The Competition Tribunal yesterday clarified why it had only granted Northam Platinum limited rights to participate in the merger proceedings of Impala Platinum (Implats) and Royal Bafokeng Platinum (RBPlat), saying “on the public interest grounds, we found that Northam has little to add”.
This as it noted that, as a rival bidder for RBPlats, Northam had every incentive to delay and scupper the deal.
It has been battle royal between Implats and Northam to acquire RBPlat, but Implats got the upper hand.
This as Implats on Monday bought more shares in RBPlat, taking its shareholding to 37.93 percent of RBPlat’s shares in issue, with its sites set on buying more, while Northam has a 34 percent interest in RBPlat.
Earlier this year when the Competition Commission had recommended to the Tribunal that the deal be approved, Northam sought to intervene in merger proceedings. But both Implats and RBPlat tried to scupper this move.
The Tribunal granted Northam’s participation in the merger proceedings, but it was limited to making written and oral submissions on the vertical effects of the proposed merger, including the effect on competition in the local upstream market for the production and sale of primary concentrate; and the extent to which the merger effects could be prejudicial to junior miners in South Africa.
The hearings were heard last month.
The Tribunal said yesterday: “As a rival bidder for RBPlats, Northam has every incentive to delay and scupper the deal. It is aware that Implats’ public offer is time-sensitive with a longstop date of August 8, 2022.
“Furthermore, Northam as a rival bidder also stands the most to gain, commercially, than any other market participant, from access to Implats’ confidential information, which in this case would include competitively sensitive information,” the Tribunal said.
However, yesterday it shot down the junior miner public interest concerns among multiple other arguments by Northam to have been granted greater access to the proceedings.
Of note, it said that the fact that Northam was a rival bidder was relevant to the exercise of its discretion in this matter, balanced against the possible assistance an intervenor could provide it with.
The Tribunal said although Northam had conceded that it was a rival bidder, the firm had “went as far as suggesting” that the Tribunal ought to delay the assessment of the proposed merger, wait until the Commission had completed its assessment of the Northam proposed merger, and then somehow consolidate the two matters into one hearing at some future date - a point which it later disavowed during argument, the Tribunal said.
It also said, “There is no certainty that Northam will be allowed to submit a separate merger filing under Commission Rule 28, so the Commission’s investigation into its transaction has not taken place. Moreover, there is no legal basis for such a consolidation of merger proceedings at the Tribunal between two rivals as if this was a bidding process for a licence.
“The Tribunal is enjoined to assess the effects of a particular merger as set out in section 12A, and not to choose between winners and losers in a bidding war.“
The Tribunal said it had allowed Northam limited rights to participate because its unique position in the market could assist it in improving its understanding of the market dynamics at a local level.
It said Northam was a miner that straddled the gap between the junior and major players. As a mid-sized miner, it was both a customer of the larger players and a supplier to the smaller junior players.
“In balancing the potential delays, were Northam to be granted the full suite of procedural rights against the degree of assistance that Northam as a mid-level miner, who is both customer of the larger players and supplier to the junior miners, could provide us with, we have limited its participation to grant it entry on the issues that will be of most assistance to the Tribunal’s deliberation, while limiting Northam’s access to the confidential recommendation,” it concluded.
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