The Competition Commission has recommended that the Competition Tribunal approve, with conditions, a proposed acquisition by the Barnes Southern Palace consortium of two Scaw Metals units from the Industrial Development Corporation (IDC).

Barnes Southern Palace is a consortium comprising Barnes Group Holdings, whose subsidiaries are active in the manufacture of wire products, and black-owned investment holding company Southern Palace.

Scaw currently comprises four divisions, namely cast products, grinding media products, wire rod products and rolled products. Barnes Southern Palace is seeking to acquire the rolled-products and wire-rod divisions.

The commission found that the proposed transaction was unlikely to result in any input or customer foreclosure concerns in the market for the long steel products and for wire and wire products.

However, the commission found that the proposed transaction might increase the likelihood of coordination, as well as create a platform for the sharing of competitively sensitive information between Barnes and Consolidated Wire Industries (CWI), which is owned by the IDC, as the IDC will retain a minority shareholding in Scaw after the merger.

To address the information-sharing concerns, the commission recommended that the proposed transaction be approved with conditions, which should ensure that, for as long as the IDC was able to appoint directors to the respective boards of CWI and Scaw, it would ensure that its representatives on the board of Scaw were not the same persons serving, nominated and/or appointed on any board or management committees or subcommittees of CWI.

Further, the nominees appointed by the IDC to the board of Scaw should not have served on the board of directors and/or management committees or subcommittees of CWI, for a period of one year prior to being nominated to the board of Scaw.

The commission, the merging parties and the Economic Development Department have also agreed on certain employment conditions, as well as conditions that would ensure that the merged entity would supply small steel mills with direct reduced iron, enabling them to produce better-quality steel.