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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:016410
In the matter between:
The Corob Trust: Palm Trust and Others Limited Acquiring Firms
And
Longland Investments (Pty) Ltd and Tangmere
Investment Corporation (Pty) Ltd Target Firms
Panel : Norman Manoim (Presiding Member)
Andiswa Ndoni (Tribunal Member)
Mondo Mazwai (Tribunal Member)
Heard on : 05 June 2013
Order issued on : 05 June 2013
Reasons issued on : 27 June 2013
Reasons for Decision
Approval
[1] On 05 June 2013 the Competition Tribunal (“Trib unal”) unconditionally
approved the merger between the two consortiums of acquiring firms
and Longland Investments (Pty) Ltd and Tangmere Inv estment
Corporation (Pty) Ltd. The reasons for approval follow below.
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The Transaction
[2] The primary acquiring firms are the Palm Trust, the Corob Trust,
Standard Bank Properties (Proprietary) Limited (“SB P”), Tsogo Sun
One Monte (Proprietary) Limited (“One Monte”), HCI Invest 5 Holdco
(Proprietary) Limited (“HCI”), Sable Holdings Limit ed (“Sable”) and
Abbeydale Investment Holdings (Proprietary) Limited (“Abbaydale”).
These firms have formed two consortiums, namely: Co nsortium 64 and
Consortium 12, in order to facilitate this transaction.
[3] The Palm Trust is a discretionary property trus t, formed for the purpose
of holding movable, immovable and incorporeal prope rty of whatever
nature. The Corob Trust is a discretionary propert y holding trust,
formed for the purpose of holding movable, immovabl e and incorporeal
property of whatever nature.
[4] One Monte is a wholly owned-subsidiary within the Tsogo Sun Group of
companies. Tsogo Sun is involved in the hotel, gam ing, exhibition and
conference facilities and entertainment industries and has operations
throughought Africa, the Middle East and the Seyche lles. The Tsogo
Sun Group’s operation can be subdivided into two pr incipal business
activities; namely: gaming and hotels. In addition to these activities,
the Tsogo Sun Group has commercial property interes t in Pallazo
Towers and the Pivot office park.
[5] The primary target firms are Longland Investments ( Pty) Ltd
(“Longland”) and and its wholly owned subsidiary Ta ngmere
Investment Corporation (Pty) Ltd (“Tangmere”). Lon gland and
Tangmere are both property investment companies tha t own adjacent
portions of land in Witkopen a suburb on the northe rn outskirts of
Johahnesburg. At present this land is zoned as far mland and has not
been commercially developed with the exception of t wo buildings one
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an office block, Longpoint Building and another a h otel, City Lodge
which do not form part of the present transaction.
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The relevant market and the impact on competition
[6] At present the land being acquired through thi s transaction is zoned as
farmland, the acquiring consortiums wish to develop it as commercial
property. Some of the members of the acquiring firm are already active
in the commercial property market. The Commission was concerned
that the merging firms were unable to commit on whi ch commercial
uses the properties would be turned to. The mergin g parties indicated
that they had a development plan which was before t he local authority
for zoning approval but that until the approval was given it was not
possible to confirm that the developments would tak e place in terms of
the zoning plan as submitted. Secondly, if the zoning process took long
which is possible, then the commercial imperatives existing now may
change. For instance if the plan provided for exte nsive office space
and the commercial office market in the area change d from what it is
presently then they might use that space for anothe r purpose ie
expanding on the retail space.
[7] The Commission was not satisfied with this and required that merger
be approved subject to the following condition:
[8] “that should the Consortium Members decide to build anything other
than Grade AAA office property (or Grade P); Grades 4 and 5 Hotel
accommodations; and a retail box property as assess ed by the
Commission in the current transaction, the Consorti um Members shall,
within a period of thirty (30) business days of the taking of such
decision, inform the Commission in writing to enabl e it to assess how
1 In terms of the Sale of Land Agreement entered int o between the primary target firm and the primary
acquiring firm, Consortium 64 will purchase in undi vided shares from Longland the Remaining Extent
of Portion 109 (Portion 109) and the remaining Exte nt of Portion 185 (Portion 185) of the farm
Witkoppen 194. Post-merger, Consortium 64 will own Portion 109 and Portion 185 of the acquired
land. Furthermore, Consortium 12 will purchase in u ndivided shares from Longland the Remaining
Extent of Portion 40 (Portion 40) of the farm Witkoppen 194 from Tangmere. Post-merger, Consortium
12 will own Portion 40 and Portion 230 of the acquired land
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such change in development plans, which were not th e subject of the
Commission’s assessement, might affect the state of competition in
any property market within the Fourways node.
[9] Further, that in the event that the Commission is o f the view that such
change in development plans is likely to give rise to substantial
lessening and preventing of competition concerns in any property
market within the Fourways node, it shall require t he Consortium
Members to notify the merger in terms of section 12 A of the Act and
the Consortium Members shall notify the merger accordingly .”
[10] The merging parties objected to the condition being imposed on them
arguing that there was no reason for it to be imposed as the merger did
not on the Commission’s own analysis, raise any com petition or public
interest concerns, which would be a necessary juris dictional basis for
the imposition of conditions.
[11] We agreed with the merging parties and have d ecided to approve the
merger without conditions for the following three r easons: (i) it is not
clear whether the subsequent change in usage of the property would
constitute a merger as such; (ii) the Commission wa s not able to
adequately identify any competition concerns within any of the
commercial properties it anaylsed so imposing a con dition on a future
change of usage does not seem justified by any exis ting concern;(iii)
the merging parties are not taking over the existin g assets and thus
increasing concentration in the market. Rather the merger
contemplates the investment in new assets and thus increasing
existing supply to the market.
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CONCLUSION
[12] There are no significant public interest issue s and we accordingly
approve the transaction without conditions.
____________________ 27 June 2013
N Manoim DATE
A Ndoni and M Mazwai concurring.
Tribunal Researcher: Thabo Ngilande
For the merging parties:
Werksmans Attorneys
For the Commission: Lindiwe Khumalo