including adverse effects on employment.
Party arguments
- Applicant
- Precrete argued that acquiring Platchro would allow it to diversify its customer base. The merging parties contended that the relevant market is a tender market, where competition is robust and competitors have relatively equal strengths. They submitted that no adverse employment effects would result from the merger, as no retrenchments or job losses were foreseen.
- Respondent
- Platchro, through its trustees, viewed the transaction as an opportunity to dispose of their shareholding. The Commission found a horizontal overlap in the application and installation of secondary support solutions but determined that Platchro's limited customer base and low revenue from this segment meant the merger would not substantially affect competition. The Commission also found no public interest concerns.
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
Public interest considerations, such as employment effects, must be assessed in merger proceedings.
06
Ratio, limits and disposition
Ratio decidendi
The Tribunal found that although there is a horizontal overlap in the provision of secondary support solutions in the platinum mining sector, Platchro's contribution to this market is minimal, accounting for less than 10% of its revenue and resulting in a market share accretion of less than 2% for the merged entity. The market is characterized by strong competition from several large firms and operates primarily as a tender market, which ensures competitive parity among participants. No adverse public interest effects, including employment losses, were identified. Accordingly, the Tribunal concluded that the merger would not substantially prevent or lessen competition nor raise public interest concerns, and approved the transaction unconditionally.
Obiter and limits
- The Tribunal noted that the tender nature of the market ensures that competitors have relatively equal opportunities when bidding for contracts.
- The Commission's reliance on competitor estimates for market share accretion was accepted as reasonable given the limited impact of the merger.
Court disposition
The proposed merger is approved unconditionally.
- The merger between Precrete Holdings (Pty) Ltd and Platchro Holdings (Pty) Ltd is approved without conditions.
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: LM199Jan17
In the matter between:
PRECRETE HOLDINGS (PTY) LTD Acquiring
Firm
and
PLATCHRO HOLDINGS (PTY)
LTD
Target Firm
Panel
: Yasmin Carrim (Presiding Member)
: Andiswa Ndoni (Tribunal Member)
: Medi Mokuena (Tribunal Member
Heard on
: 29 March 2017
Order Issued on
: 29 March 2017
Reasons Issued on : 19 April 2017
Reasons for Decision
Approval
[1] On 29 March 2017, the Competition Tribunal ("Tribunal") approved the proposed transaction between Precrete Holdings (Pty) Ltd ("Precrete") and Platchro Holdings (Pty) Ltd ("Platchro").
[2] The reasons for approving the proposed transaction follow.
Parties to the Proposed Transaction
Primary Acquiring Firm
[3] The primary acquiring firm is Precrete, a private company incorporated in accordance with the laws of the Republic of South
Africa and is controlled by PSG Private Equity (Pty) Ltd ("PSG PE"). PSG PE is an investment holding company.
[4] Precrete controls a number of firms including Precrete Mining (Pty) Ltd, Precrete (Pty) Ltd and Precrete Services (Pty) Ltd amongst others.
Primary Target Firm
[5] The primary target firm is Platchro, a private company incorporated in accordance with the laws of the Republic of South Africa and is jointly controlled by the trustees of the S&C trust and the J&L trust.
[6] Platchro controls a number of firms including Platchro Mining Services (Pty) Ltd and Platchro Rasimone (Pty) Ltd, amongst others.
Proposed Transaction and Rationale
[7] Precrete intends to acquire all the issued shares of and loan claims against Platchro. Post-transaction, Precrete will have sole control over Platchro.
[8] Precrete submits that the proposed transaction represents an opportunity for it to diversify its customer base.
[9] From Platchro's perspective the proposed transaction represents an opportunity for the trustees to dispose of their shareholding.
Relevant Market and Impact on Competition
[10] Precrete specialises in the manufacture and supply of pre-mix concrete
products as well as the application and installation of secondary support solutions in mines, predominantly in the platinum mining sector.
[11] Platchro also provides mining services to customers, predominantly in the platinum mining sector. Platchro supplies secondary support services to one of its clients in one location.
[12] The Commission accordingly found a horizontal overlap in the application and installation of secondary support solutions. However, it found that the proposed transaction is unlikely to substantially prevent or lessen competition in the relevant market due to the fact that Platchro has only one customer in the provision of secondary support solutions which customer accounts for less than 10% of its revenue. The market share accretion of the merged entity was estimated to be less than 2%.[1] Furthermore, post-transaction the merged entity will continue to face significant competition constraints from a number of large reputable firms such as Guncrete, Aveng Mining, and Murray and Roberts
[13] At the hearing the merging parties also pointed to the fact that the relevant market is a tender market and that generally, when a tender comes up, the playing fields become levelled with competitors possessing relatively even strengths.[2]
[14] The Commission is therefore of the view that the proposed transaction is unlikely to substantially prevent or lessen competition in any of the relevant markets. We concur with this finding.
Public Interest
[15] The merging parties submit that the proposed transaction will not result in any adverse effects on employment as no retrenchments or job losses are foreseen to occur as a result of the merger.[3]
[16] The Commission was of the view that the proposed transaction is unlikely to raise concerns on any other public interest grounds.
Conclusion
[17] In light of the above, we conclude that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market. In addition, no public interest issues arise from the proposed transaction. Accordingly, we approve the proposed transaction unconditionally.
19 April 2017
DATE
_______
Ms Yasmin Carrim
Mrs Medi Mokuena and Ms Andiswa Ndoni
Tribunal Researcher:
Hayley Lyle
For the merging parties:
Nazeera Mia of Cliffe Dekker Hofmeyer
For the Commission:
Kholiswa Mnisi
[1] This figure is based on estimates provided by competitors of the merging parties.
[2] Page 3 of the Transcript.
[3] Page 346 of the Merger Record.
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