The Competition Tribunal has issued an order granting platinum producer Northam Platinum leave to intervene in the large-scale merger between platinum miners Impala Platinum (Implats) and Royal Bafokeng Platinum (RBPlat).
The Competition Commission, which investigates large mergers before referring such to the tribunal for a decision, had previously recommended that the proposed merger be approved with conditions.
However, Northam requested to intervene in and assist in the tribunal processes.
Northam posited that, as an intervenor, it could assist and show the limited alternatives in the primary concentrate market, as well as the actual dynamics in the markets, so that these concerns could possibly be conditions that the tribunal could impose on any approval of transactions.
Both Implats and RBPlat opposed Northam’s intervention application, which was heard by the tribunal earlier this month, during which Northam called the merger “anti-competitive”.
Implats disputed this, saying there was no evidence to back Northam’s claims.
It said the merger involved plans to increase smelting capacity, without which closures would have happened instead.
Implats and RBPlat informed their shareholders that the proposed deal – whereby Implats intended to acquire all RBPlat shares it does not already own – was likely to be delayed as a result of the intervention application. As such, Implats extended the deadline for the fulfilment or waiver of conditions to the transaction to August 8.
In Northam’s application to intervene, it claimed that the preceding investigation by the commission had got both the product and geographic market definition incorrect insofar as the transaction was concerned, adding that the investigation was incomplete because it had been concluded under considerable time pressure.
Further, Northam said the commission had made “fundamental errors because of market analysis mistakes, horizontal and vertical effect mistakes and lack of a complete record of relevant information”.
Implats defended the merger, saying its share of the market would only increase from 17% to 20% after the takeover was concluded. It said this three percentage point increase was too small to actually change the structure of the market.
Northam, however, countered that any changes in ownership would indeed have implications on market structure owing to the market being dominated by three majors.
The commission said it would abide by the tribunal’s decision in respect of the intervention application.
Northam’s interventions may now proceed, but are limited to making written and oral submissions on the potentially harmful vertical effects of the proposed merger, including the effect on competition in the local upstream market for the production and sale of primary concentrate. Northam may also make submissions on the extent to which the merger’s effects could be prejudicial to junior miners in South Africa.
In terms of the tribunal’s order, Northam's independent legal representatives and economic advisers have been granted access to the confidential version of the commission’s merger recommendations, subject to certain confidentiality undertakings.