South Africa Judgment

Competition Tribunal

Royal Bafokeng Resources (Pty) Ltd v Bafokeng Rasimone Platinum Mine Joint Venture (38/LM/Apr09) [2009] ZACT 51 (30 July 2009)

Competition Law Merger Clearance Market Structure Public Interest Product Overlap

Citation: [2009] ZACT 51
Status: Judgment
Jurisdiction: South Africa
Court: Competition Tribunal
Panel: Y Carrim, M Mokuena, M Holden
Case number: 38/LM/Apr09

More details

Court: Competition Tribunal
Panel: Y Carrim, M Mokuena, M Holden
Case number: 38/LM/Apr09

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Professional case brief

Research organized from the available case record

Source document

Holding and result

The Tribunal found that the proposed transaction, which increased Royal Bafokeng Resources' shareholding in the joint venture from 50% to 67%, did not result in any material change to market structure or market share. The product overlap was acknowledged but deemed insignificant, as the acquiring firm already held a substantial interest in the target firm. The Competition Commission's analysis was accepted, confirming that the merger was unlikely to substantially prevent or lessen competition. No public interest issues were identified. Accordingly, the merger was unconditionally approved.

Court disposition

Merger unconditionally approved.

Orders

The merger between Royal Bafokeng Resources (Pty) Ltd and Bafokeng Rasimone Platinum Mine Joint Venture is unconditionally approved.
A Merger Clearance Certificate is issued to the parties.

Material facts

Parties

Royal Bafokeng Resources (Pty) Ltd

Applicant Counsel: Bell Dewar

Bafokeng Rasimone Platinum Mine Joint Venture

Respondent

Procedural history

Posture

Merger Application / Merger Clearance

Questions and positions

Legal issues

01
Whether the proposed merger would substantially prevent or lessen competition in the relevant market.
02
Whether there are any public interest concerns arising from the transaction.

Party arguments

Applicant: The applicant argued that the transaction would enable the creation of an independently managed platinum group metals mine solely controlled by Royal Bafokeng Resources, facilitating direct public investment and resolving commercial disagreements between the joint venture partners. The restructuring was presented as necessary for sustainable, profitable, and safe operations.
Respondent: The respondent, represented by the Competition Commission, contended that although there was a product overlap due to the acquiring firm's prior shareholding, the transaction would not result in an increase in market share or alter the market structure. The Commission concluded that the merger was unlikely to substantially prevent or lessen competition and raised no public interest concerns.

Court’s reasoning

Legal principles

01
Competition Act 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 89 of 1998

Public interest considerations must be assessed in merger proceedings, but only where relevant concerns are identified.

Ratio, limits and disposition

Ratio decidendi

The Tribunal found that the proposed transaction, which increased Royal Bafokeng Resources' shareholding in the joint venture from 50% to 67%, did not result in any material change to market structure or market share. The product overlap was acknowledged but deemed insignificant, as the acquiring firm already held a substantial interest in the target firm. The Competition Commission's analysis was accepted, confirming that the merger was unlikely to substantially prevent or lessen competition. No public interest issues were identified. Accordingly, the merger was unconditionally approved.

Obiter and limits

The Tribunal noted that the restructuring of the joint venture would resolve commercial disagreements and promote sustainable operations.
It was observed that the resources sector constitutes the largest portion of the Royal Bafokeng Nation Development Trust's interests.

Court disposition

Merger unconditionally approved.

The merger between Royal Bafokeng Resources (Pty) Ltd and Bafokeng Rasimone Platinum Mine Joint Venture is unconditionally approved.
A Merger Clearance Certificate is issued to the parties.

Source and reliance status

Competition Tribunal

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Judgment text

The complete available source text.

Source document

Competition Tribunal

Judgment

[2009] ZACT 51

COMPETITION

TRIBUNAL SOUTH AFRICA

Case NO: 38/LM/Apr09

In the matter between:

Royal Bafokeng Resources (Pty) Ltd Acquiring Firm

And

Bafokeng Rasimone Platinum Mine Joint Venture Target Firm

Panel : Y Carrim (Presiding Member); M Mokuena (Tribunal Member) and M Holden (Tribunal Member)

Heard on : 08 July 2009

Decided on : 08 July 2009

Reasons Issued on : 30 July 2009

Reasons for Decision

Approval

[1] On 08 July 2009 the Competition Tribunal issued a Merger Clearance Certificate unconditionally approving the merger between Royal Bafokeng Resources (Pty) Ltd and Bafokeng Rasimone Platinum Mine Joint Venture. The reasons appear below.

Parties

[2] The acquiring firm is Royal Bafokeng Resources (Pty) Ltd (âRBRâ), a company incorporated in accordance with the laws of the Republic of South Africa. RBR is controlled by Lisinfo 223

Property 673 (Pty) Ltd, which is, in turn controlled by Pacific Breeze Trading 673 (Pty) Ltd1 (âPacific Breezeâ).

[3] The primary target firm is Bafokeng Rasimone Platinum Mine Joint Venture (âBRPM JVâ) an unincorporated joint venture. The BRPM JV is jointly controlled by RBR, the primary acquiring firm in the instant transaction and Rustenburg Platinum Mines Ltd2 (âRPMâ). The BRPM JV does not control any firm.

Transaction

[4] The Royal Bofokeng Nation previously held joint control of the target firm. The interests in the BRPM JV were held as follows: RBR as to 50% and Rustenburg Platinum Mines Ltd, which is a subsidiary of Anglo Platinum Ltd 50%. In terms of the proposed transaction, RBR intends to increase its shareholding in BRPM JV from 50% to 67% by acquiring an additional

17% share in RPM.

Parties Activities

[5] The Royal Bafokeng Nation Development Trust (âRBN Development Trustâ) has through its various subsidiaries a diversified investment portfolio with assets in the resources; industrial and financial sectors. In the resources sector it has assets and interests in platinum; chrome and quarrying industries.3 In the industrial sector it has assets and interests in the packaging, consumer, motor and construction sectors. In the financial

sector it has assets and interests in a number of investment companies.

[6] BRPM JV mines platinum group metals (âPGMsâ) concentrate, which is shared proportionally by the joint venture partners, namely RBR and RPM. Then RBR sells its share of the concentrate to RPM in terms of an off-take agreement.

Rationale for the Transaction

[7] The RBN Development Trust intends to create an independently managed PGM mine which is solely controlled by RBR and which will attract direct public investment for its operations and further development.

[8] From BRPM JV the transaction will allow BRPM JV to be restructured so as to resolve the certain commercial disagreements between RPM and RBR on an appropriate and mutually beneficially basis and so as to ensure that the BRPM JV operates on a sustainable basis, profitably and safely.

Competition Analysis

[9] The proposed transaction results in a product overlap in as far as the acquiring firm has prior shareholding in the primary target firm. The Commission however found that this overlap will not result in an increase in the market share or change in market structure. We therefore agree with the Commissionâs conclusion that the transaction is unlikely to substantially prevent or lessen

competition.

[10] There are no public interest issues and accordingly the transaction is unconditionally approved.

_______ 30 July 2009

Y Carrim Date

Tribunal Member

M Mokuena and M Holden concurring

Tribunal Researcher : Jabulani Ngobeni

For the merging parties : Bell Dewar

For the Commission : Mfundo Ngobese (Mergers and Acquisitions)

1 Pacific Breeze is controlled by Royal Bafokeng Holdings (Pty) Ltd (âRBHâ), which is turn controlled by the Royal Bafokeng Nation Development Trust (âRBND Trust). RBH controls several subsidiaries including the following RBH Resources Holdings (Pty)Ltd; Royal Bafokeng Tholo Investment Holding Company (Pty)Ltd and Royal Bafokeng Impala Investment Holding Company (Pty)Ltd.

2 RPM has several subsidiaries including: Bafokeng Rasimone Management Services (Pty) Ltd; Kwanda Platinum Mine; Modikwa Mining Personnel Services (Pty) Ltd and Modikwa Platinum Mine (Pty) Ltd. RPM is controlled by Anglo Platinum Ltd. Anglo Platinum control several subsidiaries including Anglo Platinum Development Ltd; Anglo Platinum Shared Services Unit (Pty) Ltd; Potgietersrus Platinum Ltd and Kaymin Resources Ltd.

3 According to the parties the resources sector makes up the largest portion of the RBN Development Trust interests.

Authorities

Authorities used by the court

Cases, legislation, regulations, and constitutional provisions identified in the available record.

Competition Act 89 of 1998

Legislation

Legislation referenced in the available case record.

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