The Competition Tribunal (the "Tribunal") has today heard and approved an acquisition by Stefanutti Stocks Proprietary Limited (a subsidiary of Stefanutti Stocks Holdings Limited) (“Stefanutti Stocks”) of all the assets which comprise the business carried out by Energotec, a division of First Strut (RF) Limited t/a the First Tech Group.
Earlier this year, after failed attempts to procure funding to continue its business operations, First Strut filed resolutions placing itself under business rescue. After the business rescue practitioners resolved that there were no reasonable prospects for the group to be rescued, they resolved to place the entire First Strut Group (including Energotec) under provisional liquidation.
Stefanutti Stocks is a multi-disciplinary construction company which operates through various business units that provide, amongst others, building, mechanical, roads, pipelines and mining services. Energotec is a civil engineering firm primarily operating within the petrochemical industry.
The Tribunal reached its expedited decision on the basis that the transaction was unlikely to result in any substantial prevention or lessening of competition and that the proposed transaction will have a positive impact on the public interest. In particular, First Strut is in dire financial distress and currently under provisional liquidation. As a result of the company’s financial distress, failure to speedily approve the transaction by the competition authorities would have resulted in job losses for approximately 667 Energotec employees.
The approval is conditional upon the fact that Stefanutti Stocks may not retrench more than 16 administrative employees as a consequence of the transaction. The Commission was of the view that the saving of jobs outweighed these retrenchments but sought to confine the negative effects to these 16 employees.
This is the quickest turn-around time in which the Tribunal has made a decision to approve a merger under public interest considerations of this nature. The transaction, which comprised a large merger, was filed with the Commission, which investigated and referred same to the Tribunal within 3 business days. The Tribunal scheduled and conducted a hearing approximately 4 hours after receipt of the Commission’s Recommendation. This is thus reflective of the competition authorities’ willingness to go an extra mile in expediting approval of mergers on public interest grounds.