COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 74/LM/JUL07
In the matter between:
JOHANNESBURG MUNICIPAL PENSION FUND Acquiring Firm
And
ERF 2860 NEWTON PARK TOWNSHIP AND
ERF 2878 MOUNT ROAD TOWNSHIP Target Firm
_______________________________________________________________
Panel : N Manoim (Presiding Member), Y Carrim (Tribunal
Member), and U Bhoola (Tribunal Member)
Heard on : 31 August 2007
Decided on : 31 August 2007
Reasons issued on : 10 September 2007
REASONS FOR DECISION
APPROVAL
[1] On 31 August 2007, the Tribunal approved the merger between Johannesburg
Municipal Pension Fund (“JMPF”), the acquiring firm and Erf 2860 Newton Park
Township, known as the Bridge Mall and Erf 2878 Mount Road Township, known as
the Shoprite Mall (“the target properties”), all situated in Port Elizabeth.
THE TRANSACTION
[2] JMPF is a pension fund which is registered, and conducts its business, in
accordance with the pension fund Act 1 (“the pension fund Act”), as amended from time
to time. JMPF is not controlled by, and does not control, any firm. It has a 35% non
controlling interest in the target properties, which it now wants to increase to 54.6% by
acquiring an additional 19.6% from the Joint Municipal Pension Fund (“the Joint Fund”).
[3] The Shareholding in the target properties prior the merger was presented by the
parties as follows:
Table 1. Shareholding in the target properties prior to the transaction.
Name of share holder/company Share holding in percentage
JMPF, Primary acquiring firm in the
instant transaction
35%
Acucap Investments 3 (Pty)
Limited (“Acucap”)
18%
Municipal Employee Pension Fund
(“MEPF”)
11%
Joint Municipal Pension Fund
(“Joint Fund”)
35%
[4] The shareholding in the target properties after the transaction will be as follows:
Table 2. Shareholding in the target properties after the transaction
Name of share holder/company Share holding in percentage
JMPF, Primary acquiring firm in the
instant transaction
54.8%
Acucap Investments 3 (Pty)
Limited (“Acucap”)
18%
Municipal Employee Pension Fund
(“MEPF”)
11%
Joint Municipal Pension Fund 15.4%
RATIONALE FOR THE TRANSACTION
1 24 of 1956, as amended.
2
[5] According to JMPF the transaction provides them with an opportunity to obtain a
controlling shareholding in the target properties. The Joint Fund submits, on the other
hand, that it operates mainly as a net outflow of cash fund i.e. there are more
pensioners than there are inservice members and as result the fund pays out more
money every month than it receives. The transaction is in accordance with its role as
a cash fund.
THE PARTIES’ ACTIVITIES
[6] JMPF is a pension fund and conducts its business as such. In terms of the Pension
fund Act a pension fund may not carry on any business other than that of a pension
fund. The Regulations issued under this Act, 2 however, prescribe the types of assets a
pension fund may invest in as well as the percentage of the pension fund’s assets in
such investment. The target firm owns two properties in Port Elizabeth namely, the
Bridge Mall and Shoprite Mall. JMPF owns no other properties in Port Elizabeth than
its minority shareholding in the target properties. Outside the Port Elizabeth
geographic market, JMPF also owns land in Soweto and has a 15% stake in the Small
Street Mall in the Johannesburg City Centre.
THE RELEVANT MARKET
[7] From the facts it is clear that the relevant product market is the retail property
market and the geographic market is that of Port Elizabeth. The parties submitted that
retail property can be classified on the basis of their gross lettable area (GLA) as is
done by the South African Council of Shopping Centres (“SACSC”) as well as whether
they are stand alone or interlinked malls. On this basis the Greenacres Mall as a
whole which includes the target properties, has been classified by SACSC as a
2 Published under GN R98 in GG 162 of 26 January 1962.
3
Regional Centre. 3
COMPETITION ANALYSIS
[8] JMPF’s increase of its shareholding in the target properties from a 35% non
controlling shareholding to a 54.6% controlling shareholding can best be described as
an internal arrangement to restructure the shareholding in the target properties, which
does not raise competition concerns. It is clear that JMPF’s acquisition of control in
the target properties does not result in any market accretion. The relative share of the
target properties in the Port Elizabeth retail property market remains unchanged as a
result of the transaction
[9] Given the above, we find that the transaction is not likely to substantially prevent or
lessen competition.
CONCLUSION
[10] We further find that the transaction does not raise any significant public interest
issues and accordingly approve the merger without conditions.
3 See merging parties competitiveness report page 226.
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_______________ 10 September 2007
Y Carrim Date
N Manoim and U Bhoola concurring.
Tribunal Researcher : P S Munyai
For the merging parties : Jowell Glyn & Marais
For the competition commission : D Masilela and M Mohlala
(Mergers & Acquisitions)
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