Photo by: Duane Daws
The Competition Commission has approved an intermediate merger between cement producers Holcim and Lafarge South Africa, on the condition that Holcim divests its shareholding in Lafarge’s competitor AfriSam within three years.
The commission explained that Holcim’s shareholding in AfriSam would present anticompetitive effects should Lafarge and Holcim merge, as the shareholding meant that Holcim would have access to AfriSam’s commercially sensitive information.
The commission said it had found that the shareholding by Holcim in competitors Lafarge and AfriSam would create a platform for information sharing and tacit collusion in the cement industry and, thus, substantially lessen competition.
“This is compounded by the history of collusion in the South African cement industry and globally, involving the merging parties, the high concentration levels and barriers to entry in the cement industry,” the commission said.
It added, however, that its investigation had determined that if Holcim did not have a shareholding in AfriSam, it would not have access to the company’s commercially sensitive information.
Therefore, the commission approved the merger with conditions aimed at preventing Holcim from having joint shareholding in Lafarge and AfriSam.
“Cross shareholdings between competitors, particularly in highly concentrated sectors are a recipe for collusion. The conditions imposed on this merger ameliorate the competition concerns the merger would have presented,” acting deputy commissioner Hardin Ratshisusu said.