Business Reporter
THE Namibian Competition Commission (NaCC) has made a decision to prohibit the acquisition of Swenk Namibia Pty Ltd, the majority shareholder of Ohorongo cement, by Chinese firm, West China Cement Limited.
The NaCC stated that this is due to to the fact that West China Cement already owns Whale Rock Cement, which is also known as Cheetah Cement.
Dina Gowases, NaCC spokesperson, stated that the proposed aquisition was likely to substantially prevent or lessen competition in the cement market due to coordination.
West China Cement proposed to acquire Swenk Namibia’s 69.83% shares in Ohorongo Cement for N$1.5 billion.
Gowases further noted that should West China Cement own two of Namibia’s largest cement companies, that it would lead to the exercise of market power to the detriment of consumers.
She added that the NaCC’s investigations found that there exists a link between the West China Cement and local, Whale Rock Cement, that will increase the likelihood of coordination post merger between the two players in the cement market.
She added that the merger is also likely to create or advance conditions in the market which are conducive to collusion, specifically the sharing of sensitive business information between the primary acquirer and Whale Rock Cement.
“The target undertaking has a dominant position and post merger, the Commission is of the view that the acquisition will strengthen West China’s dominance in the market,” Gowases said.
She concluded that barriers for entry into the cement market are high and it’s not likely that a small business or an undertaking controlled by historically disadvantaged persons will be able to gain access to the cement market.
