Commission recommends conditional approval of Glencore/ Xstrata merger
On 22 October 2012 the Competition Commission (Commission) recommended that the Tribunal approve the acquisition of Xstrata Plc (Xstrata) by Glencore International Plc (Glencore), subject to employment-related conditions.
Before making its decision the Commission consulted with a number of parties that may be affected by the merger. These parties include Eskom, Sappi, the Department of Public Enterprises and the National Union of Mineworkers.
The Commission concluded that the merger is not likely to have a substantial impact on Eskom's operations since sales to Eskom are, in most cases, governed by long-term supply contracts that are typically tied to the life of a coal mine. After considering a number of factors including pricing trends, the Commission also concluded that all concerns raised by coal users could easily be addressed by various existing and proposed measures, including regulatory instruments by the government.
The Commission, however, pointed out that the transaction raises public interest concerns in that the merging parties intend to retrench 180 employees. To mitigate this, the Commission conditionally approved the merger.
The Commission and Glencore agreed that the number of retrenchments will be limited to a maximum of 80 employees and that it will not retrench 100 lower-level employees. It was also agreed that only managers and specialists may be retrenched, and that a moratorium will be placed on retrenchments of lower-level employees for two years after the merger. In the event that any lower-level employees are retrenched thereafter, a training fund of ZAR 10,000 per affected employee will need to be made available by the merged entity for re-skilling purposes.
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