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[2015] ZACT 73
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Accelerate Property Fund Limited v Old Mutual Life Insurance Company (South Africa) Limited in respect of the Portside Building (LM156Oct15) [2015] ZACT 73 (2 December 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No:
LM1560ct15
In
the matter between:
ACCELERATE
PROPERTY
FUND
LIMITED
Primary Acquiring Firm
and
OLD
MUTUAL LIFE ASSURANCE COMPANY (SOUTH AFRICA) LIMITED
IN
RESPECT
OF
THE PORTSIDE
BUILDING
Primary Target Firm
Panel
: Andreas Wessels (Presiding Member)
: lmraan Valodia
(Tribunal Member)
: Medi Mokuena (Tribunal
Member)
Heard
on
: 25 November 2015
Order
Issued on
: 25 November 2015
Reasons
Issued on
: 02 December 2015
Reasons
for Decision
Approval
[1]
On 25 November 2015, the Competition Tribunal ("Tribunal")
unconditionally approved the proposed transaction involving
Accelerate Property Fund Limited and Old Mutual Life Assurance
Company (South Africa) Limited in respect of sectional title units
in
the property and letting enterprise known as the Portside Building.
[2]
The reasons for approving the proposed transaction follow.
Parties
to proposed transaction
Primary
acquiring firm
[3]
The primary acquiring firm is Accelerate Property Fund Limited
("Accelerate"), a company incorporated in accordance
with
the laws of the Republic of South Africa. It is a property investment
company listed on the Johannesburg Stock Exchange (JSE).
It is not
controlled by any single firm.
[4]
Accelerate controls Parktown Crescent Properties (Pty) Ltd, which in
turn controls Wanooka Properties (Ply) Ltd. Accelerate
together with
its subsidiaries are collectively referred to hereinafter as the
"Acquiring Group".
[5]
The Acquiring Group's property portfolio consists of retail, office
and industrial property located in Gauteng,
the Western
Cape, Limpopo and KwaZulu-Natal provinces. However, only the
acquiring group's office and retail properties located
in the Western
Cape are relevant to the competition assessment of this transaction.
Primary
target firm
[6]
The primary target firm is Old Mutual Life Assurance Company (South
Africa) Limited ("OMLACSA") in respect of sectional
title
units in the property and letting enterprise known as the Portside
Building situated in the Cape Town CBD ("the Target
Property").
The Target Property comprises of rentable grade A office space,
rentable ground floor retail space and parking
bays.
[7]
The Target Property is currently jointly owned and controlled by
FirstRand Bank Limited ("FirstRand") and OMLACSA.
Proposed
transaction and rationale
[8]
Accelerate intends to acquire the Target Property as a going concern.
Pursuant to the transaction, Accelerate will have sole
control over
the Target Property.
[9]
The Acquiring Group submitted that the proposed transaction will
inter a/ia
allow it to acquire an iconic five star,
green-rated office building which will allow it to diversify its
business geographically.
Impact
on competition
[10]
The Competition Commission ("Commission") found that the
activities of the merging parties overlap horizontally (i)
in the
provision of rentable grade A office properties in the Cape Town CBD
node and (ii) in the provision of rentable retail property.
[11]
With respect to the provision of rentable retail property the
Commission however found that there was no geographic overlap
between
the merging parties' activities.
[12]
With respect to the provision of rentable grade A office property in
the Cape Town CBD node, the Commission found that the
parties'
post-merger market share will be less than 20%. The Commission
further found that there are a number of alternative players
present
in this market which are likely to constrain the behaviour of the
merged entity, including Redefine Properties Limited,
Ingenuity
Property Investments Limited, Emira Property Fund Limited and
Growthpoint Properties Limited.
[13]
Furthermore, tenants contacted by the Commission did
not raise any concerns regarding the proposed
transaction.
[14]
We concur with the Commission's finding that the proposed transaction
is unlikely to substantially prevent or lessen competition
in any
relevant market.
Public
interest
[15]
The
merging
parties
confirmed
that
the
proposed
transaction
will
not
result
in
an adverse
impact
on
employment.
[1]
[16]
The proposed transaction further raises no other public interest
concerns.
Conclusion
[17]
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 transaction. Accordingly, we approve the
proposed
transaction unconditionally.
02
December 2015
DATE
________________
Mr
Andreas Wessels
Mr
lmraan Valodia
and
Ms Medi Mokuena
concurring
Tribunal
Researcher:
Karissa Moothoo Padayachie
For
the merging parties:
Johan Coetzee from Glyn Marais Inc. for Accelerate
Roxanne Ker from Walkers
Inc. for OMLACSA
For
the Commission:
Billy Mabatamela and Kholiswa
Mnisi
[1]
Inter
alia
merger
record page 10.