[9]
Formex is involved in the manufacture and distribution of the following automotive components:
[9.1]
Catalytic converter pressings: a catalytic converter is a device, placed in the exhaust pipe, which converts various emissions into less harmful ones using, generally,
a combination of platinum, palladium and rhodium as catalysts. Catalytic converter pressings consist out of metal pressings that
join the exhaust pipes and the catalytic converter.
[9.2]
Other automotive pressings: these include sub-assembly and line of fuel tanks.
[9.3]
Pulleys: a pulley is a component that is characterised by two or more pulleys common to a belt. This allows for mechanical power, torque
and speed to be transmitted across axes. If the pulleys are of differing diameters, a mechanical advantage will be realised. Included
in a range of pulleys are crankshafts, power-steering, water pump and numerous components for crankshaft anti-vibration dampers.
[9.4]
Door locks: this division produces mechanical and electrical locking systems for the automotive industry.
Primary target firm
[10]
Autotube is involved in the manufacture of the following exhaust systems and components for the automotive industry:
[10.1]
Manipulated automotive exhaust tubing and assemblies: these are stainless steel pipes that are used for the exhaust of motor vehicles.
[10.2]
Muffler boxes: these are stainless steel silencer/exhaust boxes used to reduce engine noise.
[10.3]
Catalytic converter components: these are stainless steel housing with coated ceramic component, being part of a motor vehicle exhaust in order to reduce bad engine
fumes. Autotube’s catalytic converter components are metal rolled tubes which are shells that cover the catalytic converters.
Competition analysis
[11]
The merging parties submitted that there is no horizontal overlap in their activities as they manufacture different products. In their
view, the manufacturing and distribution of catalytic converter pressings and the manufacture and distribution of catalytic converter
metal rolled tubes were not in the same relevant product market. Catalytic converter pressings are metal pressings that join exhaust
pipes and the catalytic converter while metal rolled tubes are the shells that cover the catalytic converters. Catalytic converters
consist out of metal pressings (cones manufactured by Formex), metal rolled tubes (manufactured by Autotube), and monolith (brick)
inside. The cones and the tubes basically form the outside of the catalytic converter. At the hearing, the parties explained that the products
they produce do not compete in the same market because they differ in functionality. In addition, the technical skills and expertise
required to make them differ to a very large degree. They also confirmed that it would be difficult for a manufacturer to switch
from making catalytic converter pressings to making catalytic converter tubes, or vice versa, because such switching would require
huge capital investments, specialised technical skills and marketing and distribution strategies which would require some time to
establish. In light of the above, we conclude that there is no overlap in the activities of the parties.
[12]
The proposed transaction does not result in any vertical integration.
Public Interest
[13]
There are no public interest issues.
Conclusion
[14]
The merger is unlikely to substantially prevent or lessen competition. There are no public interest issues. Accordingly, the merger
is approved unconditionally.
________________
24 October 2007
Y Carrim
DATE
Tribunal Member
U Bhoola and M Holden concur in the judgment of Y Carrim
Tribunal Researcher
:
R Kariga
For the merging parties:
E Britz, Formex Industries (Pty) Ltd
For the Commission
:
I Selaledi (Mergers and
Acquisitions)
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