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[2015] ZACT 4
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Attacq Waterfall Investment Company (Pty) Ltd v Micawber 832 (Pty) Ltd (020016) [2015] ZACT 4 (20 January 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case No: 020016
In the matter
between:
Attacq
Waterfall Investment Company (Pty)
Ltd
.............................................................
Acquiring
Firm
and
Micawber
832 (Pty)
Ltd
............................................................................................................
Target
Firm
Panel: Yasmin Carrim
(Presiding Member)
Medi Mokuena
(Tribunal Member)
Andiswa Ndoni
(Tribunal Member)
Heard on: 18
December 2014
Order issued on: 18
December 2014
Reasons issued on :
20 January 2015
Reasons for
Decision
Approval
1. On 18 December
2014 the Competition Tribunal (the “Tribunal”)
unconditionally approved an acquisition by Attacq Waterfall
Investment Company (Pty) Ltd (“AWIC”) of Micawber 832
(Pty) Ltd (“Micawber”).
2. The reasons for
the approval of the proposed transaction follow.
The Parties and
their activities
3. The primary
acquiring firm is AWIC, a private company incorporated in terms of
the Laws of the Republic of South Africa. AWIC
is controlled by
Attacq Ltd (“Attacq”), a public company listed on the
Johannesburg Securities Exchange (“JSE”).
Attacq is not
controlled by any firm. Attacq’s five largest shareholders as
at 04 July 2014 are Sanlam Life Insurance Ltd
(12.92%), Lisinfo 222
Investments (Pty) Ltd (10.98%), Coronation Fund Managers (9.15%),
Mergon Foundation (6.19%) and Nedbank Group
(2.58%). AWIC controls a
number of firms including Atterbury Attfund Investment Company Number
1 (Pty) Ltd, Atterbury Property
Investments (Pty) Ltd, Aldabri 96
(Pty) Ltd and AlH international Ltd. AWIC does not control any firm.
4. The Attacq group
comprises of property development firms that develop and manage
assets and properties in the commercial, retail
industrial and
residential sectors throughout South Africa and internationally.
Relevant for purposes of this transaction are the
Attacq group’s
Grade A office properties.
5. The primary
target firm is Micawber, a private company incorporated in terms of
the Laws of the Republic of South Africa. Micawber
is controlled by
the PwC Sunninghill Property Trust (“PwC Trust”).
Micawber does not control any firm.
6. Micawber is a
special purpose vehicle that was created with the sole purpose of
holding an investment in a Grade B office property
located at Eglin
Road, Sunninghill, Gauteng Province (“the target property”).
According to the merging parties, the
target property is currently
leased to the PwC Trust and does not form part of the open market.
The merging parties also submitted
that the lease agreement will be
ceded to AWIC on the same terms.
Proposed
transaction and rationale
7. In terms of the
proposed transaction AWIC intends to acquire 100% of the issued share
capital of Micawber and all claims that
the PwC Trust may have
against Micawber. Following implementation AWCl will exercise sole
control over Micawber.
8. AWIG submitted
that the proposed transaction offers it with an opportunity to
acquire another investment asset which it believes
has a favourable
market value.
9. The PwC Trust
submitted that it intends on moving its head office to Attacq’s
Waterfall Estate (which is currently being
developed) and according
to PwC Trust, this move will be advantageous in affording it the
opportunity to consolidate part of its
Gauteng operations, which are
currently spread across three locations.
Competition
Analysis
10. Both parties own
office properties in Gauteng: the Attacq group owns grade A offices
and the target property is a grade B office
property. Although the
target property does not form part of the open market, the Commission
adopted a conservative view and assessed
the activities of the
merging parties in the provision of office property.
11. The Commission
found that the merging parties' respective grade A and B offices are
located in adjacent nodes, namely, Woodmead
and Sunninghill. In
assessing the competitive effects of the proposed transaction, the
Commission also considered the average rentals
within the two nodes.
The Commission found that the difference in average rentals in the
two nodes is not significant and consequently
adopted the view that
the two properties may constrain each other. The Commission however
did not conclude on the relevant product
market and assessed the
market for the provision of Grade A and B office properties in the
Woodmead/Sunninghill nodes.
12.The
Commission found that the merging parties wii! have post-merger
market shares of approximately 5.8% with an accretion of
4.9%.
Competitors of the merging parties within the two nodes include
Acucap, Equity Estates, Atterbury, Zenprop and others. As
the merging
parties
1
post-merger market shares are low and there are other firms that will
continue to compete with the merging parties post-merger,
the
Commission concluded that the proposed transaction is unlikely to
result in a substantial lessening or prevention of competition
in the
relevant markets.
Public interest
13. The merging
parties confirmed that the proposed transaction will have no adverse
effect on employment and will not result in
any retrenchments in
South Africa.
1
The proposed transaction raises no other
public interest concerns.
Conclusion
14. For the reasons
mentioned above, we approve the proposed transaction unconditionally.
20 January 2015
Date
Ms. Yasmin Carrim
Mrs. Medi Mokuena
and Ms. Andiswa Ndoni concurring
Tribunal Researcher:
Ipeleng Selaledi
For the merging
parties : Darren Smith of Edward Nathan Sonnenberg
For the Commission:
Hugh Dlamini
1
See
merger record, pages 10. Also see paragraph 7.1 of the Commission’s
merger report.