Senwesbel Limited & Senwes Limited v Suidwes Holdings (Pty) Limited (LM001Apr20) [2021] ZACT 6 (12 April 2021)

Senwesbel Limited & Senwes Limited v Suidwes Holdings (Pty) Limited (LM001Apr20) [2021] ZACT 6 (12 April 2021)

The Tribunal found that the evidence regarding the relevant product market was inconclusive, but alternative storage facilities such as silobags, bunkers, and zinc silos exert some competitive constraint on concrete silos. Market share calculations were disputed and unreliable, and no conclusive evidence of a substantial prevention or lessening of competition was established. The failing firm defence was considered, with the Tribunal accepting that Suidwes was in financial distress and that business rescue or liquidation was unlikely to preserve the business or its assets in the market. The remedies tendered by the merging parties—including divestiture of silos, pricing conditions,...

Citation
[2021] ZACT 6
Parties
Applicant: Senwesbel Limited; Applicant: Senwes Limited; Respondent: Suidwes Holdings (Pty) Limited
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
12 April 2021
Case Number
LM001Apr20
Procedural Posture
Large Merger Review / Reasons for Conditional Approval
Outcome
Conditional approval of the merger subject to remedies.
Judges
Mondo Mazwai, Enver Daniels, Imraan Valodia
Legal Topics
Large Merger Review, Failing Firm Defence, Market Definition, Divestiture Remedies, Public Interest Benefits, Agricultural Sector Merger
Competition Law Commercial and Corporate Large Merger Review Failing Firm Defence Market Definition Divestiture Remedies Public Interest Benefits Agricultural Sector Merger

Case Brief

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Parties

Senwesbel Limited

Applicant

Senwes Limited

Applicant

Suidwes Holdings (Pty) Limited

Respondent

Procedural Posture

Large Merger Review / Reasons for Conditional Approval

Legal Issues

  1. 1 What is the relevant product and geographic market for grain storage in the context of the merger?
  2. 2 Does the proposed merger substantially prevent or lessen competition in the identified markets?
  3. 3 Is Suidwes Holdings a failing firm, and what is the appropriate counterfactual absent the merger?

Ratio Decidendi

The Tribunal found that the evidence regarding the relevant product market was inconclusive, but alternative storage facilities such as silobags, bunkers, and zinc silos exert some competitive constraint on concrete silos. Market share calculations were disputed and unreliable, and no conclusive evidence of a substantial prevention or lessening of competition was established. The failing firm defence was considered, with the Tribunal accepting that Suidwes was in financial distress and that business rescue or liquidation was unlikely to preserve the business or its assets in the market. The remedies tendered by the merging parties—including divestiture of silos, pricing conditions,...

Court Disposition

Conditional approval of the merger subject to remedies.

Orders

  • The merger is approved subject to the divestiture of the Suidwes Strydpoort silo, Suidwes Wolmaransstad silo (including Africum Mill), and Senwes Jan Kemp Dorp silo, with a combined capacity of 178,000 tons.
  • Senwes must maintain the differential between handling and storage tariffs at specified silos for five years, unless technological improvements are made.