Johannes Shangadi
On 5 June 2025, the Namibian Competition Commission convened a public conference under Section 46 of the Competition Act in relation to the proposed acquisition of Swenk’s shareholding in Ohorongo Cement by Whale Rock Cement, the owner of Cheetah Cement. This transaction would effectively consolidate Namibia’s only two cement manufacturers into a single integrated entity.
As clarified by Mr. Johannes Ashipala, Director of Mergers and Acquisitions at the Commission, Section 46 conferences are investigative by design. They serve as fact-finding exercises, critical engagements that precede the Commission’s final determination. This article seeks to discuss the issues raised at the conference.
Structural context: From duopoly to monopoly
The proposed transaction is classified as a horizontal merger, given that both entities operate in the manufacturing and distribution of cement. Such mergers are inherently the most problematic under competition law due to the elimination of an active competitor from the market. Namibia’s current cement industry operates as a duopoly. Post-merger, this would collapse into a monopoly, raising immediate red flags regarding pricing power, quality standards, and exclusionary conduct.
The Commission’s preliminary concerns mirror those that led to the prohibition of the 2020 West China Cement // Ohorongo Cement merger. The rationale is consistent: a structural shift from two players to one poses serious risks to market dynamics.
Preliminary findings: Price, quality, and public Interest
The Commission has taken a preliminary view that the merger is likely to result in:
- Potential degradation in product quality;
- A risk of increased or predatory pricing;
- Foreclosure of downstream suppliers and SMEs currently integrated into the Ohorongo supply chain.
These concerns are amplified by the possibility that the merged entity could raise barriers to entry through vertical integration and the consolidation of customer bases.
Notably, the Commission questions whether the merged firm would have an incentive and ability to engage in exclusionary conduct. While dominance alone does not equate to abuse, the inquiry turns on whether external constraints (such as import competition) are sufficient to discipline such a monopoly. The merging parties argue that existing importers and regulatory standards, such as the NSI compliance regime and historical price conduct, should allay these concerns.
Market realities and the counterfactual
The parties present a compelling counterfactual: that absent the merger, one of the cement plants would likely shut down due to persistent overcapacity. Cement demand in Namibia sits at approximately 600,000 tonnes, against a combined annual capacity of 2.6 million tonnes. With limited export prospects, given regional bans (e.g., Botswana) and cost disadvantages (e.g., South Africa), the argument is that the market cannot sustain two players.
From a policy perspective, the Commission must weigh these market constraints against its statutory obligations under Section 2 of the Competition Act: to promote efficiency, protect consumers, and prevent the creation of anti-competitive structures.
Efficiency gains and remedies
While the merging parties cite cost efficiencies and tax advantages as justifications, the Commission remains cautious. Efficiencies must be:
- Merger-specific;
- Verifiable; and
- Capable of offsetting anti-competitive effects.
To remedy potential harm, the Commission signaled openness to a range of conditions, including:
- Employment safeguards;
- Price monitoring mechanisms;
- Potential structural remedies such as divestiture.
However, given that each party operates a single plant, a structural divestiture could strike at the heart of the transaction. Unless the interest lies in specific assets (e.g., Ohorongo’s customer base or machinery), such remedies may prove impractical.
Public participation and stakeholder views
Stakeholder input was robust. A major customer of Ohorongo, contributing 10% of its sales, strongly opposed the merger. Their concerns included:
- Harm to customers in both Namibia and South Africa;
- Loss of an active competitive constraint;
- Job losses;
- Quality degradation; and
- Increased reliance on imports from Asia.
These public interest considerations are squarely within the Commission’s mandate under Section 47(2), which requires the balancing of competition and socio-economic factors.
Concluding reflections
This merger places the Commission at the intersection of industrial policy and competition enforcement. The stakes are high: the cement industry underpins infrastructure development, job creation, and national competitiveness. Yet the economic realities, low demand, high fixed costs, limited exports, point to an unsustainable market structure without consolidation.
The Commission must now determine whether preserving competition in form justifies undermining it in function. In doing so, it will likely rely on the dual pillars of competition analysis: substantial prevention or lessening of competition, and whether any public benefits or efficiencies justify approval with or without conditions.
Regardless of outcome, this case exemplifies the growing maturity and sophistication of merger control in Namibia. It also underscores the importance of balancing structural economic reform with the foundational principles of competitive neutrality and public interest.
