Total Tenesol

The judgment

The court's own file

competitiontribunal sduth africa fax form to Lulama Mtanga fax 0116699001 Bowman Gilfillan Inc Legal Services 44283 Competition Commission “ref 69/LM/Augt11 em date 07 October 2011 from Tebogo Mputle pages 5 (including this page) re Reasons any dissemination of this communication is strictly prohibited. This message is intended only for the use of the addressee and may contain information that is privileged and confidential. If you are not the intended recipient, communication in error, please notify us immediately by telephone. you are hereby notified that If you have received this Attached please find the Tribunal’s reasons for the decision Regards WD Tebogo Mputle CC: Lerato Monareng - 44088 in the above matter. 3 Floor, Mulayo, the dti Campus, 77 Meintjies Street, Sunnyside, Pretoria Tel: +27 (12) 394 3300 Fax: +27 (12) 3940169 Email: ctsa@comptrib.co.za D4 Private Bag X24, Sunnyside 0132 Website: http:/Avww.comptrib.co.za competitiontribunal Sekek ate sea COMPETITION TRIBUNAL OF SOUTH AFRICA Case No: 69/LM/Augi1 In the matter between: Total Energie Development S.A.S Acquiring Firm And Tenesol S.A Target Firm Panel : Norman Manoim (Presiding Member) Andiswa Ndoni (Tribunal Member) Medi Mokuena (Tribunal Member) Heard on : 21/09/2011 Order issued on : 21/09/2011 Reasons issuedon_ : 06/10/2011 Reasons for Decision APPROVAL

[1]On 21 September 2011 the Competition Tribunal (‘Tribunal’) unconditionally approved the proposed transaction between Total Energie Development S.A.S and Tenesol S.A. The reasons for approval of the proposed transaction follows below. THE MERGING PARTIES

[2]This is an international merger between Total Energie Development S.A.A (“TED”), the primary acquiring firm, a subsidiary of Total which is incorporated under the laws of France, and Tenesol S.A, the primary target firm, which is jointly controlled by the Total Group and EDF Energie Nouvelles Reparties S.A (“EDF”), also a French based company.

[3]Total group has various subsidiaries in South Africa and is active in among other things; the production and distribution of petrochemicals, lubricants, oils, gas, agro- chemicals, etc. Internationally, it is active in the solar energy sector, particularly in the manufacture and sale of solar cells, solar modules and solar systems for the generation of solar energy. In South Africa, it is only involved in the solar energy sector through its 50% shareholding in Teneso! SA which is involved in the manufacturing of solar modules.

[4]Total also has controlling interest in Photovoltech N.V, a firm active in the production and sale of solar cells. It also has sole control in SunPower Corporation (“SunPower’), a firm active in the design, manufacture and supply of solar cells, modules and systems. SunPower is a United States based company which recently entered the South African market through Total’s recent acquisition’. However it has not yet commenced with production in South Africa.

[5]Tenesol internationally is active in the production and supply of solar modules and solar systems. It was submitted that 96.1% of the solar modules that Tenesol produces in South Africa are exported to Tenesol in Europe for the production of solar systems, and that the solar systems produced by Tenesol in Europe are sold worldwide except in South Africa. The remaining 3.9% of the modules produced in South Africa by Tenesol are sold in South Africa to producers of solar systems. THE TRANSACTION AND RATIONALE

[6]This transaction has been notified with and cleared by various jurisdictions including the European Commission.

[7]Essentially, this transaction is a move from joint to sole control as TED intends to acquire the remaining 50% shares and the voting rights held by EDF in Tenesol. That way TED will acquire sole control (100%) of the shares and voting rights in Tenesol. ‘ This transaction was notified and approved in the EU, and was not notifiable in South Africa. COMPETITION ASSESSMENT

[8]There is a horizontal overlap in the activities of the merging parties, in respect of the production and supply of solar modules as a result of Total’s 50% shareholding in Teneso!l. However this does not result in an accretion in market share or any change in the market structure given that this deal is essentially a move from joint to sole control.

[9]There is currently no vertical integration in respect of the merging parties’ activities in South Africa. However, the Commission did a future market analysis for when SunPower does commence production in South Africa, and found that this would result in a horizontal overlap with respect to solar modules and a vertical overlap with respect to solar cells, solar modules and solar systems. Nevertheless the Commission found that this would not raise serious competition concerns as Tenesol’s market shares are relatively low (about 15%) in the market for production and supply of solar modules in South Africa. The Commission also found that SunPowers entry into this market is unlikely to increase this market share significantly as there are other larger competitors in this market.

[10]From a vertical perspective, the Commission found that SunPower’s entry is likely to allow Total to become fully vertically integrated in the solar energy market in South Africa, though this would not result in any foreclosure concerns given the | insignificance of SunPower’s entry in this market. PUBLIC INTEREST

[11]The merging parties in their competitiveness report said that the proposed transaction will not result in any job losses. The Commission in its investigation established that 13 employees were voluntarily retrenched prior to the transaction. The Commission is of the view that these retrenchments were operational and in the normal course of business of Tenesol and not related to the merger.

[12]This deal therefore does not give rise to any public interest issues as the job losses are not as a result of the merger. CONCLUSION

[13]We therefore conclude that the proposed transaction is unlikely to substantially prevent or lessen competition in any of the relevant identified markets. 3 i a 06/10/2011 N Manoim |; Date li M Mokuena and A Ndoni concurring Tribunal Researcher: Londiwe Senona For the merging parties: Bowman Gilfillan For the Commission: Lerato Monareng . i” P| 8. -x.-4- Communication Result Report ( 7. Oct. 2011 9:38) x ex No Date/Time: 7. Oct. 2011 9:27 ile : No, Mode ee Destination Pa (s} Result WF sont 71649 Memory TX 00116699001 - ep 5 0 es tebogo 44983 , oC 44088 OK Reason fer error - _ 1). Hang up or tine tait E13)” No answer £4} NoSLaccimit ion E15) Exceeded max. E-mail size : simite connection competitiontribunal santh africa ~q to "Llama Mtanga fax 0116899001 Bowman Gilfillan Inc Legal Services 44283 Competition Commission ref = 69/LM/Augi1 date 07 October 2011 from Tebogo Mputie pages 5 (including this page) re Reasons This messageis Intended only for the use of the addressee and may contain information that ie privileged and confidential, {f you are not the intended recipient, you are heteby noted that ‘any dissemination of this communication is strictly prohibited, If yau have tecsived this ‘somnmunication in error, please nofify us immediately ay talephona. Attached please find the Tribunal's reasonsfor the decision in the above matter. Regards > Tebogo Mputla GC: Lerato Monareng - 44088 8° Floor, Mulayo, the di Campus, 77 Msinfjios Street, Sunnyside, Pretonta Sg Private Bag X24, Sunnyside O13Z Seer ded ann Boe a Pat ak NARS Erma tet puib.co.zaza Website: