COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:56/LM/JUL11
In the matter between:
REDEFINE PROPERTIES LTD Acquiring Firm
And
FIN PROPERTIES 107 (PTY) LTD Target Firm
IN RESPECT OF A 50% UNDIVIDED SHARE
IN THE PROPERTY LETTING ENTERPRISE
KNOWN AS “DAWN DISTRIBUTION CENTRE”
Panel : Norman Manoim (Presiding Member)
Andiswa Ndoni (Tribunal Member)
Medi Mokuena (Tribunal Member)
Heard on : 28 September 2011
Order issued on : 28 September 2011
Reasons issued on : 06 October 2011
Reasons for Decision
Approval
1] On 28 September 2011, the Competition Tribunal (“Tribunal”) approved the
large merger between Redefine Properties Ltd and Fin Properties 107 (Pty)
Ltd, in respect of a 50% undivided share in the property letting enterprise
known as “Dawn Distribution Centre”. We explain below our reasons for this
conclusion.
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The 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 firm however; it controls a number of
subsidiaries.
3] The primary target firm is Fin Properties 107 (Pty) Ltd (“Finprop”), in respect
of a 50% undivided share in the property letting enterprise known as “Dawn
Distribution Centre”.
4] In terms of the transaction, Redefine will acquire from Finprop a 50%
undivided share in the property letting enterprise known as “Dawn Distribution
Centre” (“the centre”), a warehouse categorised as rentable light industrial
space and situated in the Greater Germiston Node. Post implementation of
the transaction, Redefine will acquire joint control over the centre. The centre
only has one tenant whose lease has another 12 years to run and whose
rental terms are set out in the lease.
The Rationale
5] The merging parties submitted that as Redefine is in the business of acquiring
and disposing properties, the centre is an ideal opportunity for it.
The parties’ activities
6] Redefine is a property loan stock company with companies in commercial
retail property, office space and industrial space in South Africa.
7] Finprop is a property investment company and its business activities include
property holding, investments and the management thereof. It invests in
commercial property in the rentable retail space, rentable office space and
rentable industrial space in various regions in South Africa.
The relevant market and the impact on competition
8] The Commission found that there is an overlap in the market for rentable light
industrial space in the Greater Germiston node. However the Commission found
that with a low post-merger market share of 6.73% in Germiston, the market
share is too low to raise any competition concerns and further that there are other
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players in the property sector such as Growthpoint, Emira, and Capital. The
Commission then concluded that the merger is unlikely to result in substantial
prevention or lessening of competition in the relevant market.
CONCLUSION
9] The parties submitted that the proposed transaction will not result in employment
losses. The proposed transaction does not raise any other public interest issues.
10] We agree with the Commission’s conclusion above and find that the merger is
unlikely to lead to any substantial prevention or lessening of competition in the
relevant market, in particular, as the target firm has only one tenant which is
protected by virtue of an existing lease for the next 12 years. Accordingly, we
approve the above merger unconditionally.
____________________ 06 October 2011
NORMAN MANOIM DATE
Medi Mokuena and Andiswa Ndoni
Tribunal Researcher: Tebogo Hlafane
For the merging parties: Vani Chetty Competition Law
For the Commission: Bheki Masilela
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