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The Commission has recommended to the Competition Tribunal that the proposed acquisition of Murray & Robert by Aton be prohibited.

In South Africa, the Aton Group through Redpath SA, provides a range of mining services to Sub-Saharan Africa including the excavation of vertical or inclined openings from the surface for conveyance of miners, materials, ventilation, pumping water, in addition to hoisting ore and waste rock, operational or maintenance activities, infrastructure development and upgrade and whole of mine operational management.

M&R, a company listed on the JSE, focuses its expertise and capacity on delivering sustainable and fit-for-purpose project engineering, procurement, construction, commissioning, operations and maintenance solutions. The company also delivers its capabilities into three global sectors: oil & gas; underground mining; and power & water.

The Commission found that the merging parties are close competitors and that this transaction will, for both parties, result in the removal of their closest and strongest competitor.

During the investigation of the proposed transaction, the Commission received concerns that the proposed transaction will potentially negatively impact potential competitors. The concerns were that the merger will potentially create a company that has such size and scale that it has the financial wherewithal to throttle competition. Further, the merger will create a company that potentially has the financial muscle to buy projects or to discount projects to such an extent that other companies cannot compete.

In relation to employment, there has not been any suggestion by either Aton or M&R that there exists a likelihood of the current employees of M&R losing their jobs in the foreseeable future. It has not been argued that M&R is struggling financially or is facing any commercial or business threats which could endanger jobs in the near future. Accordingly, the commitment by Aton in relation to the preservation of jobs after the expiry of the Kusile and Medupi projects is not tantamount to saving jobs or the creation of new employment opportunities. M&R has not indicated any difficulties in retaining its current employees in the future. Even if the Commission were to find that there is a chance of M&R not being able to retain employees, the commitment would amount to job preservation which the Commission generally expects from an acquirer who is acquiring another firm with a view of saving it.

The Commission found that the proposed transaction results in a substantial lessening of competition. Thus, the Commission recommends that the proposed transaction be prohibited.

Issued by The Competition Commission of South Afric