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COMPETITION TRIBUNAL OF SOUTH AFRICA

Case No: LM072Jul15

In the matter between:

ROCKWOOD FUND I	Acquiring Firm

And

ENVIROSERV HOLDINGS (PTY) LTD	Target Firms

Panel	: Yasmin Carrim (Presiding Member)
: Mondo Mazwai (Tribunal Member)
: Medi Mokuena (Tribunal Member)

Heard on
Order Issued on Reasons Issued on

: 23 September 2015
: 23 September 2015
: 8 October 2015

Reasons for Decision

Approval

[1] On 23 September 2015, the Competition Tribunal ("Tribunal") unconditionally approved the merger between Rockwood Fund I ("Rockwood") and Enviroserv Holdings (Pty) Ltd ("Enviroserv").

[2]	The reasons for approving the proposed transaction follow.

Parties to transaction and their Activities

Primary acquiring firm

[3] The primary acquiring firm is Rockwood, an en commandite partnership registered in accordance with the Jaws of  the Republic of South Africa. It is controlled by Rockwood Fund I GP ("the GP Partner") which is in turn controlled by Equity Investment Trust and Rockwood Fund I GP (Pty) Ltd ("the investment Partner''). Rockwood controls a number of firms including Envrioserv (40%) which is the target firm in the proposed transaction.

[4]     Rockwood is a private equity fund that focuses on taking substantial equity positions in medium to large sized companies with experienced management teams.

Primary target firm

[5] The primary target firm is Enviroserv, a firm incorporated in accordance with the company Jaws of the Republic of South Africa. It is jointly controlled by Rockwood and the Mclean Family Trust. It controls Enviroserv Waste Management Ltd ("EWM") and Enviroserv Africa Holdings Ltd ("Enviroserv Africa").

[6]		Enviroserv  conducts  its  business  through  the  following  three  divisions  at  its operational subsidiary EWM:

•	
;

Solid waste division
•	Waste beneficiation division; and
•	International division.

Proposed transaction and rationale:
Proposed transaction and rationale:
[7] 	In terms of the proposed transaction, Rockwood will increase its ordinary shareholding in Enviroserv from 40% to more than 50%. Post-merger, Enviroserv will be controlled by Rockwood.

[8]	The merging parties submit that Rockwood is willing to provide Enviroserv with the additional funding it requires for its operations in exchange for additional share capital.

Impact on Competition:

[9] 	The Competition Commission ("Commission") considered the activities of  the merging parties to determine whether there were any overlaps between them. As stated above, Rockwood is a private equity fund which focuses on substantial equity positions in medium to large sized companies with experienced management team whilst Enviroserv provides waste management services.

[10]  	The Commission accordingly concluded that except for Rockwood's existing interest in Enviroserv, there is no horizontal overlap in the merging parties' activities as the acquiring firm does not hold any interest in the market for waste management.

Public interest:

[11] 	In relation to employment, the merging parties submitted that EWM is already engaged in a retrenchment process which will result in further retrenchments in the future. The Commission considered this aspect and found that the retrenchments are a result of the new waste classification and management regulations introduced by the Department of Environmental Affairs. Thus, the Commission was satisfied that the retrenchments are not merger specific but rather operational in nature.

[12]	The proposed transaction did not raise any other public interest concerns.

Conclusion:

[13] 	In light of the above, we agree with the Commission's analysis and conclude that the proposed transaction is unlikely to substantially prevent or lessen competition in the relevant market. In addition, no public interest issues arise from the proposed transaction.

Yasmin Carrim

Mondo Mazwai and Medi Mokuena concurring

08 October 2015
DATE

Tribunal Researcher:	Ammara Cachalia
For the merging parties:	Graeme Wickins, Werksmans Attorneys For the Commission:	Rakgole Mokolo