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[2015] ZACT 51
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Unemployment Insurance Fund v South Point Management Services (LM010Apr15) [2015] ZACT 51 (9 June 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM010Apr15
DATE:
09 JUNE 2015
In
the matter between:
UNEMPLOYMENT
INSURANCE
FUND
...................................................
Primary
Acquiring Firm
And
SOUTH
POINT MANAGEMENT
SERVICES
..................................................
Primary
Target Firm
Panel
: Y Carrim (Presiding Member)
:
F Tregenna (Tribunal Member)
:
M Mokuena (Tribunal Member)
Heard
on
: 3 June 2015
Order
Issued on
: 3 June 2015
Reasons
Issued on
: 9 June 2015
Reasons
for Decision
Approval
[1]
On 3 June 2015, The Competition Tribunal
(“Tribunal”)
unconditionally approved the
acquisition by Unemployment Insurance Fund
(“UIF”)
of South Point Management
Services
(“SPMS”).
[2]
The reasons for approving the proposed
transaction follow.
[3]
The primary acquiring firm is UIF,
represented by Public Investment Corporation SOC Limited
(“PIC”).
The UIF’s largest
shareholder is the Government Employees Pension Fund
(”GEPF”)
with 89.17%. The UIF is not
controlled by any firm but falls under the Department of Labour. The
UIF does not control any firm but
it does have shareholdings of less
than 2% in more than 21 companies.
[4]
The target firm is SPMS, a private
company controlled by Lereko Metier Capital Growth Trust. Its other
shareholders are Connexus
Capital Trust and Lereko Metier Capital
Growth Trust 1. SPMS controls Stay at South Point (Pty) Ltd.
Proposed
Transaction
[5]
The
UIF intends to acquire 100% of the issued share capital of SPMS.
Post-merger the UIF will have sole control of SPMS.
[I]
Rationale
[6]
The proposed transaction is in line with
the UIF’s investment mandate. For SPSM, the investment period
was coming to an end
and the investment needed to be realised for a
return of capital to investors.
Relevant
Market and Impact on Competition
[7j
The UIF is an unemployment insurance fund registered in South Africa.
The UIF is responsible for the collection and distribution
of
contributions by employees, employers and other contributors to the
fund. The collected funds are then invested into various
investment
vehicles. The UIF owns four buildings located in Thohoyandou, Bisho,
Pretoria and Randjespark. PIC invests funds in
a number of publically
listed property holding entities.
[8]
SPMS is engaged in refurbishing
inner-city buildings primarily for purposes of providing residential
accommodation to students in
urban cities. It currently has property
in Johannesburg, Pretoria, Durban, Port Elizabeth and Cape Town and
it houses more than
9000 students.
[9]
The Commission is of the view that there
is no horizontal overlap in the activities of the merging parties
since UIF and PIC do
not currently own student accommodation.
Furthermore, PIC does not hold any board membership or have the
ability to appoint board
members in any of the major competitors of
the merging parties. Therefore the Commission concludes that the
merger is unlikely
to substantially prevent or lessen competition in
the relevant market. We agree with this finding.
Public
Interest
[10]
The
transaction does not raise any public interest concerns.
[11]
In
light of the above we concluded that the proposed transaction was
unlikely to substantially prevent or lessen competition. Accordingly
we approved the proposed transaction unconditionally.
9
June 2015
DATE
Ms
Y Carrim
Prof.
F Tregenna and Ms M Mokuena concurring
Tribunal
Researcher: Moleboheng Moleko
For
the merging parties: Burton Phillips and Chris Charter - Cliff Dekker
Hofmeyr
For
the Commission: Seabelo Molefe and Xolela Nokele
[I]
This is Phase 1 of the transaction. Phase 2 is not part of this
transaction. In Phase 2 UIF will sell some of its shareholding
in
SPSM to Business Venture Investment (Pty) Ltd and Newco. The merging
parties have agreed to inform the Commission once Phase
2 of the
transaction occurs even though phase 2 may not reach the threshold
for notification in terms of the Act.