WBHO Construction (Pty) Ltd v Trencon Construction (Pty) Ltd (LM269Mar19) [2019] ZACT 57 (19 August 2019)

WBHO Construction (Pty) Ltd v Trencon Construction (Pty) Ltd (LM269Mar19) [2019] ZACT 57 (19 August 2019)

The Tribunal found that the proposed merger would not substantially prevent or lessen competition in any relevant market, as the combined market share of the merged entity would remain below 10% and market share accretion was insignificant. The presence of several prominent competitors, such as Aveng and Murray & Roberts, ensures continued competition. The vertical overlap in mesh and rebar supply was found not to pose foreclosure risks, as Trencon's procurement represents a small fraction of WBHO's sales and multiple suppliers exist. The transaction was found to promote public interest benefits, particularly the empowerment and development of historically disadvantaged persons and SMEs...

Citation
[2019] ZACT 57
Parties
Applicant: WBHO Construction (Pty) Ltd; Respondent: Trencon Construction (Pty) Ltd
Court
Competition Tribunal
Jurisdiction
South Africa
Judgment Date
19 August 2019
Case Number
LM269Mar19
Procedural Posture
Merger Review / Reasons for Decision
Outcome
The proposed merger is approved subject to conditions.
Judges
Yasmin Carrim, Andreas Wessels, Fiona Tregenna
Legal Topics
Merger Review, Public Interest Benefits, Market Share Analysis, Vertical and Horizontal Overlap
Competition Law Commercial and Corporate Merger Review Public Interest Benefits Market Share Analysis Vertical and Horizontal Overlap

Case Brief

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Parties

WBHO Construction (Pty) Ltd

Applicant

Trencon Construction (Pty) Ltd

Respondent

Procedural Posture

Merger Review / Reasons for Decision

Legal Issues

  1. 1 Whether the proposed merger between WBHO Construction and Trencon Construction is likely to substantially prevent or lessen competition in any relevant market.
  2. 2 Whether the transaction raises any significant public interest concerns under section 12A(3)(c) of the Competition Act.
  3. 3 Whether the conditions attached to the approval adequately address monitoring and reporting obligations for public interest benefits.

Ratio Decidendi

The Tribunal found that the proposed merger would not substantially prevent or lessen competition in any relevant market, as the combined market share of the merged entity would remain below 10% and market share accretion was insignificant. The presence of several prominent competitors, such as Aveng and Murray & Roberts, ensures continued competition. The vertical overlap in mesh and rebar supply was found not to pose foreclosure risks, as Trencon's procurement represents a small fraction of WBHO's sales and multiple suppliers exist. The transaction was found to promote public interest benefits, particularly the empowerment and development of historically disadvantaged persons and SMEs...

Court Disposition

The proposed merger is approved subject to conditions.

Orders

  • The merger between WBHO Construction (Pty) Ltd and Trencon Construction (Pty) Ltd is approved subject to the conditions set out in Annexure A.
  • The merging parties must submit annual reports to the Competition Commission detailing all joint venture projects undertaken as part of the WBHO Alliance.