South Africa’s Competition Tribunal on Wednesday denied the Industrial Development Corporation (IDC) access to documents previously prepared by the Competition Commission, related to the proposed merger of Anglo American and Kumba Resources.
Anglo is seeking to obtain at least a 49% stake in Kumba from its current 20%, with another 10,1% subject to tribunal approval and that would bring its total stake to 30,1%, so as to get access to the company’s iron ore assets in South Africa.
Iron ore, used in the production of steel, is one of the global commodities showing strong growth especially because of strong demand out of Asia, particularly China.
The key bone of contention between the IDC, which holds a 14% stake in Kumba, and Anglo is over the degree of participation of empowerment concerns in Kumba.
The IDC, the government’s funding parastatal, strongly advocates significant empowerment participation in Kumba. Anglo wants control of Kumba or else it will divest from the company.
The tribunal found that the IDC had failed to prove that the documents it sought to inspect were relevant and necessary for the purposes of the hearing.
The IDC’s application for the documents relates to an advisory opinion given by the Competition Commission to Anglo concerning the implementation of an option to purchase Stimela, which holds a 10,5% stake in Kumba.
Both Anglo and the commission have opposed the IDC’s application to produce
the documents.
However, at the hearing on July 4 the commission advised that it would no longer be opposed to producing the opinion. Before the commencement of the present hearing, Anglo sought a non-binding advisory opinion from the commission to determine whether it could exercise the Stimela option without fear of implementing the merger prior to approval.
In terms of the Competition Act parties may not implement a merger without appropriate approval. The commission apparently concluded that the implementation of the option would not result in a change of control and exercising the option would not constitute prior implementation of the merger.
The commission’s opinion and the internal documents requested by the IDC do not form part of the public record of the Anglo/Kumba hearing.
“There is nothing on the papers (in the court record relating to the matter) to suggest even remotely that any of the documents could assist our function in assessing the current merger or in establishing whether the tribunal has jurisdiction to entertain the application currently before it,” the tribunal said in a statement. – I-Net Bridge