COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:77/LM/Sep11
In the matter between:
RESILIENT PROPERTIES (PTY) LTD Acquiring Firm
And
PANGBOURNE PROPERTIES LTD Target Firm
Panel : Norman Manoim (Presiding Member),
Yasmin Carrim (Tribunal Member)
Andreas Wessels (Tribunal Member)
Heard on : 12 October 2011
Order issued on : 12 October 2011
Reasons issued on : 26 October 2011
Reasons for Decision
Approval
1] On 12 October 2011 the Competition Tribunal (“Tribunal”) approved the large
merger between Resilient Properties (Pty) Ltd and Pangbourne Properties
Limited in respect of the property known as Boardwalk Shopping Centre. The
reasons for approving the proposed transaction follow below.
The Parties to the transaction
2] The primary acquiring firm is Resilient Properties (Pty) Ltd (“Resilient”), which is a
private company incorporated in terms of the laws of the Republic of South
Africa. Resilient is a wholly owned subsidiary of Resilient Property Income Fund
Limited, a property income fund which is listed on the Johannesburg Securities
Exchange. The Resilient Group conducts business in the rental of properties in
the retail space sector of the rental property market throughout the Republic of
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South Africa.
3] The primary target firm is Pangbourne Properties Limited (“Pangbourne”) in
respect of the property known as Boardwalk Shopping Centre. Pangbourne is a
wholly owned subsidiary of Capital Property Fund (“Capital”). Boardwalk is a
shopping centre situated in Richards Bay in the province of KwaZulu Natal and
categorised as a major regional centre comprising 65 814 square metre of
rentable retail space.
The Rationale
4] In terms of the Draft Sale Agreement, Resilient is acquiring from Pangbourne the
entire business enterprise known as Boardwalk and described as portions 4, 5,
38, 40 and 41 of 11161 Richards Bay, province of KwaZulu Natal. Following the
implementation of the proposed transaction, Resilient will have sole control of
Boardwalk.
The relevant market and the impact on competition
5] The Commission found that there is an overlap in the market for major regional
centres. Boardwalk comprises 65 814 square metre of rentable retail space, in
the Richards Bay node. The Commission found that Resilient does not own major
regional centres around the Richards Bay node. In its findings the Commission
found that the proposed transaction is unlikely to substantially prevent or lessen
competition in the market for retail space in the Richards Bay node as there is no
geographic overlap in the activities of the merging parties.
6] The Commission submitted that there is also a vertical relationship between the
merging parties because Resilient Fund holds a 19.1% interest in Capital and in
turn PFM which is a wholly owned subsidiary of Resilient Fund is the
management company of Capital. Furthermore, PFM has outsourced the asset
management function it has in respect of Capital to Resilient. The Commission
found that the vertical relationship is minimal to result in foreclosure. Furthermore
the Commission submitted that this transaction raises no public interest concerns
the Commission submitted that this transaction raises no public interest concerns
and accordingly recommends that the transaction be approved without
conditions.
7] We agreed with the Commission’s conclusions and accordingly, the merger was
approved without conditions.
____________________ 26 October 2011
YASMIN CARRIM DATE
N Manoim and A Wessels concurring.
Tribunal Researcher: Thabo Ngilande
For the merging parties: Vani Chetty Competition Law
For the Commission: Mr Bheki Masilela
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