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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: 016527
In the matter between:
Presmooi (Pty) Ltd, Savyon Building (Pty) Ltd and Acquiring Firm
IPS Investments (Pty) Ltd
And
Drystone Investments (Pty) Ltd, Odeon Investments Target Firm
(Pty) Ltd and Adamax Property Projects, Persequor (Pty) Ltd
Panel : Norman Manoim (Presiding Member),
Mondo Mazwai (Tribunal Member)
and Andiswa Ndoni (Tribunal Member)
Heard on : 05 June 2013
Order issued on : 05 June 2013
Reasons issued on : 14 June 2013
Reasons for Decision
Approval
On 05 June 2013, the Competition Tribunal (“Tribunal”) conditionally approved
the merger between Presmooi (Pty) Ltd(“Presmooi”), Savyon Building (Pty)
Ltd(“Savyon”), IPS Investments (Pty) Ltd(“IPS”)(“Ac quiring Firms”) and
Drystone Investments (Pty) Ltd(“Drystone”), Prophol d Ltd(“Prophold”), Odeon
Investments (Pty) Ltd(“Odeon”) and Adamax Property Projects(“Adamax”),
Persequor Park (Pty) Ltd(“Persequor”)(“Target Firms”). Our reasons follow.
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Parties to the transaction
[1] The Acquiring firms all form part of the Octode c Premium Group. Octodec
is a property loan stock company listed on the Joha nnesburg Stock
Exchange (“JSE”), with property investments diversi fied across all sectors
of the rental property market, including the retail office, residential and
industrial sectors in Gauteng.
[2] The Target firms are part of the Prophold Group which is a property
investment consortium, active in the letting of com mercial and residential
properties.
Proposed transaction
[3] The transaction involves the purchase of seven properties namely: Prime
Cure Hanger, Lenchen Industrial Retail Park, Odeon Forum, Dynamech
Office Park, De Havilland Forum and Planburo Consil ium (“Target
Properties”). These properties have been disposed o f in five separate
agreements which have been negotiated and concluded as the disposal of
a single property portfolio. Despite the number of involved in the
transactions, both the acquiring firms and target f irms respectively, are
controlled centrally, by a unitary controlling inte rest which viewed the
transactions as inseparable.
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Relevant markets and impact on competition
[4] The Commission when assessing the competitive e ffects of the proposed
transaction, made a comparison between the Target P roperties and the
properties owned by the Acquiring Firms, having reg ard to substitutability
in terms of product classification and geographic l ocation. However only
those properties owned by the Octodec Premium Group that fall within the
same product classification and geographic area as that of the target
1 Mr Anthony Stein, the Director of Octodec Premium Group, testified and explained why the
transactions were notified as a single transaction instead of multiple transactions. See para 20, page 5
of Transcript of hearing.
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properties were considered. In respect of all the c lasses of property the
Commission applied a 10 km radius, considering that this was sufficiently
narrow to accommodate any concerns about the exerci se of market
power.
[5] Based on this, the Commission found overlaps in respect of the following:
• Rentable light industrial space
[6] In respect of the Centurion node in Gauteng, th e Acquiring Firms own one
property (Lenchen Centre) which is within the 5km t o 10km radius of
Lenchen Industrial Retail Park, the Target Property . The market share
accretion will be from 1.15% to 3.75%.
• Rentable retail space
[7] In respect of the same properties as above, wit hin the same geographic
area the market share accretion will be from 1.75% to 3.3%.
[8] The Commission’s conclusion in respect of these properties was that post
merger market shares remained low and market accret ions were minimal.
This is a conclusion that we agree with and no furt her analysis was
required.
Public Interest
[9] The Commission was concerned that information submitted about post
merger job losses had been inconsistent. The mergin g parties were
however willing to give an undertaking in this respect and agreed to have it
made as a condition for the approval for the merger.
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2 See Transcript of hearing para 15, page 4.
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CONCLUSION
[10] The proposed transaction is unlikely to substa ntially lessen or prevent
competition and we therefore approve it with the co nditions set out in the
Annexure.
____________________ 14 June 2013
Norman Manoim DATE
M. Mazwai and A Ndoni.
Tribunal Researcher: Caroline Sserufusa
For the merging parties:
Vani Chetty of Vani Chetty Competition Law
For the Commission: Jatheen Bhima
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ANNEXURE “A”
Conditions imposed to the Merger between
Presmooi (Pty) Ltd & Others and Drystone
Investments (Pty) Ltd & Others
1. No employees of the target firms shall be retren ched as a result of this
Merger within two (2) years after the approval date . For the sake of
clarity, retrenchments do not include voluntary separation agreement or
voluntary early retirement packages, and reasonable refusals to be
redeployed in accordance with the provisions of the Labour Relations
Act, 1995, as amended.
2. Should the Acquiring firms wish to retrench with in the period mentioned
in 1 above, the Acquiring firms shall notify the Co mmission of such
contemplated retrenchments and motivate as to why t hese
retrenchments are not merger specific or merger related.