Automated Summary
Key Facts
The Competition Tribunal of South Africa conditionally approved the merger between Evraz Group SA (acquiring firm) and Highveld Steel and Vanadium Corporation Ltd (target firm) on 25 April 2007. The approval is subject to divestiture of an interest in Mapochs mine and Vanchem plants as confirmed by the European Commission. Evraz's rationale for the transaction includes geographic diversification in steel and access to Southern Africa's construction sector, while Anglo American's strategy focuses on core mining activities. The merger creates a new entity controlling nearly half of the global vanadium value chain, prompting EC concerns about potential market dominance in vanadium feedstock, oxides, and finished products. Conditions imposed by the EC and adopted by the Tribunal include divestiture of Highveld's vanadium businesses and supply commitments to maintain competition.
Issues
- The tribunal considered the compatibility of the European Commission's divestiture conditions with South African merger regulations. Both the merging parties and the Competition Commission agreed to adopt the EC's conditions as the Tribunal's order, including simultaneous filing of notices with the EC and South African Commission. The EC's conditions required the sale of Highveld's vanadium businesses and maintained supply agreements to prevent market dominance in vanadium feedstock.
- The tribunal evaluated whether the merger between Evraz Group SA and Highveld Steel and Vanadium Corporation Ltd would result in a substantial lessening or prevention of competition in the identified markets, particularly in relation to vanadium feedstock, oxides, and finished vanadium products. The European Commission's analysis indicated the merger could control nearly half of the global vanadium value chain, raising concerns about restricting access to feedstock for downstream competitors. The decision concluded that the EC's conditions, including divestiture of Mapochs mine and Vanchem plants, would address these concerns in South Africa.
Holdings
- Based on the above the transaction will not result in a substantial lessening or prevention of competition in the identified markets and is accordingly approved on condition of divestiture of an interest in Mapochs mine and Vanchem plants as confirmed by the European Commission. The condition is attached to the decision as Annexure "A".
- On 25 April 2007 the Competition Tribunal issued a Merger Clearance Certificate approving the merger between Evraz Group SA ("Evraz") and Highveld Steel and Vanadium Corporation Ltd ("Highveld") conditionally.
- There are no public interest issues.
Remedies
- The transaction was approved on the condition that an interest in Mapochs mine and Vanchem plants be divested, as confirmed by the European Commission. This condition is attached to the decision as Annexure 'A'.
- Evraz pledged to enter into long-term supply agreements (three to five years) with Vanady Tula and Chusovskoy to provide at least the same quantity of vanadium-containing steel slag as currently supplied, under similar terms and conditions unless otherwise agreed.
- Evraz committed to maintaining the existing vanadium steel slag supply relationship between Highveld and Treibacher Industrie AG, ensuring the relationship is not modified or discontinued.
Legal Principles
The Competition Tribunal applied principles of merger control and competition law to assess the transaction. The approval was conditional on divesting Mapochs mine and Vanchem plants to address anti-competitive concerns identified by the European Commission. The decision emphasized preventing substantial lessening of competition in vanadium markets through divestiture remedies.
Precedent Name
Evraz Highveld
Cited Statute
European Union Merger Regulations
Judge Name
- Y Carrim
- N Manoim
- M Mokuena
Passage Text
- the conditions remove this overlap created by the merger in their entirety. According to the EC report: 'As regards downstream markets, vanadium oxides and finished vanadium products, the proposed remedies will comprise all of Highveld's vanadium oxide and finished vanadium products capacities and Highveld will thus not be active any more on these markets after the divestment of the divested business.'
- Based on the above the transaction will not result in a substantial lessening or prevention of competition in the identified markets and is accordingly approved on condition of divestiture of an interest in Mapochs mine and Vanchem plants as confirmed by the European Commission.
- The proposed transaction will allow Evraz to diversify geographically in steel. It has also been submitted by the merging parties that the acquisition of Highveld gives Evraz access to the booming construction sector in Southern Africa.