Commission sets conditions for Actom, Savcio merger

Transnet Rail Engineering, the largest buyer of commutators in the country, was particularly concerned about the possibility.

The commission proposed a condition that, after the merger, Actom must continue to supply Transnet Rail Engineering with commutators on terms similar to the current ones for five years, with the price adjusted to take account of increases in relevant input costs. Actom and Savcio Holdings are not contesting the proposed conditions. Hardin Ratshisusu, acting manager for the mergers and acquisitions division at the commission, told Business Day that the current terms would remain in place for five years because that is the time it would take Transnet to find a viable alternative to the merged entity's product.

The commission also had concerns about the shareholding of Kagiso Tiso Holdings in both Actom and Acton Repair Services, a direct competitor of Savcio in the market for repairing electrical equipment. Kagiso Tiso holds a 19% stake in Actom. The commission felt that common shareholding could facilitate information sharing between the merged entity and Acton. The parties have already removed all common directors and the commission wants the tribunal to approve a condition that no common directors will in future be appointed to the boards of the new entity and of Acton Repair Services. The Competition Tribunal is set to hear evidence on the proposed conditions and decide whether it is enough to mitigate anti-competitive effects.

Read the full article on www.businessday.co.za.