At 22 percent, mining-related services accounted for most of the merger activity that was handled by the Competition Authority in the 2014/15 financial year. Close behind was retail with 16 percent and at the bottom of the list were insurance, tyre services, property, advertising, security services, fast food and pharmaceuticals with three percent.
At the top of the mining sector list is the merger of BCL Investments and Tati Nickel which happened last year. The latter bought Tati Nickel Mining Company and Nkomati Nickel and Chrome Mine in South Africa. BCL entered into definitive transaction agreements with Norilsk Nickel to buy the Russian mining company’s operations in Africa as well as obtain a 50 percent participation interest in Nkomati and its 85 percent stake in Tati Nickel Mining Company in Botswana. This means that the South African mine which smelts its copper ore in Russia will now smelt it in Selebi Phikwe. The total expected consideration for the Assets payable by BCL to Norilsk Nickel amounts to US$337 million payable in cash.
The other mergers were of Belabela Quarries and B&E. Three other mergers (Fluid Systems Botswana and Manuli, Jindal BVI and Glendal Trading as well as Torre International Holdings and Equipment Sales and Services) were carried forward to the 2015/16 financial year because their date of determination fell within that period.
“Merger activity experienced a slight drop in the year under review as compared to the previous year which may be on account of challenging economic conditions. The total number of mergers notified in 2014/15 was 32. This was a slight decrease from the figure of 33 in the previous year. Out of these 32 notifications, six mergers (18.8 percent) were discovered by the Authority, showing an increase of 6.7 percentage points on proactively identified mergers as compared to the financial year 2013/14,” the Authority’s 2014/15 annual report says.
During the year under review, the Authority made determinations of 26 merger notifications against a target of 36. This figure was 27.8 percent below the 2014/15 target.
“The determination of 26 mergers is a 21 percent decrease from 33 in the previous year and of these 26 cases, three were approved with conditions and 23 without conditions. No merger was prohibited, as appropriate remedies and conditions have been put in place to address a substantial lessening of competition, dominance and public interest concerns,” the report says.
Mergers are the responsibility of the Department of Mergers and Monopolies which assesses whether proposed mergers and acquisitions are likely to prevent or substantially lessen competition, restrict trade or the provision of any service or endanger the continuity of supplies or services or are likely to result in any enterprise (including an enterprise which is not involved as a party in the proposed merger) acquiring a dominant position in the market.