Imerys South Africa (Pty) Ltd v Competition Commission and Andalusite Resources (Pty) Ltd

Imerys South Africa (Pty) Ltd (ISA) sought to acquire all the shares in Andalusite Resources (Pty) Ltd (AR) in an intermediate merger. ISA and AR were the only producers of andalusite in South Africa, a key input in the manufacture of refractories. The Competition Commission prohibited the merger on the basis that it would result in a domestic monopoly and a substantial lessening of competition. The Competition Tribunal, after a lengthy hearing, confirmed the prohibition. The merging parties appealed to the Competition Appeal Court, contending that the merger should have been approved subject to conditions, including five-year supply agreements at regulated prices and a long-term export-parity price cap, on the basis that both firms would soon become capacity-constrained and that unilateral anti-competitive effects would then fall away.

The appeal was dismissed and the Competition Tribunal’s prohibition of the merger was confirmed.

The case is significant for clarifying the approach to conditional merger approval in South African competition law, particularly where anti-competitive effects are conceded in the short term but alleged to dissipate in the future. It confirms that the Competition Tribunal has a true discretion to prohibit a merger despite proposed conditions, especially in circumstances of market uncertainty, and that prohibition may be preferable where remedial conditions risk failure.