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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 016212
In the matter between:
Redefine Properties Ltd
Acquiring Firm
And
Rural Maintenance (Pty) Ltd in Target Firm
respect of the business referred to
as Redefine Electricity Business
Panel : Andreas Wessels (Presiding Member)
Medi Mokuena (Tribunal Member)
Mondo Mazwai (Tribunal Member)
Heard on : 13 March 2013
Order issued on : 13 March 2013
Reasons issued on : 04 April 2013
Reasons for Decision
Approval
[1] On 13 March 2013 the Competition Tribunal (“Tri bunal”) approved the
merger between Redefine Properties Ltd (“Redefine”) and Rural
Maintenance (Pty) Ltd (“Rural Maintenance”) in resp ect of the business
referred to as Redefine Electricity Business.
[2] The reasons for approving the proposed transaction follow.
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Parties to transaction
[3] The primary acquiring firm is Redefine. Redefin e is a property loan stock
company listed on the Johannesburg Stock Exchange L imited. Its portfolio
comprises a diversified range of properties includi ng office, retail and
industrial space located throughout South Africa. I t furthermore conducts
its own asset management services. Redefine also se lls a relatively
insignificant amount of electricity to some of its tenants.
[4] The primary target firm is Rural Maintenance’s business referred to as
Redefine Electricity Business. Redefine Electricity Business does not
control any firms.
[5] Redefine Electricity Business procures electric ity from Eskom and other
suppliers at the promulgated bulk rate and then res ells the electricity in
smaller quantities to respective smaller users (Red efine’s property
tenants) at regulated tariffs. Redefine Electricity Business also resells
electricity to Redefine itself in relation to prope rties or parts of properties
owned by Redefine that are not let to tenants.
Proposed transaction and rationale
[6] The proposed transaction involves the acquisiti on by Redefine from Rural
Maintenance of the electricity supply management bu siness referred to as
Redefine Electricity Business. Following the implem entation of the
proposed transaction, Redefine will have sole contr ol over Redefine
Electricity Business.
[7] Redefine submitted that the transaction is in l ine with its current strategy of
vertically integrating certain services and functio ns which have previously
been outsourced to third party service providers.
[8] Rural Maintenance is divesting from non-core activities.
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Impact on competition
[9] Post implementation of the proposed transaction , Redefine will supply
electricity directly to its tenants at the electric ity tariffs as approved by the
National Energy Regulator of South Africa (NERSA).
[10] The proposed transaction raises no likely comp etition concerns from a
horizontal perspective given the limited overlap be tween the activities of
the merging parties. As stated above, the amount of electricity supplied by
Redefine to its tenants is very small.
[11] As stated above, Redefine Electricity Business sells some electricity to
Redefine. However, this vertical relationship raise s no likely input or
customer foreclosure concerns.
Redefine Electricity Business does not
supply electricity to any competitors of Redefine a nd Redefine does not
purchase electricity from the competitors of Redefine Electricity Business.
[12] Furthermore, none of the customers and competi tors contacted by the
Commission as part of its market investigation expr essed any concerns
regarding the impact of the proposed transaction on competition.
[13] We conclude that that the proposed transaction is unlikely to
substantially prevent or lessen competition in any relevant market.
Public interest
[14] The merging parties confirmed that there will be no adverse effect on
employment as a result of the proposed transaction.
1 No other public
interest issues arise as a result of this transaction.
1 See pages 9 and 46 of the merger record.
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CONCLUSION
[15] We approve the proposed merger unconditionally .
____________________ 04 Aril 2013
Andreas Wessels DATE
Medi Mokuena and Mondo Mazwai concurring
Tribunal researcher: Caroline Sserufusa
For the merging parties:
Vani Chetty of Vani Chetty Competition Law
For the Commission: Zanele Hadebe