Sibanye Gold apparently breaches employment conditions

1 Dec 2014 2 min read Competition Matters Article

The Competition Commission recently issued a notice of apparent breach of a condition imposed on a merger (Notice of Apparent Breach) to Sibanye Gold. According to the Commission, Sibanye Gold has undertaken a retrenchment process in breach of a condition imposed by the Competition Tribunal to the effect that there may be no merger related retrenchments arising from Sibanye's acquisition of the Cooke mining operations from Gold One International in early 2014 (Retrenchment Condition). The Competition Tribunal's condition prohibited the parties from undertaking merger related retrenchments for a period of two years. Operational retrenchments, voluntary separation agreements and voluntary early retirement packages were not subject to the moratorium on retrenchments.

According to the Commission, it received a formal complaint from the National Union of Mineworkers regarding the fact that the proposed retrenchments were in fact merger specific on 5 November 2014.

The Retrenchment Condition came about as a result of concerns raised during the investigation of the transaction that merger specific retrenchments were taking place in the Sibanye Gold business. The Commission, after an extensive investigation, was not able to find that the retrenchments were merger specific. These retrenchments related to all divisions of Sibanye Gold, which at the time stated that the retrenchments were operational in nature.

During the course of its investigation of the merger, the Commission also found that notices in terms of s189 of the Labour Relations Act, No 66 of 1995 had been issued to employees of the target firm but that these notices were subsequently withdrawn out of concern that the retrenchment process may jeopardise the merger.

Although it could not find that the retrenchments were merger specific, out of caution, the Commission requested that a two year moratorium on merger specific retrenchments be imposed on the merger. The parties did not contest the Retrenchment Condition and the Tribunal agreed with the Retrenchment Condition.

The Commission's Notice of Apparent Breach highlights the significant practical difficulty faced by merging parties in showing the distinction between merger specific and true operational retrenchments where employment conditions have been imposed on their businesses.

Parties issued with Notices of Apparent Breach have a right to approach the Competition Tribunal for review of the notice.

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