Competition Commission stops merger of paper recycling companies

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The Competition Commission said on Wednesday that it would prohibit the proposed merger whereby Corruseal Group (Pty) Ltd intended to acquire Neopak (Pty) Ltd.

The commission said such a merger would likely result in a substantial prevention and lessening of competition.The commission said the supply chain of Corruseal is integrated.

The commission found that Neopak is considered an important independent, non-integrated supplier of recycled containerboard paper to firms that manufacture packaging products. The commission said the merger would thus result in the loss of the Neopak as a non-integrated firm. “By way of example, during the commission's 2020/2021 financial year, of the 242 mergers notified that year, only two were prohibited.

Tzarevski said the overwhelming majority of prohibitions are occasioned by competition concerns that cannot be outweighed by pro-competitive outcomes or public interest gains.Among the concerns identified by the commission was the likelihood that the transaction would increase concentration in the paper manufacturing market, which the commission regards as highly concentrated already.

 

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