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Johannesburg - The Competition Commission has approved the merger of cement producers Holcim and Lafarge SA, it said on Wednesday.
The transaction is an international merger which was notified in various jurisdictions globally.
It said it approved the intermediate merger on October 1.
Both producers operate internationally. However, Holcim exited the South African market a few years ago, save for a stake it held in Afrisam.
Until the transaction, it was only Lafarge that operated in South Africa.
"The commission found that Holcim's shareholding interest in Afrisam, a cement producer in South Africa, would present anti-competitive effects post-merger," it said.
"This is due to the fact that the shareholding creates an undesirable structural link between Holcim and Afrisam in that it provides Holcim with access to Afrisam's commercially sensitive information."
The commission found that the shareholding by Holcim in competitors would create a platform for information-sharing and collusion in the cement industry post-merger.
It said this was compounded by the history of collusion in the South African cement industry and the high concentration levels and barriers to entry in the cement industry.
"To address the competition concerns, the commission approved this merger on condition that Holcim divests of the shareholding in Afrisam within a period of three years after approval of the merger."
Acting deputy commissioner Hardin Ratshisusu said in the statement that cross-shareholdings between competitors were often a recipe for collusion.
"The conditions imposed on this merger ameliorate the competition concerns the merger would have presented," Ratshisusu said.
