Tribunal quashes move to rush Chevron merger

An attempt by a Glencorebacked investor to hurry the Competition Commission’s investigation into its proposed acquisition of Chevron SA was thwarted by the Competition Tribunal on Wednesday.

Off the Shelf Investments, the acquiring party, asked the tribunal not to give the commission an extension as a framework agreement with the government was now in place and addressed the concerns of the third parties involved.

The tribunal, however, granted the commission an extension of 15 business days, as requested, in order to consult parties.

The commission’s representative, Maya Swart, indicated that the framework agreement included some changes of significance — for example, the black economic empowerment shareholding requirement, as it had been understood, was not part of the agreement.

“The commission has a duty to investigate concerns and must be in a position to do so,” said tribunal panel member Andreas Wessels.

“I don’t think the merging parties are being reasonable.” The commission’s deadline is now August 20.

The $973m deal would see Glencore, a global commodities giant, acquire 75% of Chevron SA’s assets and empowerment partners acquire 25%.

The assets include a 110,000 barrel-a-day refinery, a lubricants plant, 820 petrol stations and oil storage facilities.

Hong Kong-based Sinopec announced plans to acquire Chevron SA in March 2017, but in October Glencore outfoxed its competitor by backing Off the Shelf Investments, Chevron SA’s minority shareholder, which then exercised its right of first refusal of the deal.

The subsequent merger notice was filed on November 7 2017 and the initial period of 40 days for investigation, as defined in law, expired on January 5 2018. Since then 10 extensions were agreed to.

The commission argued that the delays were through no fault of its own, as it failed to receive timeous updates from the merging parties, third parties and other stakeholders who were involved in protracted negotiations. The commission argued it had been given consent to share the framework agreement — reached with the Department of Economic Development — with third parties only on Monday evening.

Third parties include the Chemical, Energy, Paper, Printing, Wood and Allied Workers Union; Branded Marketers, custodians of the Caltex brand; and Chevron retirees.

The legal representative for Off the Shelf Investments, Omphemetse Mooki, argued the commission had not explained why it should be granted yet another extension. He said a confidential version of the agreement had been with the commission since July 20.

Wessels said the merging parties were responsible for the delays and had known they had to submit a non-confidential version of the agreement to engage third parties.

COMMISSION’S DELAYS WERE THROUGH NO FAULT OF ITS OWN, AS IT FAILED TO RECEIVE TIMEOUS UPDATES FROM MERGING PARTIES