Description of Activities

Description: The Commission resolved to prohibit the acquisition by Whale Rock Cement (Proprietary) Limited of the entire issued share capital in SCHWENK Namibia (Proprietary) Limited from SCHWENK Zement International GmbH & Co. KG. 

Acquiring group: The primary acquiring undertaking is Whale Rock Cement (Pty) Ltd., a private company incorporated in the Republic of Namibia. It owns and operates a cement plant outside Otjiwarongo that produces cement under the brand “Cheetah Cement.”

Target undertaking: The primary target undertaking is Schwenk Namibia (Pty) Ltd., a private company incorporated in the Republic of Namibia. Its sole purpose and activity are to hold a controlling interest in the following entities in Namibia: Ohorongo Cement (Pty) Ltd., involved in the manufacturing and supply of cement under the brand “Ohorongo Cement,” and Energy for Future (Pty) Ltd., involved in the procuring of alternative energy sources through reducing scrub encroachment on farms in Namibia and turning the subsequent biomass into energy supply exclusively for Ohorongo Cement.

Merger Determination

The Commission’s decision is based on the grounds that the proposed merger is a move from a duopoly to a monopoly, with significant unilateral effects specifically but not limited to the removal of an effective competitor, the non-existence of countervailing buyer power, and a lack of import competition. The aforesaid is highly likely to render the merged undertaking market power, thereby significantly impeding effective competition by enabling the merged entity to act independently of market forces, with the likely outcome being higher prices, reduced output and quality, and limited choice for downstream customers with negative ripple effects on the entire value chain, including but not limited to increased cost of housing and infrastructural projects and the economy at large. Therefore, the transaction was found to be likely to substantially lessen or prevent competition in the relevant market. Further, the Secretariat is of the considered view that the implementation of the proposed merger is likely to lead to a negative effect on employment due to job overlaps. In addition to the likely anti-competitive effects of the merger, there is a real risk that post-merger strategies may be employed that diminish the fiscal contributions currently realized by the government, thus undermining public interest outcomes in the long term.