COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 20/LM/Mar12
In the matter between:
Growthpoint Properties Limited Acquiring firm
And
Liberty Group Limited in respect of
64.29% of the business enterprise
known as Alberton City Target Firm
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 : 18 July 2012
Reasons for Decision
Approval
[1] On 30 May 2012 the Competition Tribunal (“Tribunal”) approved the
merger between Growthpoint Properties Limited and Liberty Group
Limited in respect of a 64.29% interest in the business enterprise
known as Alberton City. The reasons for approving the proposed
transaction follow below.
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Parties to transaction
[2] The primary acquiring firm is Growthpoint Properties Limited
(“Growthpoint”), a listed property investment holding company. Its
property portfolio comprises rentable retail, office and industrial space.
[3] The primary target firm is the business enterprise known as the
Alberton City shopping centre. Liberty Group Limited (“Liberty Group”)
holds a 64.29% share in this business enterprise. Alberton City is
categorised as a minor regional centre and is situated in the Alberton
node, Gauteng.
Proposed transaction and rationale
[4] Growthpoint and Liberty Group are currently joint owners of Alberton
City shopping centre. In terms of the proposed transaction,
Growthpoint will acquire from Liberty Group its 64.29% interest in
Alberton City. Growthpoint currently holds the remaining interest and
will therefore upon implementation of the transaction have a 100%
interest in and sole control over Alberton City.
[5] The rationale for the proposed merger is that Growthpoint would like to
make its own decisions relating to the management of the centre and
as such, Growthpoint regards wholly owning, as opposed to jointly
controlling, Alberton City as the most ideal method to achieve this.
Assessment
[6] This transaction represents a change from joint to sole control over
Alberton City. Growthpoint does not own any other regional shopping
centre in the Alberton node.
[7] The Commission, however, raised a concern pertaining to an
exclusivity clause in the lease agreement between the anchor tenant,
namely Shoprite Checkers, and the landlord. The exclusivity clause
was allegedly inserted at the request of Checkers when it was common
practice to do so in order to protect their core business at the time,
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namely their butchery. The Commission was concerned that this
exclusivity clause could have the effect of preventing small businesses,
i.e. butcheries, from gaining access to rentable retail space in the
Alberton City shopping centre. In order to address this concern the
Commission, based on certain undertakings by the merging parties,
recommended that certain conditions be attached to the approval of
this merger.
[8] The above-mentioned exclusivity clause in the lease agreement raises
a public interest concern in terms of section 12A(3)(c) of the
Competition Act of 1998 (Act No. 89 of 1998, as amended) and
conditions are therefore warranted to address such concern. As such,
the Tribunal has approved the proposed merger subject to the following
conditions:
1. Growthpoint shall negotiate with Checkers in the utmost good faith
to have the exclusivity clause in the lease agreement removed
within thirty days of the Tribunal order.
2. Growthpoint shall within sixty days after entering into a new lease
agreement with Checkers, provide the Commission with a report
setting out in detail the extent to which they have complied with the
condition of removing the exclusivity clause.
Public interest
[9] No significant adverse effects on employment are envisaged as a result
of the proposed transaction. 1 In the context of the above-mentioned
exclusivity concern, we have imposed the aforementioned conditions
aimed at addressing any effects on the ability of small businesses to
become competitive.
CONCLUSION
1 See Commission’s Report, paragraph 8.1; also see pages 13 and 14 of the record.
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[10] We approve the proposed merger subject to the conditions attached
hereto as “Annexure A”.
____________________ 18 July 2012
ANDREAS WESSELS DATE
Medi Mokuena and Takalani Madima concurring
Tribunal researcher: Nicola Ilgner
For the merging parties: Vani Chetty Competition Law
For the Commission: Zanele Hadebe
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