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[2015] ZACT 115
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Vukile Property Fund Limited v Flanagan & Gerard Investments (Proprietary) Limited and Another (LM080Jul15) [2015] ZACT 115 (7 September 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No:
LM080Jul15
In
the matter between:
Vukile
Property Fund
limited
Primary Acquiring Firm
and
Flanagan
& Gerard
Investments
(Proprietary)
Limited
and
East & West
Investments (Proprietary)
Limited,
in
respect
of each firms
50%
interest
in the
Bedworth
Centre Letting
Enterprise
Primary
Target
Firms
Panel
: Ms Yasmin Carrim (Presiding Member)
: Ms Medi Mokuena
(Tribunal Member)
: Prof lmraan I Valodia
(Tribunal Member)
Heard
on
: 12 August 2015
Order
Issued on
: 12 August 2015
Reasons
Issued on
: 7 September
2015
Reasons
for Decision
Approval
[1]
On
12 August
2015,
the
Competition
Tribunal
("Tribunal")
unconditionally
approved
the merger
between
Vukile
Property
Fund
Limited
("Vukile
Property
Fund")
and
Flanagan
&
Gerard
Investments
(Proprietary)
Limited
("Flanagan
&
Gerard")
and
East &
West
Investments
(Proprietary)
Limited
("
East
& West
Investments"),
in respect
of each
firms 50% interest in
the
Bedworth Centre Letting Enterprise ("Target Property")
[1]
[2]
The reasons for approving the proposed transaction follow.
Parties
to
transaction
Primary
acquiring firm
[3]
The primary acquiring firm, Vukile Property Fund is a firm listed on
the Johannesburg Securities Exchange and is not controlled
by a
single shareholder.
[4]
Vukile Property Fund is a property fund with a portfolio that
consists of retail space, office space and land under development.
Primary
target firm
[5]
The Target Property is jointly controlled by Flanagan & Gerard
and East & West Investments and comprises
Erf 270
Bedworth Park Township, Erf 413 Bedworth Park Township, Erf 427
Bedworth Park Township and Erf 924 Bedworth Park Township.
[6]
Flanagan & Gerard's core business activities are the development
and investment in regional shopping centres
and community
centres. East & West Investments is active in the business of
property investments.
Proposed
transaction and rationale
[7]
The proposed transaction involves Vukile Property Fund acquiring 100%
of the undivided shares equally held by Flanagan &
Gerard and
East & West Investments in respect of the Target Property. As a
result of the transaction Vukile Property Fund will
hold sole
ownership and control over the Target Property.
[8]
Vukile Property Fund submits that the acquisition is a good strategic
fit for its portfolio due to the property's location.
The target
firms intend to realise the profits of their investments through the
proposed transaction.
Impact
on competition
[9]
The Competition Commission ("the Commission") identified a
horizontal overlap in the activities of the parties as
the property
portfolios of both Vukile Property Fund and the Target Firms
comprises retail space.
[10]
The Commission evaluated comparative centres within a 15km radius of
the target property and found that Vukile Property Fund
does not own
retail property within that radius. It further found that there are
comparative centres within the radius which would
constrain the
merged entity. As such, the Commission concluded that there is no
geographic overlap in the activities of the merging
parties and
therefore that the proposed transaction is unlikely to substantially
prevent or lessen competition.
[11]
We concur with the Commission's competition assessment, i.e. that the
proposed transaction is unlikely to substantially prevent
or lessen
competition in the market for rentable space in comparative centres.
Public
interest
[12]
The merging
parties
confirmed that the
proposed
transaction
will
not result
in an adverse impact on employment.
[2]
The
proposed
transaction
further
raises
no other
public
interest
concerns.
Conclusion
[13]
In light of the above, we conclude that the proposed transaction is
unlikely to substantially prevent or lessen competition
in any
relevant market. In addition, no public interest issues arise from
the proposed transactions. Accordingly, we approve the
proposed
transaction unconditionally.
07
September 2015
DATE
________________________
Ms
Yasmin Carrim
Ms
Medi Mokuena and Prof lmraan I Valodia concurring
Tribunal
Researcher:
Aneesa Ravat
For
the merging parties: Andries Le Grange
of Cliffe Dekker Hofmeyr Inc
For
the Commission:
Prishani Maheeph, Seema Nunkoo and Xolela Nokele
[1]
The transaction was notified simultaneously as the shares in
Bedworth Centre are indivisible.
[2]
Inter
alia
merger
record page 8.