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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:
82/LM/Sep12
015552
In the matter between:
Sycom Property Fund Acquiring Firm
And
AECI Pension Fund in respect of a 60% undivided Ta rget Firm
share in the letting enterprise known as Woodlands
Office Park and its management company
Panel : Andreas Wessels (Presiding Member)
Takalani Madima (Tribunal Member)
Medi Mokuena (Tribunal Member)
Heard on : 17 October 2012
Order issued on : 17 October 2012
Reasons issued on : 29 October 2012
Reasons for Decision
Approval
[1] On 17 October 2012 the Competition Tribunal (“Tribunal”) approved the
merger between Sycom Property Fund (“Sycom”) and AE CI Pension
Fund (“AECI”) in respect of a 60% undivided share i n the letting
enterprise referred to as Woodlands Office Park as well as its
management company, Woodlands Office Park Property Management
Company (Pty) Ltd (“Woodlands Manco”).
[2] The reasons for approving the proposed transaction follow below.
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Parties to transaction
[3] The primary acquiring firm is Sycom. Sycom is a closed-end property
unit trust that is listed on the Johannesburg Secur ities Exchange
Limited (JSE). Sycom, either directly or indirectly , through its property
investment companies, invests in rental property in the retail and
office space sectors. We note that Sycom however do es not perform
any asset management services for third parties.
[4] The primary target firm is AECI in respect of a 60% undivided share in
the letting enterprise referred to as Woodlands Off ice Park as well as
Woodlands Manco. AECI is a registered pension fund in terms of the
Pension Funds Act.
1 The principal participating employer in the fund
is AECI Limited, a JSE listed chemical company with a wide variety of
shareholders.
[5] Woodlands Office Park is classified as A-Grad e rentable office space.
Woodlands Manco is the management company for the W oodlands
Office Park and performs the function of office manager.
Proposed transaction
[6] Premerger Sycom owns a 40% undivided share in Woodlands Office
Park and Woodlands Manco respectively. In terms of the proposed
transaction, Sycom will acquire from AECI its 60% i nterest in both
Woodlands Office Park and Woodlands Manco. Upon imp lementation
of the proposed transaction, Sycom will therefore h ave sole control
over Woodlands Office Park and Woodlands Manco.
Rationale for proposed transaction
[7] According to Sycom, since it already owns 40% of Woodlands Office
Park and Woodlands Manco, the acquisition of the re maining 60% is in
line with its strategy of enhancing Sycom Group’s u nitholder value
through buying out co-owners’ interest, where possible.
1 Act No. 24 of 1956.
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[8] AECI’s rationale for the proposed transaction relates to compliance
with Regulation 28 of the Pension Funds Act.
Relevant markets and impact on competition
[9] The activities of the merging parties overlap with regards to the
provision of rentable A-grade office space in the W oodmead node in
Gauteng. There is, however, no need for us in this case to take a
definitive view on the exact parameters of the rele vant geographic
market since it does not alter our conclusion.
[10] As stated above, Woodlands Office Park and Woodlands Manco are
already jointly owned by Sycom (see paragraph 6 above).
[11] According to the Commission’s assessment, the proposed merger will
not have a likely negative impact on competition si nce there are
sufficient constraining factors post-merger, includ ing vacant A-grade
office space in the Woodmead node itself, as well a s A-grade office
space in the Greater Woodmead node comprising Woodm ead,
Sunninghill, Sandton and Environs nodes. In additio n to this market
participants submitted that there are new developme nts coming up
aimed at A-grade office rental space in the relevant geographic area(s).
Furthermore, customers contacted by the Commission submitted that
they have alternatives to the merging parties’ A-gr ade office space in
the Woodmead node.
[12] We concur with the Commission’s finding that t he proposed
transaction is unlikely to substantially prevent or lessen competition in
any relevant market.
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Public interest
[13] The merging parties confirmed that there will be no adverse effect on
employment as a result of the proposed transaction.
2 No other public
interest issues arise as a result of this transaction.
CONCLUSION
[14] We approve the proposed merger without conditions.
____________________ 29 October 2012
Andreas Wessels DATE
Takalani Madima and Medi Mokuena concurring
Tribunal researcher: Caroline Sserufusa
For the merging parties:
Vani Chetty Competition Law
For the Commission: Thelani Luthuli
2 See merger record pages 13, 69 and 108.