Schumann Sasol (South Africa) (Pty) Ltd and Price's Daelite (Pty) Ltd (23/LM/May01) [2001] ZACT 28 (18 July 2001)

Schumann Sasol (South Africa) (Pty) Ltd and Price's Daelite (Pty) Ltd (23/LM/May01) [2001] ZACT 28 (18 July 2001)

The Tribunal found that the proposed vertical merger between SCHS and PD would substantially prevent or lessen competition in both the upstream candle wax and downstream household candle markets. SCHS holds a dominant position in the wax market (75% share) and PD in the candle market (42% share), with high concentration ratios in both. The merger would raise entry barriers, facilitate market foreclosure, and enable SCHS to consolidate its dominance, reducing competitors to fringe status. The failing firm defence was rejected, as PD's failure was not shown to be imminent, and excess capacity and ease of entry suggest competition would intensify if PD exited. Pro-competitive efficiency...

Citation
[2001] ZACT 28
Parties
Applicant: Schumann Sasol (South Africa) (Pty) Ltd; Respondent: Price's Daelite (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
18 July 2001
Case Number
23/LM/May01
Procedural Posture
Large Merger Review / Final Decision
Outcome
Merger prohibited.
Judges
D.H. Lewis, M. Holden, U. Bhoola
Legal Topics
Vertical Merger, Market Concentration, Entry Barriers, Failing Firm Defence, Predatory Pricing, Public Interest
Competition Law Commercial and Corporate Vertical Merger Market Concentration Entry Barriers Failing Firm Defence Predatory Pricing Public Interest

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Parties

Schumann Sasol (South Africa) (Pty) Ltd

Applicant

Price's Daelite (Pty) Ltd

Respondent

Procedural Posture

Large Merger Review / Final Decision

Legal Issues

  1. 1 Does the proposed vertical merger between SCHS and PD substantially prevent or lessen competition in the relevant markets?
  2. 2 Are there pro-competitive efficiency gains that outweigh the anti-competitive effects of the merger?
  3. 3 Is the failing firm defence applicable to justify approval of the merger?

Ratio Decidendi

The Tribunal found that the proposed vertical merger between SCHS and PD would substantially prevent or lessen competition in both the upstream candle wax and downstream household candle markets. SCHS holds a dominant position in the wax market (75% share) and PD in the candle market (42% share), with high concentration ratios in both. The merger would raise entry barriers, facilitate market foreclosure, and enable SCHS to consolidate its dominance, reducing competitors to fringe status. The failing firm defence was rejected, as PD's failure was not shown to be imminent, and excess capacity and ease of entry suggest competition would intensify if PD exited. Pro-competitive efficiency...

Court Disposition

Merger prohibited.

Orders

  • The proposed merger between Schumann Sasol (South Africa) (Pty) Ltd and Price's Daelite (Pty) Ltd is prohibited.
  • No conditions or behavioural remedies are imposed, as none would cure the anti-competitive effects identified.