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[2013] ZACT 87
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Sasol Pension Fund v An undivided half share in property owned by the Elixir Trust (017103) [2013] ZACT 87 (8 August 2013)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No.: 017103
In
the matter between:
Sasol
Pension Fund Primary Acquiring Firm
and
An
undivided half share in property owned
by
the Elixir Trust Primary Target Firm
Panel
Andreas
Wessels (Presiding Member)
Andiswa
Ndoni (Tribunal Member)
Anton
Roskam (Tribunal Member)
Heard
on
31
July 2013
Order
issued on
31
July 2013
Reasons
issued
08
August 2013
DECISION
Approval
[1]
On 31 July 2013, the Competition Tribunal (“Tribunal”)
unconditionally approved the proposed acquisition by Sasol
Pension
Fund of an undivided half share in property owned by the Elixir
Trust.
[2]
The reasons for approving the proposed transaction follow.
Parties
to transaction
[3]
The primary acquiring firm is Sasol Pension Fund (“SPF”).
SPF is a registered pension fund in terms of the
Pension Funds Act,
1956
. It holds interests in various firms as passive investments. It
does not control any firm.
[4]
The members of SPF comprise of staff of Sasol Limited ("Sasol”)
and its associates. SPF invests its contributing
members’
savings and pensioners’ retirement capital to generate returns
for its contributing members and income to
pay benefits to retired
members. It also invests in and develops property to generate rental
income. SPF leases property to third
parties, as well as to Sasol.
[5]
The primary target firm is the Elixir Trust ("Elixir”) in
respect of one undivided half share in vacant immovable
land situated
in Sandton and zoned for office property development (“the
target property”).
1
[6]
In terms of the proposed transaction the target property consists of
land
2
in the Sandton node that will be developed into 67 000 m2 of P-Grade
office space
3
in order to lease the property to Sasol Group Services (Pty) Ltd as
its new corporate offices.
4
[7]
Elixir invests in and develops property to benefit its beneficiaries.
Of relevance to the competition assessment of this transaction
is
that Elixir owns
inter
alia
two B-grade office properties in the Sandton node.
Proposed
transaction and rationale
[8]
In terms of the proposed transaction SPF intends to acquire 50%
undivided shares in the target property from Elixir. Following
the
implementation of the proposed transaction, the target property will
be jointly controlled by SPF and Elixir.
[9]
In addition to the sale of properties agreement, SPF and Elixir have
concluded a co-ownership agreement, a development agreement
and a
property management agreement.
5
[10]
The proposed transaction is in line with SPF’s mandate to
invest the savings of its contributing members and pensioners’
retirement capital and the Sandton node offers exposure to premier
office property for investment purposes.
6
[11]
According to Elixir this transaction provides the opportunity to
develop the target property and to create a long-term relationship
with a blue chip tenant such as Sasol.
Competition
assessment
[12]
In relation to vacant property or rentable P-grade office property
(see paragraph 6 above), the Commission found no overlap
in the
activities of SPF and the target property, since SPF does not own any
vacant property or any rentable P-grade office property
within the
Sandton node.
[13]
In relation to a potential product market including both A- and
P-grade office property, the Commission found that SPF’s
A-grade property is located in the Rose bank node whilst the target
property is located in the Sandton node. However, even if the
Rosebank and Sandton nodes are considered as one geographic market,
the merging parties’ combined postmerger market
share
remains relatively small.
[14]
In addition, given the fact that the target property will be leased
out to Sasol for a period of [...] years, the transaction
does not
significantly alter the structure of the market since the property
will not be available for lease to third parties during
that period.
[15]
The Commission further identified a product overlap in the activities
of SPF and Elixir in the market for rentable B-grade
office space.
However, SPF’s B-grade office properties are located within the
Centurion and Rosebank nodes, whereas the B-grade
office properties
owned by Elixir are located in the Sandton node. However, even if the
Rosebank and Sandton nodes are considered
as one geographic market,
the proposed merger has no substantial effect on competition in the
market.
[16]
Furthermore, the Commission found no likelihood of the proposed
merger creating a platform for SPF and Elixir to post-merger
share
sensitive information and facilitate coordination. We have no reason
to doubt this finding.
[17]
Therefore we conclude that the proposed transaction is unlikely to
substantially prevent or lessen competition in any relevant
market.
Public
interest
[18]
The merging parties confirmed that the proposed transaction will not
have any negative impact on employment and that no retrenchments
will
result from the proposed transaction.
7
No other public interest issues arise as a result of this
transaction.
CONCLUSION
[19]
Having regard to the facts above, we find that the proposed
transaction is unlikely to substantially prevent or lessen
competition
in any relevant market. Furthermore, no public interest
concerns arise as a result of the proposed transaction. Accordingly,
we
approve the proposed merger unconditionally.
ANDREAS
WESSELS
08
August 2013
DATE
Andiswa
Ndoni and Anton Roskam concurring
Tribunal
Researcher: Nicola llgner
For
the Commission: Dineo Mashego and Themba Mahlangu
For
the merging parties: Cliffe Dekker Hofmeyr Inc.'
1
For
a full description of this property, see
inter
alia
pages 7 and 8 of the merger record. Also see page 9 of the
Commission’s Report.
2
The
target property previously held office properties, but these
properties have been demolished. It now comprises various portions
of vacant land zoned for office property development.
3
SAPOA
defines Grade P property as top-quality, generally modern space
which is a pacesetter in establishing rentals and which
includes the
latest or a recent generation of building services, ample parking, a
prestige lobby and good views, or a good environment.
4
See
inter
alia
pages 35 and 39 of the merger record.
5
See
pages 36 and 37 of the merger record.
6
See
page 36 of the merger record.
7
See
pages 9 and 43 of the merger record, as well as page 5 of the
transcript.