2 December 2015 by Competition Matters

Commission prohibits small merger following a voluntary merger submission

Following a voluntary merger submission to the Competition Commission by the merging parties, the Commission, on 28 July 2015, prohibited the merger in which Raumix Aggregates Proprietary Limited (Raumix) sought to acquire OMV Kimberley Proprietary Limited and OMV Kimberley Mining (Proprietary) Limited (OMV Group).

Raumix is a subsidiary of Raubex Group Limited (Raubex Group) which comprises a number of companies involved in road construction, the production and supply of value added bitumen products, the production and supply of aggregates from quarries, contract crushing of aggregates and other raw materials, the production and supply of asphalt materials handling and benefaction for the mining industry.

OMV produces aggregates used as road stone by road contractors and in asphalt production and high quality concrete applications. The products it supplies meet the specifications of the Committee of Land Transport Officials which the South African National Roads Agency needs.

Given that the OMV Group is the only supplier of road stones required for surfacing national roads in Kimberley, the Commission found that Raumix would be incentivised to raise costs to its competitors who required products OMV Group supplies in the downstream market. This would result in a substantial lessening or prevention of competition.

This decision is exemplary of the importance of the voluntary small merger notification and investigation process. The process enables the Commission to detect and investigate the potential
anti-competitive effects of mergers that would not ordinarily be notified due to them not meeting the monetary thresholds required to compel the parties to notify the mergers.

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