beneficiation competition industrial inputs Investment political economy


Media release from the Competition Commission: 

The Competition Commission (Commission) has reached a settlement agreement with ArcelorMittal South Africa Limited (AMSA), finalising all pending investigations and prosecutions against AMSA. In terms of the agreement, AMSA admits having been involved in the long steel and scrap metal cartels, and agrees to pay an administrative penalty of R1.5 billion (one billion five hundred million rand). Furthermore, AMSA has agreed to remedies relating to complaints against its pricing conduct without admitting that its pricing conduct constituted a contravention of the Competition Act. In this regard, AMSA has undertaken that for a period of five years it will limit its EBIT (earnings before interest and tax) margin to a cap of 10% for flat steel products sold in South Africa. In addition, AMSA has committed to a R4.6 capital expenditure over the next five years. The Commission has, in turn, agreed that the settlement will cover all pending cases against AMSA including those that are still under investigation.

Today, 22 August 2016, the Commission filed an application with the Competition Tribunal (Tribunal) for confirmation of this settlement agreement as an order of the Tribunal. The agreement relates to various cases that the Commission has investigated against AMSA, some of which were subsequently referred to the Tribunal for adjudication. The following is a summary of the cases and the Commission’s findings.

beneficiation industrial inputs mining

Beneficiate…but only when it is economic [Business Day column]

Producing more value-added industrial products, on the back of South Africa’s resources, remains a much-sought after policy goal. But it has been so for a while. In this column, I reflect on this policy challenge, after the national budget allocated R2.7bn to beneficiation projects.

FOR someone visiting the US for the first time, Chicago’s magnificent mile might not be the best place to start. Not because that wonderful city, or even that particular neighbourhood, is a terrible place. It just reinforces the stereotypes too easily with its wide avenues dripping with opulence. Browsing through iconic jewellery stores, my enchantment was tempered by the knowledge that SA might produce tons of gold and platinum, but it had no hand in the art and design before my eyes.

This was in the early 2000s and not much has changed since then. At that time, I worked for a gold miner and discussions over the new mining charter were heated. Beneficiation emerged as a stepchild of that process. Mining companies could offset some of their ownership obligations for spending on beneficiation projects. They spent some money on beneficiation projects, and continue to do so, but it would be hard to say that resource-based manufacturing took off.

For more, please go here:–but-only-when-it-is-economic

competition competition policy economic policy industrial inputs political economy

Fifteen years of competition regulation in post-apartheid South Africa

Photo: Chris Kirchhoff,
Photo: Chris Kirchhoff,

This month the Competition Commission, Competition Tribunal and Competition Appeal Tribunal celebrate fifteen years of pursuing the ideal of fair and efficient markets in South Africa.
A look back on one of the most ground-breaking cases the Commission has taken on, known as the Hazel Tau case, which saw the price of antiretrovirals from global manufacturers brought down:

Today, over a decade since lodging that complaint, Tau works for a research programme in health economics at Wits University.

But at the time, the victory at the Commission was bitter-sweet. Many of Tau’s comrades and colleagues lost their lives before antiretrovirals became affordable and widely available.
The authorities’ main anniversary featured Ebrahim Patel, Minister of Economic Development, as keynote speaker.


Patel will also consider the extent to which the law, as it stands, allows the competition authorities to break up giants that behave anti-competitively. The pricing practices of dominant firms will also be under scrutiny, to see if amendments are needed to deal with pricing practices considered harmful.

The South African Venture Capital Association is holding a masterclass on merger control on 18 September, following one on abuse of dominance held on the 11th. For a brief Q&A with the convenor of the masterclass, go to


In tough economic times employment security and protecting consumers’ pockets take on a heightened importance. In mergers, potential job losses especially amongst unskilled and semi-skilled workers, who earn lower incomes, will be of concern. I also expect to see a greater focus on abuse of dominance, in other words single-firm behaviour as opposed to cartels. Recent successful abuse of dominance cases such as Telkom and Sasol set the framework for future investigations.

An opinion piece at Business Day with a focus on excessive pricing, with reference to the recent Tribunal ruling against Sasol:


In short, local plastics manufacturers pay an import parity price for polypropylene, the most significant input in production. This is in a market context where there is a greater supply of polypropylene than local manufacturers can absorb. Sasol Chemical Industries exports about half of its production to international markets, notably Asia, where it charges a lower price to manufacturers in those markets. It’s also worth noting that Sasol Chemical Industries is globally a low-cost producer of the input as it enjoys a special cost advantage due to the state’s historical investment in and support for the company.


The tribunal heard that the firm’s pricing practice has stunted plastics manufacturers, who are rendered unable to compete with their international counterparts.


competition industrial inputs mergers and acquisitions regulation

Competition Commission prohibits merger between producers of key mining and industrial input

Excerpts from Competition Commission’s media release:

” On 08 May 2014, the Competition Commission referred a recommendation to the
Competition Tribunal to prohibit the proposed acquisition of Arkema Resins by Ferro
Industrial Products. The Commission found that the proposed merger is likely to
result in a substantial prevention and lessening of competition.
In the mining segment, the merging parties are currently the only suppliers of UPR
and the Commission found that the merger would result in the removal of an
effective competitor, leaving Ferro to enjoy a monopoly position post-merger.
The Commission also found that in other segments, the proposed merger would
result in the merged entity gaining a significant share of the market of approximately
64%, with the closest competitor having approximately 16%. The rest of the market
is accounted for by a small local supplier and some imports.
The Commission found that there are high barriers to entry in the UPR market due to
the high capital outlay required for entry, economies of scale and the existence of
excess capacity. In the mining segment, there are additional barriers to entry in the
form of reputation, technology, technical expertise and technical specifications
required. The excess capacity may also be used as a strategic deterrent for entry
and expansion.
The Commission’s investigation included interviews with customers and competitors
of the merging parties who also raised concerns regarding the proposed transaction.
The Commission considered possible remedies such as divesture of Arkema’s
composite business, but this was not deemed to be viable as the firm’s coatings
business is also located in the same plant, making it impractical to separate them.
The merging parties also proposed a pricing formula applicable for two years. The
Commission is of the view that the pricing formula will not address the
anticompetitive effects arising from the structural changes in the market brought
about by the proposed transaction.”