COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 106/LM/Dec11
[013730]
In the matter between:
Nedbank Ltd Acquiring Firm
And
Emergent Investments (Pty) Ltd Target Firm
Panel : Andreas Wessels (Presiding Member)
Medi Mokuena (Tribunal Member)
Merle Holden (Tribunal Member)
Heard on : 22 February 2012
Order issued on : 22 February 2012
Reasons issued on : 16 April 2012
Reasons for Decision
Approval
1] On 22 February 2012 the Competition Tribunal (“Tribunal”) unconditionally
approved the acquisition by Nedbank Ltd of Emergent Investments (Pty)
Ltd. The reasons for the approval follow below.
1
Parties and their activities
2] The primary acquiring firm is Nedbank Ltd (“Nedbank”), a public company
incorporated in terms of the laws of the Republic of South Africa. Nedbank
is controlled by the Nedbank Group Ltd (“Nedbank Group”), which is in
turn controlled by Old Mutual (South Africa) Ltd (“OMSA”). OMSA is
indirectly controlled by Old Mutual plc. Nedbank has a number of
subsidiaries.
3] Nedbank is involved in inter alia corporate and retail banking, investment
banking, private banking, securities trading, foreign exchange and property
financing. For purposes of the competition assessment of this transaction
only the property activities of Nedbank Group and OMSA are relevant.
Nedbank, through OMSA, holds various properties for inter alia investment
purposes.
4] The primary target firm is Emergent Investments (Pty) Ltd (“Emergent”), a
private company incorporated in terms of the laws of the Republic of South
Africa. Emergent is a property investment company which holds a portfolio
of industrial, retail and office properties.
5] The current shareholders in Emergent include Nedbank, Emergent
Properties Ltd and Globus Investments (Pty) Ltd. Nedbank acquired in
excess of 50% of Emergent’s issued share capital on 17 March 2010; its
current shareholding in Emergent is in excess of 80%. Nedbank thus
currently has control over Emergent (also see paragraphs 6 and 7 below).
Transaction
6] According to the merging parties Nedbank technically acquired sole
control over Emergent on 17 March 2010 and currently holds in excess of
80% of Emergent’s entire issued share capital.1
1 For full details of the transaction see inter alia record pages 52 to 54: Commission’s report
pages 7 to 9.
2
7] The Competition Commission (“Commission”), in terms of its Risk
Mitigation Practice Note and Update, granted Nedbank an extension until
25 November 2011 either to dispose of its controlling stake in Emergent or
to notify the transaction to the competition authorities. On 24 November
2011 the Commission granted Nedbank a further extension until 02
December 2011. However, Nedbank was not successful in disposing of
the assets within the stipulated time frame and thus filed this transaction.
Relevant markets and impact on competition
8] The Commission identified an overlap in the activities of Nedbank
Group/OMSA and Emergent in respect of (i) rentable Grade B offices in
the Berea node in KwaZulu-Natal; and (ii) rentable industrial warehousing
in the Pinetown node in KwaZulu-Natal.
9] In regard to rentable Grade B offices in the Berea node, the combined
post-merger market share of the merging parties in this market is below
20%. There are numerous other providers of Grade B office space in the
Berea node. Furthermore, the Commission’s market investigation revealed
that customers of the merging parties do not see the properties of OMSA 2
and Emergent 3 as substitutable due to inter alia large price differentials
between the two properties in question.
10]In regard to rentable warehouse property in the Pinetown node, although
the merging parties’ combined post-market market share is high in this
market, they will still face competition from players such as Capital
Property Fund, Growthpoint Properties and Emira Property Fund. The
latter players own a number of warehouses in the Pinetown node. In
addition, none of the customers of the merging parties contacted by the
Commission raised any objections to the transaction.
2 Property known as the Fassifern building.
3 Property known as the Price City building.
3
Public interest
11]The merging parties submitted that the transaction will not have any effect
on employment.4 Furthermore, the deal raises no other public interest
concerns.
Conclusion
12]In light of the above, we conclude that the transaction is unlikely to
substantially prevent or lessen competition in any relevant market.
Furthermore, the transaction raises no public interest concerns.
Accordingly we approve the transaction unconditionally.
____________________ 16 April 2012
Andreas Wessels Date
Medi Mokuena and Merle Holden concurring
Tribunal researcher: Ipeleng Selaledi
For the merging parties: Edward Nathan Sonnenbergs Inc.
For the Commission: Lerato Monareng
4 Merger record, page 68.
4