Precrete Holdings And Platchro Holdings

The judgment

The court's own file

Wd compatitionteibunal COMPETITION TRIBUNAL OF SOUTH AFRICA Case No: LM199Jan17 In the matter between: PRECRETE HOLDINGS (PTY) LTD Acquiring Firm and PLATCHRO HOLDINGS (PTY) LTD Target Firm Panel : Yasmin Carrim (Presiding Member) : Andiswa Ndoni (Tribunal Member) : Medi Mokuena (Tribunal Member Heard on : 29 March 2017 Order Issued on : 29 March 2017 Reasons Issued on 219 April 2017 Reasons for Decision Approval

[1]On 29 March 2017, the Competition Tribunal (“Tribunal”) approved the proposed transaction between Precrete Holdings (Pty) Ltd ("Precrete") and Platchro Holdings (Pty) Ltd (“Platchro”).

[2]The reasons for approving the proposed transaction follow. Parties to the Proposed Transaction Primary Acquiring Firm

[3]The primary acquiring firm is Precrete, a private company incorporated in accordance with the laws of the Republic of South Africa and is controlled by (4 PSG Private Equity (Pty) Ltd ("PSG PE”). PSG PE is an investment holding company and is not controlled by any one firm. Precrete controls a number of firms including Precrete Mining (Pty) Ltd, Precrete (Pty) Ltd and Precrete Services (Pty) Ltd amongst others. Primary Target Firm (5) (6) The primary target firm is Platchro, a private company incorporated in accordance with the laws of the Republic of South Africa and is jointly controlled by the trustees of the S&C trust and the J&L trust. Platchro controls a number of firms including Platchro Mining Services (Pty) Ltd and Platchro Rasimone (Pty) Ltd, amongst others. Proposed Transaction and Rationale M7 (8) (1 Precrete intends to acquire all the issued shares of and loan claims against Platchro. Post-transaction, Precrete will have sole control over Platchro. Precrete submits that the proposed transaction represents an opportunity for it to diversify its customer base. From Platchro's perspective the proposed transaction represents an opportunity for the trustees to dispose of their shareholding. Relevant Market and Impact on Competition [10]Precrete specialises in the manufacture and supply of pre-mix concrete products as well as the application and installation of secondary support ‘solutions in mines, predominantly in the platinum mining sector.

[11]Platchro also provides mining services to customers, predominantly in the platinum mining sector. Platchro supplies secondary support services to one of its clients in one location,

[12]The Commission accordingly found a horizontal overlap in the application and installation of secondary support solutions. However, it found that the proposed transaction is unlikely to substantially prevent or lessen competition in the relevant market due to the fact that Platchro has only one customer in the provision of secondary support solutions which customer accounts for less than 10% of its revenue. The market share accretion of the merged entity was estimated to be less than 2%.' Furthermore, post-transaction the merged entity will continue to face significant competition constraints from a number of large reputable firms such as Guncrete, Aveng Mining, and Murray and Roberts

[13]At the hearing the merging parties also pointed to the fact that the relevant market is a tender market and that generally, when a tender comes up, the playing fields become levelled with competitors possessing relatively even strengths.2

[14]The Commission is therefore of the view that the proposed transaction is unlikely to substantially prevent or lessen competition in any of the relevant markets. We coneur with this finding. Public Interest

[15]The merging parties submit that the proposed transaction will not result in any adverse effects on employment as no retrenchments or job losses are foreseen to occur as a result of the merger.

[16]The Commission was of the view that the proposed transaction is unlikely to raise concems on any other public interest grounds. 1 This figure is based on estimates provided by competitors of the merging parties. 2 Page 3 of the Transcript. 3 Page 346 of the Merger Record. Conclusion

[17]In light of the above, we conclude that the proposed transaction is unlikely to substantially prevent or lessen competition in any relevant market. In addition, no public interest issues arise from the proposed transaction. Accordingly, we approve the proposed transaction unconditionally. \ h 19 April 2017 Ms Yasmin Carrim DATE Mrs Medi Mokuena and Ms Andiswa Ndoni Tribunal Researcher: Hayley Lyle For the merging parties: Nazeera Mia of Cliffe Dekker Hofmeyer For the Commission: Kholiswa Mnisi