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[2014] ZACT 93
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AFHCO Proprietary Limited v 120 End Street Property Investments Proprietary Limited (018820) [2014] ZACT 93 (16 July 2014)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: 018820
In the matter
between;
AFHCO
PROPRIETARY
LIMITED
..................................................................
Primary
Acquiring Firm
And
120 END STREET
PROPERTY INVESTMENTS
PROPRIETARY
LIMITED
........................................................................................
Primary
Target Firm
Panel: Anton Roskam
(Presiding Member)
: Prof Imraan
Valodia (Tribunal Member)
: Prof Fiona
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 unconditionally approved the acquisition by
AFHCO (Pty) Ltd of the remaining 50% shareholding
in 120 End Street
Proprietary Investments (Pty) Ltd from Amdec Investments (Pty) Ltd
(“
AMDEC
”).
[2] The reasons for
approving the proposed transaction follow.
Parties to
transaction
Primary
acquiring firm
[3]
The primary acquiring firm is AFHCO (Pty) Ltd
(“AFHCO”).
AFHCO
is a wholly owned subsidiary of AFHCO Holdings (Pty) Ltd
(“AFHCO
Holdings”).
AFHCO
Holdings is jointly controlled by the following shareholders:
•
Old
Mutual Life Assurance Company (SA) Limited (“OMLACSA”);
•
Mr.
Wayne Plit;
•
Mrs.
Renney Plit.
1
[4]
The shareholders of AFHCO Holdings sold their 50% interest in AFHCO
Holdings to SA Retail (Pty) Ltd
(“SA
Retail”).
This
acquisition was assessed by the Commission and approved by the
Competition Tribunal on 18 June 2014 under Tribunal Case Number
018762. In terms of this transaction AFHCO Holdings is now wholly
owned by SA Retail. This transaction is hereinafter referred
to as
the
“
SA
Retail
I
AFHCO transaction”.
[5]
OMLACSA is a wholly owned subsidiary of Old Mutual Emerging Markets
Limited
(“OMEM”),
which
is wholly owned by Old Mutual (South Africa) (Pty) Ltd
(“OMSA”).
OMSA
is wholly owned by Old Mutual Netherlands B.V.
(“OM
Netherlands”).
OM
Netherlands is a wholly owned subsidiary of OM Group (UK) Limited
(“OM UK”).
OM
UK is a wholly owned subsidiary of Old Mutual Pic.
[6]
AFHCO Holdings holds a 100% interest in the Urban Housing Finance
(Pty) Ltd and Protea Glen Housing (Pty) Ltd. AFCHO holds a
50%
interest in 120 West End Street Property Investments (Pty) Ltd
(“120
End Street Investments”)
and
controls the following firms:
Serfo
Investments (Pty) Ltd;
Ocwen
Investment 57 (Pty) Ltd;
Only
The Best Properties 223 (Pty) Ltd;
Anchor
Towers Property Inv. (Pty) Ltd;
Rainbow
Place Properties 80 (Pty) Ltd;
Morulat
Property Investmenst (Pty) Ltd;
Blazing
Fortune Properties 9 (Pty) Ltd;
Dust
Gold Investments 3 (Pty) Ltd;
Elite
Star Properties 3 (Pty) Ltd;
Rapiprop
101 (Pty) Ltd;
Seimwright
Corner Properties (Pty) Ltd.
Note:
Hereinafter,
reference to the
“
Acquiring
Group”
bears
reference to all of the above listed firms except for OMLACSA.
2
Primary target
firm
[7] The primary
target firm is 120 End Street Investments which is jointly controlled
in equal shares by AFHCO and Amdec. Amdec
is jointly controlled by
the Baker Family Trust and the Rowe Family Trust. Trustees of the
Baker Family Trust are:
James
Alexander Wilson;
Deborah
Anne Wilson; and
;
John
Stuart Wilson.
Trustees of the Rowe
Family Trust are:
John
Stuart Wilson;
Astra
Margaret Wilson; and
James
Alexander Wilson.
Proposed
Transaction and Rationale
[8] In terms of the
Sale of Shares and Claims Agreement, AFCHO is acquiring the remaining
50% of the shares and claims in 120 End
Street Investments from
Amdec. Upon the acquisition of the remaining 50% shareholding, AFHCO
will gain sole control of 120 End
Street Investments.
[9]
The rationale for this transaction is for the Acquiring Group and
Amdec to give effect to the SA Retail/AFHCO transaction
(“SACREF”).
SACREF
expressed an interest in acquiring the remaining 50% issued share
capital in End Street and this provided an opportunity
for Amdec to
sell its interest to AFHCO and in turn enable SACREF to obtain a
wholly owned interest in End Street through its proposed
acquisition
of AFCHO Holdings.
Relevant Market
and Impact on Competition
[10] The Acquiring
Group comprises of property investment companies that own office,
residential, retail and light industrial properties
while 120 End
Street is a property investment firm with a portfolio comprising of
11 immovable properties classified as residential,
office and retail.
An assessment of the property portfolio of the Acquiring Group and
that of the target firm revealed a horizontal
overlap in respect of:
rentable
residential space within the Johannesburg CBD;
rentable
retail space in convenience centres within a 6km radius from the
Johannesburg CBD;
Grade
C office space within the Johannesburg CBD node; and
light
industrial space within the South West Industrial node.
Rentable
Residential Space
[11] The Acquiring
Group has a property portfolio in excess of 20 rentable residential
spaces within the Johannesburg CBD. With
respect to the market for
the provision of rental space in residential property, the Commission
could not find data to determine
the estimated market shares of the
merging parties. However, the Commission submitted that the merging
parties will continue to
face competition from 30 firms which
currently own residential properties within the Johannesburg CBD.
Retail
Rentable Convenience Centres
[12] A horizontal
overlap was identified in the Johannesburg CBD in that the 120 End
Street Investments retail properties are located
within this node and
within a narrow 6km radius of the Johannesburg CBD. The merged
entities market share in the Johannesburg CBD,
based on a GLA
estimate, is 14.65% post-merger, with a 2.46% market accretion. It is
noted that within the same geographic market
the merged entity will
continue to face competition from retail centres which have a
combined market share of 86.45%.
Rentable Grade
C Office Space
[13] Overlaps were
identified in the Johannesburg CBD node as 120 End Street Investments
has two properties located in the Johannesburg
CBD. Therefore only
properties within the Acquiring Group which are located within the
Johannesburg CBD were considered for purposes
of this assessment.
[14] The Acquiring
Group’s market shares based on a GLA estimate is 1.11% post
merger with a 0.82% accretion, which is deemed
too minimal to raise
competition concerns.
Provision
of ren
t
als
in industrial property
[15] AFHCO and 120
End Street Investments jointly own an industrial property within the
South West industrial node. This is the
only such property within
their respective portfolios and thus this transaction does not result
in an accretion of market share
nor does it alter the structure of
the market.
Conclusion
[16] In light of the
above we conclude that the proposed transaction is unlikely to
substantially prevent or lessen competition
in the identified
markets. In addition, no public interest issues arise from the
proposed transaction. Accordingly we approve the
proposed transaction
unconditionally.
18 July 2014
DATE
Prof Imraan
Valodia
Anton Roskam and
Prof Fiona Tregenna concurring
Tribunal Researcher:
Derrick Bowles
For the merging
parties: Susan Meyer - Cliffe Dekker Hofmeyr
For the Commission:
Dineo Mashego, Xolela Nokeie and Seema Nunkoo
1
Mr.
Wayne Plit and Mrs. Renney Plit do not control any other firms.
2
This
is because OMLACSA sold its selling interest in AFHCO Holdings to SA
Retail.