“However the 1996 European Commission report on the proposed merger of the platinum interests of Gencor (viz. Implats) and Lonrho (viz.
LPD) (henceforth 'the Gencor-Lonrho report') found that PGMs do not constitute a single relevant market but rather six relevant markets,
each comprising the various members of the platinum group of metals… Although subsequent developments may indicate a greater
degree of substitutability between platinum and palladium in the manufacture of auto-catalysts than that suggested in the EC report,
we are confident that the relevant markets identified by the European Commission remain valid…
9.
The Commission similarly defined separate markets for platinum, palladium, rhodium, iridium, ruthenium and osmium, and was of the
view that the relevant geographic market was international in all the above product markets.
Impact on competition
Horizontal impact
10.
The global market shares provided by the parties were based on 2003/2004 supply figures and while we are concerned that more current
figures were not provided, especially considering the nature of merger activity in the PGM sector, we nevertheless accept the Commission’s
submission that the increment in market share in all the relevant markets is relatively low. Furthermore, the merged entity faces competition from larger players such as Anglo American Platinum, Impala Platinum, Norilsk Nickel
(Russia) and Aquarius Platinum.
Vertical impact
11.
As stated above, Lonmin is involved in the refining and smelting of PGMs. Messina does not have its own smelting and refining operations
and pre-merger, it’s smelting and refining was contracted to Impala Refining Services in terms of an off-take agreement. According
to the parties, this agreement will terminate in June 2006, and the concentrate produced at Messina will be refined and smelted at
Lonmin’s facilities.
12.
According to the Commission, the volume of concentrates that Impala refines and smelts for Messina is insignificant. Furthermore,
Impala has consented to the termination of the agreement. In the Commission’s view, the transaction does not raise any vertical
foreclosure concerns. We agree with the Commission in this regard.
Public Interest
13.
According to the parties, the financial state of the Messina mining operations made it unsustainable and absent the merger, approximately
1532 jobs would be at risk. Post merger, however, with Lonmin’s intervention, the number of retrenchments would be substantially
reduced and approximately 284 semi-skilled workers and 116 workers at management, artisan, supervisor and administrator levels might
be retrenched (worse-case scenario). The parties submitted that the planned retrenchments could be attributed to the transition to
a safer productive mining method, changed working timetables and the reduction of high operating costs (labour costs constitute more
than 60% of the pre-merger total cost of Messina).
14.
The Commission was of the view that the retrenchments planned were still substantial and together with the parties agreed on a set
of conditions. However, it appeared from the record that the unions representing the employees at Messina Mine had not been consulted during the drafting of
the condition. Accordingly the Tribunal asked the parties to send copies of the Commission's recommendation to the various unions for
them to consider the proposed conditions and make submissions in relation to these. The parties subsequently furnished us with letters
from the unions which all stated that they had accepted the conditions. Furthermore, we requested that the various union representatives
be present at the hearing on 8 June 2005. At the hearing, the union representatives confirmed their acceptance of the conditions.
15.
The transaction was approved subject to the following conditions:
(i)
The maximum number of employees to be retrenched as a result of the proposed merger shall be approximately 284 semi-skilled employees
and approximately 116 employees at the management, artisan, supervisor and administrator levels, provided that in total there shall
not be more than 400 retrenchments.
(ii)
At least a quarter of the retrenched employees shall be short listed for appropriate positions that become available within the Lonmin
Group or elsewhere.
(iii)
The merged entity shall offer alternative skills training, as agreed with the relevant trade unions, to employees who are retrenched
as a result of the proposed merger. Such skills training will be available for a period of six months from the date on which notice
of the retrenchments is given to the relevant trade unions. The merged entity must ensure that the training commences prior to the
effective date of the retrenchments.
(iv)
The merged entity shall pay the costs of the alternative skills training offered by the merged entity, including accommodation and
two meals a day.
The conditions will endure for a period of 24 months from the date of the issue of the clearance certificate by the Competition Tribunal.
16.
We also requested the parties to provide us with more detail on the nature of the skills training they would offer. According to the
parties, the courses it would offer were bricklaying, electrical house wiring, welding and electronic appliance maintenance.
17.
We are satisfied that the conditions deal with any concerns arising out of this merger.
22 July 2005
Y Carrim
Date
Concurring: M Holden and M Madlanga
For the merging parties:
N Brown and J Meijer (Cliffe Dekker)
For the Commission:
H Ratshisusu (Mergers and Acquisitions)
For the Trade Unions:
M Leshilo (BMEAWU, Mpumalanga)
J Showale (BMEAWU, Messina)
G Mphela (NUM, South Plats)
T Mokgophi (NUM, Messina Plats)
J Scheepers (UASA, Mpumalanga)
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