COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 41/LM/MAY11
In the matter between:
REDEFINE PROPERTIES LTD Acquiring Firm
And
ROWMOOR INVESTMENTS 567 (PTY) LTD Target Firm
IN RESPECT OF THE PROPERTY LETTING
ENTERPRISE KNOWN AS “SAMMY MARKS PORTION 2”
Panel : Norman Manoim (Presiding Member)
Yasmin Carrim (Tribunal Member)
Andreas Wessels (Tribunal Member)
Heard on : 06 July 2011
Order issued on : 06 July 2011
Reasons issued on : 11 July 2011
Reasons for Decision
Approval
1] On 06 July 2011, the Competition Tribunal (“Tribunal”) approved the
transaction involving Redefine Properties Ltd and Rowmoor Investments
567 (Pty) Ltd in respect of the property letting enterprise known as
“Sammy Marks Portion 2”. We explain below our reasons for this
conclusion.
1
Parties to the transaction
2] The primary acquiring firm is Redefine Properties Ltd (“Redefine”), a
public company incorporated in accordance with the laws of the Republic
of South Africa. Redefine is not controlled by any single shareholder. It
controls in excess of nineteen subsidiaries.
3] The primary target firm is the property letting enterprise known as
“Sammy Marks Portion 2” owned by Rowmoor Investments 567 (Pty) Ltd
(“Rowmoor”). Rowmoor is incorporated in accordance with the laws of the
Republic of South Africa.
Proposed transaction
4] In terms of the proposed transaction, Redefine intends to acquire from
Rowmoor the property letting enterprise known as “Sammy Marks Portion
2”, a rentable retail space. Redefine pre-merger owns portions 1 and 3 of
Sammy Marks Square. Pursuant to the proposed transaction Redefine will
thus own portions 1, 2 and 3 of Sammy Marks Square, hereinafter
collectively referred to as “Sammy Marks Square”.
5] Simultaneously with the above, the parties to the merger have concluded
a Sale of Shares Agreement in terms of which Redefine will purchase all
the shares held by Rowmoor in Sammy Marks Square Management
Company (Pty) Ltd, which pre-merger is jointly controlled by Redefine and
Rowmoor. Redefine will perform its own property management of Sammy
Marks Square once it acquires sole control of Sammy Marks Square
Management Company (Pty) Ltd.
Rationale for transaction
6] Since Redefine pre-merger owns portions 1 and 3 of Sammy Marks
Square, it wishes to consolidate its interest in the complex by acquiring
portion 2.
7] The proposed deal will allow Rowmoor to consider new investment
opportunities.
2
Merging parties’ activities
8] Redefine is a property loan stock company. Its property investments are
diversified across all sectors of the rental property market including
rentable retail space, rentable office space and rentable industrial space.
9] As stated above, Sammy Marks Square is a rentable retail space. It is
situated in the Pretoria Central Business District (“CBD”).
Competition assessment
10] As is evident from the above, the activities of the merging parties horizontally
overlap in regard to rentable retail space in Pretoria.
11]In assessing the market for the provision of rentable retail space, the
Competition Commission used the Independent Property Databank’s (IPD)
retail property classification of potential subsectors. The IPD classifies various
shopping centres, based mainly on gross lettable area (GLA), inter alia as
follows:1
Type of Centre Property type classification
Super regional > 100 000 m2
Major regional 50 000 m2 – 100 000 m2
Minor regional 25 000 m2 – 50 000 m2
Community centre 12 000 m2 – 25 000 m2
Neighbourhood centre 5 000 m2 – 12 000 m2
Local convenience centre 1 000 m2 – 5 000 m2
12]Sammy Marks Square portions 1 and 3 are 11 700 m2 combined; portion 2 is
approximately 17 745 m2. Combined, these three portions thus represent >25
000 m2 of rentable retail space and therefore is classified as a minor regional
centre. According to the merging parties’ submissions, these portions “ co-
exist as if the centre is a single shopping centre”.2
13] However, the precise scope of the relevant product and geographic markets
may be left open in this case since the proposed merger raises no
competition concerns in any market delineation context.
1 See Competition Commission’s Recommendation pages 7 and 8.
2 See page 99 of the record.
3
14]The Redefine group does not pre-merger own any other minor regional
centres within a 15 km radius of Sammy Marks Square. 3 If the market is
defined more broadly then there is an overlap between the activities of the
merging parties since the Redefine group does own other rentable retail
space in the Pretoria CBD. The post-merger market share of the merged
entity however remains low in any potential relevant market. Therefore, we
conclude that the proposed transaction is unlikely to lead to any substantial
prevention or lessening of competition in any relevant market.
Public interest
15]The merging parties submitted that no job losses would result from the
proposed transaction.4 The proposed deal raises no other public interest
issues.
Conclusion
16] Based on the above, we conclude that the proposed transaction is unlikely
to lead to a substantial prevention or lessening of competition in any
relevant market. Furthermore, no public interest concerns arise from this
deal. Accordingly the proposed transaction is approved unconditionally.
____________________ 11 July 2011
ANDREAS WESSELS DATE
Norman Manoim and Yasmin Carrim concurring
Tribunal researcher: Tebogo Hlafane
For the merging parties: Vani Chetty Competition Law
For the Commission: Mogalane Matsimela
3 See inter alia page 109 of the record.
4 See inter alia pages 9 and 109 of the record.
4