COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 46/LM/Apr12
014985
In the matter between:
REIT INVESTMENTS (PTY) LTD Acquiring Firm
And
COPPER MOON TRADING 249 (PTY) LTD
AND 6 OTHERS Target Firms
Panel : Andreas Wessels (Presiding Member)
Medi Mokuena (Tribunal Member)
Takalani Madima (Tribunal Member)
Heard on : 30 May 2012
Order issued on : 30 May 2012
Reasons issued on : 10 July 2012
Reasons for Decision
Approval
[1] On 30 May 2012 the Competition Tribunal (“Tribunal”) unconditionally
approved the large merger between Reit Investments (Pty) Ltd and
Copper Moon Trading 249 (Pty) Ltd and 6 others in respect of certain
letting enterprises. Our reasons for approving the transaction are set out
below.
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Parties to the transaction
[2] The primary acquiring firm is Reit Investments (Pty) Ltd (“Reit
Investments”), a private firm incorporated in terms of the laws of the
Republic of South Africa. Reit Investments’ shareholders include Nedbank
Limited, Globus Investments (Pty) Ltd (“Globus”) and Emergent Properties
Limited. Globus is ultimately controlled by HBW Group (Pty) Ltd (“HBW”).
Reit Investments owns commercial property mainly comprised of office
space located in Centurion, Durban, Johannesburg, Kimberly, Midrand,
Pinetown and Standerton.
[3] The primary target firms are the following properties, including the existing
leases, which fall within HBW:
i. Celtis Plaza Land: Erf 663 Hatfield Township (“Celtis Plaza”)
owned by Copper Moon Trading 249 (Pty) Ltd;
ii. Cleveland Land: the remaining extent of Erf 173 Cleveland
Extension 5 Township (“Cleveland”) owned by Globus;
iii. Isando Land: Erf 431 Isando Township (“Isando”) owned by
TCG Properties (Pty) Ltd;
iv. FDC Pinetown Land: the remaining extent of Erf 13099 Pinetown
Extension 107 Township (“FDC Pinetown”) owned by FDC
Properties (Durban) (Pty) Ltd ;
v. FDC Meadowbrook Land: the remaining extent of Portion 353, as
well as Portions 467 and 575 of The Farm Rietfontein Number 63
(“FDC Meadowbrook”) owned by FDC Properties (East) (Pty) Ltd;
vi. Nampak Land: Sections 1 and 3 Waljon Industrial Estate
(“Nampak Building”) owned by Globus;
vii. Route 21 Land: Erf 925 Irene Extension 30 Township (“Route 21”)
owned by Globus;
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viii. Steeledale Land: Erf 17 Steeledale Township, as well as Erf 26,
27, 28 and 29 Steeledale Extension 1 Township, (“Steeledale
Shopping Centre”) owned by Steeldale Property Holdings (Pty) Ltd;
ix. Walker Drive Land: the remaining extent of Erf 3738 Kabega
(“Walker Drive”) owned by Ferox Investments (Pty) Ltd (“Ferox
Investments”); and
x. Welkom Square Land: Portion 4 of Erf 165 Welkom, as well as the
remaining extent of Erf 165 Welkom (“Welkom Square”) owned
by Ferox Investments. 1
[4] We shall below refer to the above properties as “the target properties”.
Proposed transaction and rationale
[5] According to the Sale of Letting Enterprises Agreement , Reit Investments
will acquire ownership of the target properties as going concerns. In terms
of the above agreement, the parties will also enter into a management
agreement in terms of which HBW (or its nominee) will manage the
property portfolio of the acquiring firm.
[6] The acquiring firm intends to grow its property portfolio in size and value as
well as in diversify to achieve sufficient scale. 2 The owners of the target
properties want to inter alia secure new capital to invest in further
developments.
Competition analysis
[7] In its analysis of the proposed merger, the Competition Commission
(“Commission”) found that the merging parties’ activities overlap in the
following three product markets:
(i) the market for the provision of rentable space in convenience centres.
However, no geographical overlap exists in relation to the merging
parties’ centres;
1 Merger record pages 20 to 22; also see Sale of Letting Enterprises Agreement, merger
record pages 211 to 265.2 Merger record page 48.
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(ii) the market for rentable Grade B office space. However, there is no
geographical overlap in the activities of the merging parties; and
(iii) the market for the provision of rentable light industrial property in
the Pinetown node. The merging parties will have a post-merger
market share in this market of below 15%.
[8] In light of the above analysis the Commission concluded that the proposed
transaction is unlikely to lead to a substantial lessening or prevention of
competition. We concur with this finding.
Public interest
[9] The merging parties submitted that the proposed transaction will have no
adverse effects on employment. The proposed transaction raises no other
public interest concerns.
Conclusion
[10] We conclude that the proposed merger is unlikely to lead to a substantial
prevention or lessening of competition in any relevant market.
Furthermore, the proposed transaction raises no public interest concerns.
We therefore approved the above merger without conditions.
____________________ 10 July 2012
A Wessels DATE
M Mokuena and T Madima concurring
Tribunal researcher: Songezo Ralarala
For the merging parties: Charmaine Natalie Kemp of Vining Camerer
Incorporated
For the Commission: Dineo Mashego
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