Imerys South Africa (Pty) Ltd. and Andalusite Resources (Pty) Ltd. merger:
In January 2015 the appellants, Imerys South Africa (Pty) Ltd. (herein ‘‘ISA’’) and Andalusite Resources (Pty) Ltd (herein ‘‘AR’’) notified the Competition Commission (the ‘‘Commission’’) of an intermediate merger in terms whereof ISA was to acquire all the shares in AR.
The appellants mine andalusite, a mineral from which refractories are made. Refractories are used to line furnaces, kilns and other containers exposed to high temperatures. ISA and AR are the only producers in South Africa, as the world’s largest producer of andalusite. The merging parties contended that even though the parties are the only two suppliers of andalusite, there are technical and / or economic substitutes for the product.
The Commission did not accept the appellants’ argument and said that the andalusite industry is already characterised by high barriers to entry with no possibility of new market entry by other competitors.
The Commission agreed with the Tribunal that the transaction will constitute a merger-to-monopoly and result in anti-competitive effects in relation to price and non-price competition and prohibited the merger.
The transaction between ISA and AR will result in the reduction of the number of competitors in the andalusite market, increase market share for the merged entity and market concentration, thereby reducing customer choice.