Shiselweni Forestry Company Ltd v Peak Timbers Ltd and Another (LM120Sep20) [2021] ZACT 13 (6 April 2021)

Shiselweni Forestry Company Ltd v Peak Timbers Ltd and Another (LM120Sep20) [2021] ZACT 13 (6 April 2021)

The Tribunal found that the proposed merger between Shiselweni Forestry Company Ltd and the businesses of Peak Timbers Ltd and Peak Forest Products (Pty) Ltd would not result in a substantial prevention or lessening of competition in the relevant timber markets. The Tribunal accepted the Competition Commission's findings that, although there were horizontal and vertical overlaps, the merged entity's market shares were not sufficient to confer market power in most markets. The main theory of harm related to input foreclosure, specifically the risk that the merged entity might divert supplies of untreated transmission poles and mining timber away from third-party customers to its own...

Citation
[2021] ZACT 13
Parties
Applicant: Shiselweni Forestry Company Ltd; Respondent: Peak Timbers Ltd; Respondent: Peak Forest Products (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
6 April 2021
Case Number
LM120Sep20
Procedural Posture
Large Merger / Conditional Approval
Outcome
Merger conditionally approved subject to behavioral remedies.
Judges
M Mazwai, A Wessels, T Vilakazi
Legal Topics
Input Foreclosure, Vertical Integration, Supply Conditions, Merger Control, Market Share Analysis
Competition Law Commercial and Corporate Input Foreclosure Vertical Integration Supply Conditions Merger Control Market Share Analysis

Case Brief

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Parties

Shiselweni Forestry Company Ltd

Applicant

Peak Timbers Ltd

Respondent

Peak Forest Products (Pty) Ltd

Respondent

Procedural Posture

Large Merger / Conditional Approval

Legal Issues

  1. 1 Whether the proposed merger would result in a substantial prevention or lessening of competition in the relevant timber markets.
  2. 2 Whether the merger would create input foreclosure effects for downstream customers of timber products.
  3. 3 Whether the imposed conditions adequately address competition and public interest concerns.

Ratio Decidendi

The Tribunal found that the proposed merger between Shiselweni Forestry Company Ltd and the businesses of Peak Timbers Ltd and Peak Forest Products (Pty) Ltd would not result in a substantial prevention or lessening of competition in the relevant timber markets. The Tribunal accepted the Competition Commission's findings that, although there were horizontal and vertical overlaps, the merged entity's market shares were not sufficient to confer market power in most markets. The main theory of harm related to input foreclosure, specifically the risk that the merged entity might divert supplies of untreated transmission poles and mining timber away from third-party customers to its own...

Court Disposition

Merger conditionally approved subject to behavioral remedies.

Orders

  • The merger is approved subject to the conditions set out in Annexure A.
  • The merged entity must publish a non-confidential version of the conditions on its website within five days of implementation and provide them to existing customers within 14 days of approval.