It appears that the joint venture‚ Kendrum Limited‚ which hasn't yet been formed‚ would not operate in SA. However, but given the global nature of the transaction and the presence of both companies in SA‚ the transaction meets the monetary threshold for a notification in this country.
John Wood is an international energy services company and its South African subsidiary Wood Group is involved through its gas turbine business in the construction of the Hitachi boilers at the Medupi and Kusile power stations‚ being built by Eskom.
Final deliverance on the boilers had been delayed by contractual disputes between Eskom and Hitachi.
Eskom also confirmed in 2013 that a second contractor had been "engaged" to design and install the control and instrumentation boiler protection system software for its Medupi plant.
Eskom said the French multinational company Alstom had failed to deliver on the contract. There has been speculation that Siemens could replace French multinational Alstom.
A critical software operating system‚ without which boilers cannot be operated‚ designed by Alstom‚ has failed numerous tests. The software should have been ready by December 2012‚ but by about November last year it was still not functional.
Siemens and John Wood Group said the information they provided to the Competition Commission regarding the effect of the transaction on the contracts was confidential.
As part of the transaction Siemens will contribute its global TurboCare business to the joint venture and John Wood Group will contribute its gas turbine services business. This will give John Wood Group a controlling stake of 51% in the newly formed entity.
TurboCare provides services relating to non-Siemens manufactured gas turbines. These services include modifications‚ upgrades and replacements. TurboCare is not active in SA.
The commission has assessed the competitive effect of the transaction on the South African market and found that it was unlikely to substantially lessen competition.
It recommended that the Competition Tribunal approve the deal without conditions.
The Competition Tribunal will hear the matter on Friday (10 Janaury) and decide whether to accept the commission's recommendation or to approve it with conditions‚ or even prohibit it.
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