SASOL LIMITED
Primary Acquiring Firms
ENGEN LIMITED
PETRONAS INTERNATIONAL CORPORATION LIMITED
And
SASOL OIL (PTY) LTD
Primary Target Firms
ENGEN LTD
With the following parties intervening:
BP SOUTHERN AFRICA (PTY) LTD First Intervening Party
SHELL SOUTHERN AFRICA ENERGY (PTY) LTD and
SHELL SOUTHERN AFRICA MARKETING (PTY) LTD Second Intervening Party
CHEVRON SOUTH AFRICA (PTY) LIMITED Third Intervening Party
TOTAL SOUTH AFRICA (PTY) LTD Fourth Intervening Party
MASANA PETROLEUM SOLUTIONS (PTY) LTD Fifth Intervening Party
REASONS FOR DECISION
The Merging Parties
12
Sasol Limited
12
PICL
16
Engen
16
Empowerment parties
17
The Intervening parties
17
BP
18
Caltex
18
Shell
18
TOTAL
18
Masana
18
Department of Minerals and Energy
19
The Hearings
20
Refining And Marketing White Fuels In South Africa – The Background
22
Introduction
22
The development of white fuel production capacity
23
Public Regulation
31
The Development of Logistics Capacity
36
The Components Supply Agreement
46
Summary and Conclusion
54
Rationale For The Transaction
57
The counter factual – independent entry by Sasol into the retail market
65
The Relevant Markets
71
The relevant product markets and market shares
71
The relevant geographic market and market shares
75
The Competition Analysis
85
Introduction
85
Foreclosure – profitability and credibility
93
Rates of growth in the demand for white fuel products
106
Logistics – pipeline, rail and road
110
Introduction
110
Diesel and the Crude Oil Pipeline
117
Rail and Road Logistics
140
Road and Rail Logistics – conclusions
160
Expanding the DJP
163
De-bottlenecking the northern DJP
169
Strategic Responses to Foreclosure – prioritisation and retaliation
173
Prioritisation
174
Retaliation
182
Foreclosure – summary and conclusions
185
A Substantial Lessening of Competition – our findings
190
A substantial lessening of competition in the downstream market
191
A substantial lessening of competition in the upstream market
198
Cartelisation and the fuel markets
203
Efficiencies
205
Public Interest
211
Remedies
212
A brief summary and conclusion
223
APPENDIX A
231
IN THE COMPETITION TRIBUNAL OF SOUTH AFRICA
CASE NO: 101/LM/Dec04
In the large merger between:
SASOL LIMITED
Primary Acquiring Firms
ENGEN LIMITED
PETRONAS INTERNATIONAL CORPORATION LIMITED
And
SASOL OIL (PTY) LTD
Primary Target Firms
ENGEN LTD
With the following parties intervening:
BP SOUTHERN AFRICA (PTY) LTD First Intervening Party
SHELL SOUTHERN AFRICA ENERGY (PTY) LTD and
SHELL SOUTHERN AFRICA MARKETING (PTY) LTD Second Intervening Party
CHEVRON SOUTH AFRICA (PTY) LIMITED Third Intervening Party
TOTAL SOUTH AFRICA (PTY) LTD Fourth Intervening Party
MASANA PETROLEUM SOLUTIONS (PTY) LTD Fifth Intervening Party
REASONS FOR DECISION
Order
1.
The proposed joint venture / merger between Sasol Limited, Engen Limited, Petronas International Corporation Limited and Sasol Oil
(Pty) Ltd is prohibited. The reasons for this decision follow.
The Transaction
2.
The parties to the proposed transaction are:
-
Sasol Limited (“Sasol Ltd”);
-
Sasol Oil (Pty) Ltd (“Sasol Oil” or “Sasol”), also referred to as Sasol Liquid
Fuels Business (“Sasol LFB”), of which 98% is held by Sasol Ltd and 2% is
held by Sizanani Trust;
-
Petroliam Nasional Berhad ("Petronas"), a Malaysian state oil company;
-
Petronas International Corporation Limited (“PICL”) is wholly-owned subsidiary of Petronas;
-
Afric Energy Resources (Pty) Limited ("AER"), a wholly owned subsidiary of Worldwide African Investment Holdings (Pty) Limited
("Worldwide”);
-
Engen Limited (“Engen”) of which 80% is held by PICL and 20% held by AER;
-
Engen Holdings (Pty) Ltd, a wholly owned subsidiary of Engen;
-
Engen Management Services (Pty) Ltd, a wholly owned subsidiary of Engen;
-
Engen Petroleum Limited, a wholly owned subsidiary of Engen Management Services; and
-
Leopont 512 Properties (Pty) Ltd which will change its name to Tshwarisano LFB Investment (Pty) Limited (“Tshwarisano”).
3.
The current ownership structure of the various parties is depicted in the diagram below:
4.
The proposed transaction involves the conclusion of a share-for-share exchange agreement which will regulate the formation of a JV
to be named Uhambo Oil Limited (“Uhambo”). Engen will acquire the entire ordinary issued share capital of Sasol Oil.
In consideration for this, Sasol Limited will acquire 37,5% of the entire enlarged issued share capital of Engen. PICL will retain
37,5% of Engen, AER (PICL’s BEE partner) will retain 12,5% and Leopont (Tshwarisano) will acquire the remaining 12,5% of Engen.
5.
According to the merging parties, neither AER nor Tshwarisano will acquire control over Engen. However, as a direct consequence of
the acquisition by Engen of sole control of Sasol Oil and as consideration there for (and not as a separate transaction), PICL and
Sasol Limited will acquire joint control over Engen.
6.
The post merger ownership structure is depicted in the diagram below:
7.
The transaction will constitute a significant consolidation of the South African petroleum industry. Uhambo, the joint venture, will
comprise the white fuels produced by Sasol Oil at Secunda, Sasol’s 63,64% share of the Natref refinery in Sasolburg, as well as Enref
.RTF of original document