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[2015] ZACT 107
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Arrowhead Properties Limited v Redefine Properties Limited in respect of the property letting enterprise known as Cleary Park (LM159Oct15) [2015] ZACT 107 (25 November 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM1590ct15
In
the matter between:
Arrowhead
Properties
Limited
Acquiring Firm
And
Redefine
Properties Limited in respect of
the
property
letting enterprise
known
as Cleary
Park
Target
Firm
Panel
: Yasmin Carrim (Presiding Member)
: Mondo Mazwai (Tribunal
Member)
: Fiona Tregenna
(Tribunal Member)
Heard
on
: 18 November 2015
Order
Issued on
: 18 November 2015
Reasons
Issued on
: 25 November 2015
Reasons
for Decision
Approval
[1]
On 18 November 2015, the Competition Tribunal ("Tribunal")
unconditionally approved the merger between Arrowhead Properties
Limited ("Arrowhead") and Redefine Properties Limited
("Redefine") in respect of the property letting enterprise
known as Cleary Park.
[2]
The reasons for approving the proposed transaction follow.
Parties
to transaction and their Activities
Primary
acquiring firm
[3]
The primary acquiring firm is Arrowhead, a public
company incorporated in accordance
with the laws of
the Republic of South Africa. Arrowhead is listed on the Johannesburg
Securities Exchange Limited ("JSE")
and accordingly is not
controlled by any firm. Arrowhead controls lndluplace Properties
Limited and Vividend Income Fund Limited
which in turn control a
number of firms.
[4]
Arrowhead
holds
a diverse portfolio of properties
comprising
rentable
retail,
residential,
office
and
industrial
space
located
across
South
Africa.
Relevant
to
the
proposed
transaction
is
the
fact
that
the
acquiring
group
owns
a
number
of
rentable
retail
properties
in the
province
of
the
Eastern
Cape.
[1]
Moreover,
it
owns
one
comparative
centre
in
Mitchell's
Plain in
the Western
Cape.
Primary
target firm
[5]
The primary target firm is Redefine in respect of the property
letting enterprise known as Cleary Park. Redefine is a public
firm
incorporated in accordance with the laws of the Republic of South
Africa. Redefine is listed on the JSE and is not controlled
by any
firm. Cleary Park does not control any firm.
[6]
Redefine is a property loan stock company. It holds a diverse
property portfolio which comprises office, retail and industrial
space throughout South Africa. Cleary Park is a minor regional
shopping centre located in Bethelsdorp, Port Elizabeth.
Proposed
transaction and rationale:
[7]
In terms of the proposed transaction, Arrowhead will acquire
Cleary Park from Redefine. Post-transaction,
Arrowhead will own the target enterprise.
[8]
Arrowhead submits that it is focused on acquiring a portfolio of
retail centres and has identified Cleary Park as a suitable
investment. According to Redefine, its current strategy is to invest
in assets of a certain quality in specific areas. Cleary Park
no
longer forms part of this strategy thus Redefine has taken the
decision to exit this non-core asset in order to refocus its
portfolio on its core asset portfolio.
Impact
on Competition:
[9]
The
Competition
Commission
("Commission")
identified
the
relevant
market to
be the
market
for the
provision
of rentable
retail
space in
comparative
regional
shopping
centres
("comparative
centres'').
[2]
In this
regard,
it is
important
to
note that
the
acquiring
group
owns
a
number
of
retail
properties
but
only
one
comparative
centre which
is
located
in
the
Western
Cape.
Conversely,
the
target
enterprise
is
a
comparative
centre
located
in
Port
Elizabeth.
[10]
The Commission considered the property portfolios of the
merging parties and found that there is an overlap in the
market for the provision of rentable retail space in relation
to comparative centres. However, as the acquiring group does
not own
any comparative centres in the Eastern Cape
which is where the target enterprise
is
located,
there is no geographic overlap. Further, the Commission found that
the closest retail property of the acquiring group is
a stand-alone
retail unit located 23.2km.
[11]
The Commission accordingly concluded that the proposed transaction is
unlikely to substantially prevent or lessen competition
in the market
for the provision of rentable retail space in comparative centres.
Public
interest:
[12]
The Commission concluded that there are no public interest concerns
likely to arise from the proposed transaction.
Conclusion:
[13]
In light of the above, we agree with the Commission's analysis and
conclude that the proposed transaction is unlikely to substantially
prevent or lessen competition in the relevant market. In addition, no
public interest issues arise from the proposed transaction.
25
November 2015
DATE
____________________
Yasmin
Carrim
Mondo
Mazwai and Fiona Tregenna concurring
Tribunal
Researcher:
Ammara Cachalia
For
the merging parties:
Vani Chetty, Baker McKenzie
For
the Commission:
Thato Mkhize
[1]
These properties include The Arches, Market Square Centre, Tsolo and
Sterkspruit.
[2]
In determining the relevant market, the Commission considered the
fact that the acquiring group owns a combination of minor regional
centres, neighbourhood centres, local convenience centres and small
free-standing centres and that the target enterprise is a
minor
regional shopping centre. It further
considered
the
Tribunal
decision
in the
Fountainhead
Property Trust
Scheme
and
Pareto
Limited
merger
(Tribunal
case
no:
018556) where
it
accepted
that
regional
centres
fall
within
a
comparative
centre
category
and
that
comparative
centres
are
unlikely
to be
constrained
by
centres
which fall within other categories.