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[2014] ZACT 11
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SA Retail Properties (Pty) Ltd v AFHCO Holdings (018762) [2014] ZACT 11 (16 July 2014)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: 018762
DATE:
16 JULY 2014
In the matter
between:
SA RETAIL
PROPERTIES (PTY) LTD
......................
Primary
Acquiring Firm
And
AFHCO
HOLDINGS
.....................................................
Primary
Target Firm
Panel : Mr A
Roskam (Presiding Member)
: Prof. I Valodia
(Tribunal Member)
: Prof. F
Tregenna (Tribunal Member)
Heard on : 18
June 2014
Order Issued on :
18 June 2014
Reasons Issued on
: 16 July 2014
Reasons
for Decision
Approval
[1] On 18 June 2014,
The Competition Tribunal (‘Tribunal’') unconditionally
approved the acquisition by SA Retail (Pty)
Ltd (“SA Retail”)
to acquire the entire issued share capital in AFHCO Holdings (Pty)
Ltd (“AFHCO”). Post-
merger SA Corporate
Real Estate Fund (“SA Corp”) will have sole indirect
control over AFHCO.
[2] The reasons for
approving the proposed transaction follow
Parties to the
transaction
[3] The primary
acquiring firm is SA Retail, a wholly owned subsidiary of SA
Corporate Real Estate Fund Nominee (“SACN”).
SACN is
controlled by SA Corp, a company listed on the Johannesburg
Securities Exchange. SA Carp’s shareholders with an interest
of
more than 5% include; Government Employment Pension Fund, Coronation
Fund Managers and Stanlib Asset Management. SACN holds
100% shares in
Blue Heron (Pty) Ltd, Dune Lark Investments, Erf 84-85-86 Shakes Head
(Pty) Ltd, Wood Ibis Investments (Pty) Ltd,
Grey Heron Investments
(Pty) Ltd, Whirlprops 25 (Pty) Ltd, Rock Kestel Investments (Pty) Ltd
and Stonedell Investments (Pty) Ltd.
SACN holds 75% shares in Umlazi
Mega City (Pty) Ltd,
[4] The primary
target firms is AFHCO, its shareholders include; IDEA Managed Fund,
Mr Wayne Plit and Ms Renney Plit. AFHCO holds
100% interest in
various companies including AFHCO (Pty) Ltd (“AFHCO Sub”),
AFHCO Property (Pty) Ltd, Urban Housing
Finance (Pty) Ltd and Protea
Glen Housing (Pty) Ltd. AFHCO Sub controls more than 11 companies.
Proposed
Transaction
[5] SA Corp through
its subsidiary SA Retail intends to acquire the entire issued share
capital in AFHCO. Post-merger SA Corp will
have sole Indirect control
over AFHCO.
Rationale
[6] The proposed
transaction offers SA Corp the opportunity to acquire an established
and experienced management team in the residential
sector. For
2 AFHCO shareholders
the saie provides an opportunity to realise their investment at an
appropriate time in their careers.
Relevant Market
and Impact on Competition
[7] SA Retail group
is a collective investment scheme which invests in property (also
known as a property unit trust). It has a
total of 134 properties
that comprises of 26 retail properties, 89 industrial properties and
19 office properties and they are
all located in the Gauteng
Province. Relevant for this transaction are the 124 properties.
[8] AFHCO is a
property investment company that has a total of 62 properties
comprising of 27 residential properties, 31 retail
properties, 1
light industrial property and 4 office properties mostly located
within the Johannesburg Central Business District
(“CBD")
and Newtown.
[9] The proposed
transaction does result in horizontal overlap arising in relation to
provision of B-Grade and C-Grade office space,
the market for
provision of rentable retail space in convenience centres and the
market for provision of rentable space in light
industrial property.
[10] In the market
for Grade B and C office properties 7 properties were identified as
overlapping post the transaction. However,
the Competition Commission
found that there is no geographic overlap in the areas of rentable
office space in B-Grade and C-Grade
and the market for the provision
of rentable space in light industrial property. The B-Grade and
C-Grade properties are not within
the same node as AFCHO, the B-Grade
is within a 26km distance and the C- Grade office properties are
within a 5km distance.
[11 ] The Commission
also considered the market for provision of rentable space in retail
property within the 6km distance of the
Johannesburg CBD nodie. In
this node SA Corp has a total GLA of 5506m2 and a market share of
2.2% and AFHCO has a total GLA of
40926 and a market share of 14.4%.
SA Corp will have a post -merger market share of 16.6%, The
Commission found that the parties
post-merger estimated market shares
were not significant to raise competition concerns and competitors in
the market still have
a market share of 83.4% and a GLA of 246 213mz.
Competitors include; Bel Air shopping centre (7.3%), Centro
Continental (6.0%),
Thrupps Centre (5.4%) and Bfamley shopping
centre.
[12] In the market
of provision of rentable space in light industrial property, the
Commission found that none of the SA Corp properties
are Ideated
within the South-West Industrial node where AFHCO’s one
property is located therefore there is no geographic
overlap.
Conclusion
[12] In light of the
above we conclude that the proposed transaction is unlikely to
substantially prevent or lessen competition
in the market for
provision of rentable of B-Graae and C-Grade office space, the market
for provision of rentable retail space
in convenience centre and the
market for provision of rentable space in light industrial property.
In addition, no public interest
issues arise from the proposed
transaction. Accordingly we approve the proposed transaction
unconditionally.
July 2014
Prof. F Tregenna
DATE Prof. I Valodia and Mr A Roskam concurring
Tribunal
Researcher: Moleboheng Moleko
For the merging
parties: Desmond Rudman - Webber Wentzel
For the
Commission: Hardin Ratshiisusu, Xolela Nokele, Seema Nunkoo
and Dineo
Mashego.