COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:62/LM/Jun12
In the matter between:
MMI Holdings Limited Acquiring Firm
And
ERIS PROPERTY (Pty) Ltd Target Firm
Panel : Yasmin Carrim (Presiding Member),
Andreas Wessels (Tribunal Member)
Andiswa Ndoni (Tribunal Member)
Heard on : 31 July 2012
Order issued on : 31 July 2012
Reasons issued on : 28 August 2012
Reasons for Decision
Approval
1] On 31 July 2012 the Competition Tribunal (“Tribunal”) unconditionally
approved the merger between MMI Holdings Limited and Eris Property
(Pty) Ltd. The reasons for approval follow below.
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The Transaction
2] The primary acquiring firm is MMI Holdings (“MMI”), a firm listed on the
Johannesburg Securities Exchange (“JSE”) and incorporated in terms
of the laws of the Republic of South Africa.
3] The primary target firm is Eris Property Group (Pty) Ltd (“Eris”), a
private company incorporated in terms of the laws of the Republic of
South Africa.
4] MMI’s core business is long and short term insurance, property asset
management, savings, investment, health-care administration and
employee benefits. It has a subsidiary which provides property
management and asset management services. It owns industrial, office
and retail properties in the Umhlanga Rocks, Bellville and Cape Town
nodes.
5] Eris is a property services company which provides a range of
commercial property skills, property advisory services, property
valuations, leasing and investment broking, property development,
trading, asset management, property management, facilities
management and retail services. It owns office space in the Bellville
and Goodwood nodes.
6] As a result of the proposed transaction, the business of the subsidiary
of the acquiring firm shall be injected into the target firm.
The Rationale
7] The acquiring firm previously indirectly enjoyed economic benefits by
procuring its property services from Eris, which fell away as a result of
the merger between Momentum and Metropolitan as it led to the
unbundling of Momentum from the First Rand Group. MMI and Eris
have entered into the proposed transaction against the above
background. This will allow MMI to derive economic benefits from the
procurement of services from Eris.
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8] The target firm intends to gain access to a diversified portfolio of
properties in the form of properties managed by a subsidiary of the
acquiring firm, while the acquiring firm will again derive benefits from
the procurement of services from the target firm as a result of the
proposed transaction, the business of the subsidiary of the acquiring
firm shall be injected into the target firm.
The relevant market and the impact on competition
9] The Commission found that there is an overlap in the market for
industrial space in the Goodwood/Epping node and an overlap for
Grade B office space in the Cape Town CBD node. The Commission
found that the post-merger combined market share of the merged
entity remains low. There is a vertical overlap in respect of property
management and the asset property management services provided by
Eris to MMI.
10]The Commission found that the proposed transaction is unlikely to lead
to a substantial prevention or lessening of competition as the market
shares’ remain low. Given that the vertical integration is for in-house
purposes, the proposed transaction will not lead to foreclosure
concerns.
11]We agree with the Commission that the transaction be approved
without conditions.
CONCLUSION
12]There are no significant public interest issues and we accordingly
approve the transaction without conditions.
____________________ 28 August 2012
Y Carrim DATE
A Wessels and A Ndoni concurring.
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Tribunal Researcher: Thabo Ngilande
For the merging parties: Cliffe Dekker Hofmeyr
For the Commission: Takalani Ramavhoya
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