South Africa Judgment

Competition Tribunal

Trafigura PTE Ltd v Puma Energy Holdings PTE Ltd (LM002Apr21) [2021] ZACT 38 (1 June 2021)

Competition Law Merger Control Vertical Integration Foreclosure Concerns Public Interest

Citation: [2021] ZACT 38
Status: Judgment
Jurisdiction: South Africa
Court: Competition Tribunal
Panel: Andreas Wessels, Enver Daniels, Yasmin Carrim
Case number: LM002Apr21

More details

Court: Competition Tribunal
Panel: Andreas Wessels, Enver Daniels, Yasmin Carrim
Case number: LM002Apr21

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Professional case brief

Research organized from the available case record

Source document

Holding and result

The Tribunal found that there is no horizontal overlap between the activities of Trafigura and Puma Energy in South Africa. The vertical relationship between the upstream trading activities of Trafigura and the downstream distribution activities of Puma Energy does not raise foreclosure concerns due to their low market shares and the presence of effective competitors. The transaction does not give rise to any public interest concerns. Accordingly, the Tribunal approved the proposed transaction unconditionally.

Court disposition

The proposed transaction is approved unconditionally.

Orders

The merger between Trafigura PTE Ltd and Puma Energy Holdings PTE Ltd is approved without conditions.

Material facts

Parties

Trafigura PTE Ltd

Applicant Counsel: K McLean, J Lurie, M Sambo

Puma Energy Holdings PTE Ltd

Respondent

Procedural history

Posture

Merger Control / Final Determination

Questions and positions

Legal issues

01
Whether the proposed acquisition of shares by Trafigura in Puma Energy raises competition concerns in South Africa.
02
Whether the transaction gives rise to any public interest concerns.

Party arguments

Applicant: Trafigura argued that the acquisition would not result in any substantial lessening of competition, as there is no horizontal overlap between the parties and their market shares in the affected vertical markets are low. The transaction is unlikely to result in foreclosure or anti-competitive effects, and there are no public interest concerns.
Respondent: The Competition Commission submitted that the transaction has a vertical dimension but is unlikely to lead to foreclosure concerns due to the merging parties' low market shares and the presence of strong competitors. The Commission concluded that the transaction would not substantially prevent or lessen competition and does not raise public interest concerns.

Court’s reasoning

Legal principles

01
Competition Act, 89 of 1998

A merger may be approved unconditionally if it is unlikely to substantially prevent or lessen competition in any relevant market and does not raise public interest concerns.

Ratio, limits and disposition

Ratio decidendi

The Tribunal found that there is no horizontal overlap between the activities of Trafigura and Puma Energy in South Africa. The vertical relationship between the upstream trading activities of Trafigura and the downstream distribution activities of Puma Energy does not raise foreclosure concerns due to their low market shares and the presence of effective competitors. The transaction does not give rise to any public interest concerns. Accordingly, the Tribunal approved the proposed transaction unconditionally.

Obiter and limits

The Tribunal noted the importance of continued competitive constraints in vertically affected markets to prevent foreclosure.
The Tribunal observed that the absence of public interest concerns further supported unconditional approval.

Court disposition

The proposed transaction is approved unconditionally.

The merger between Trafigura PTE Ltd and Puma Energy Holdings PTE Ltd is approved without conditions.

Source and reliance status

Competition Tribunal

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Judgment text

The complete available source text.

Source document

Competition Tribunal

Judgment

[2021] ZACT 38

COMPETITION

TRIBUNAL

Case no: LM002Apr21

In the matter between:

Trafigura PTE Ltd Primary Acquiring Firm

And

Puma Energy Holdings PTE Ltd Primary Target Firm

REASONS

FOR DECISION

Unconditional approval

[1] On 13 May 2021, the Competition Tribunal (âTribunalâ) unconditionally approved the proposed transaction in terms of which Trafigura PTE Ltd (âTrafiguraâ) intends to acquire an additional 45% of the shares in Puma Energy Holdings PTE Ltd (âPuma Energyâ). Post-merger, Trafigura will own and control Puma Energy.

[2] The acquiring firm is Trafigura, a company incorporated in accordance with the company laws of Singapore. Trafigura and all its subsidiaries will hereinafter be referred to as âTrafiguraâ. Trafigura is an international commodity trader, with business operations in more than 20 countries worldwide. Its core business is the physical trading (i.e., supply and transportation) of oil and petroleum, minerals and metal commodities globally. In South Africa, Trafigura is involved in trading activities relating to oil and petroleum products, as well as metals and minerals. Trafigura also supplies fuel and gas oil (bunkering) through a joint venture, TFG Marine.

[3] The target firm is Puma Energy, a Singaporean company in which Trafigura is a shareholder pre-merger. Puma Energy has several subsidiaries globally. Its activities in South Africa include the distribution of refined petroleum products, including petrol, diesel, kerosene and aviation fuel.

[4] The Competition Commission (âCommissionâ) found no horizontal overlap between the activities of the merger parties but found that the proposed transaction has a vertical dimension since Trafigura is active in the (upstream) trading of crude oils and the supply of refined petroleum products, whilst Puma Energy is active in the (downstream) wholesale and distribution of refined petroleum products. The Commission concluded that this is unlikely to lead to any foreclosure concerns given the merging partiesâ relatively low market shares in the vertically affected markets and the continued constraints that will be faced from competitors after the proposed transaction. The Commission ultimately concluded that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market and we concur with that conclusion.

[5] The proposed transaction does not give rise to any public interest concerns.

[6] In light of the above, we approved the proposed transaction unconditionally.

1 June 2021

Mr Andreas Wessels Date

Mr Enver Daniels and Ms Yasmin Carrim concurring

Tribunal Case Manager : Kgothatso Kgobe

For the Merging Parties : K McLean, J Lurie, and M Sambo of Bowmans

For the Commission : Z Hadebe

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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