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[2015] ZACT 70
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Vukile Property Fund Limited v Thavhani Property Investments (Proprietary) Limited in repsect of 1/3 undivided interest in the Thavhani Mall Letting Enterprise (LM135Sep15) [2015] ZACT 70 (3 December 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No:
LM135Sep15
In
the matter between:
Vukile
Property Fund
Limited
Acquiring Firm
And
Thavhani
Property Investments (Proprietary) Limited
in
respect of a 1/3 undivided
interest in the Thavhani
Mall Letting
Enterprise
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
: 03 December
2016
Reasons
for Decision
Approval
[1]
On 25 November 2015, the Competition Tribunal ("Tribunal")
conditionally approved the acquisition by Vukile
Property Fund
Limited ("Vukile") of a 1/3 (one third) undivided interest
in the Thavhani Mall Letting Enterprise (''Thavhani
Mall").
[2]
The reasons for approving the proposed transaction follow.
Parties
to transaction and their activities
Primary
acquiring firm
[3]
The
primary
acquiring
firm
is Vukile.
Vukile
is
listed
on
the
Johannesburg
Securities Exchange and
accordingly
is not
controlled
by
any single
firm. Vukile
controls
a number
of
firms.
[1]
[4]
Vukile is a property fund with a property
portfolio comprising retail space,
office
space and land under development. Relevant to the current analysis is
Vukile's interest in retail properties
located in the Limpopo
province.
Primary
target firm
[5]
The primary target firm is Thavhani Property Investments (Ply) Ltd
("Thavhani") in respect of 1/3 undivided interest
in the
Thavhani Mall. Thavhani does not control any firm.
[6]
The Thavhani Mall is a development located in the Limpopo province
that is currently under construction.
Proposed
transaction
and
rationale
[7]
In terms of the proposed transaction, Vukile intends to
purchase an interest equivalent to a 1/3 undivided
share of the Thavhani Mall. Upon completion of the proposed
transaction, Vukile and Thavhani will have joint control over
the Thavhani Mall.
[8]
Vukile submitted that this investment is in line with its strategy to
maintain a strong retail property portfolio.
[9]
The Competition Commission ("Commission") however noted
that an agreement will be concluded between Vukile, Thavhani
and the
lender funding the development of the Thavhani Mall. This agreement
confers step-in rights on Vukile should certain events
occur in
future. Should these step-in rights be exercised to acquire the
remaining undivided share in the Thavhani Mall,
there will be a
change in the (type of) control of the Thavhani Mall which would
trigger notification to the Commission. Thus the
Commission
recommended that the proposed transaction be approved subject to
certain conditions and the merging parties agreed to
those
conditions. We have therefore approved the proposed transaction
subject to the following conditions as agreed to between
the
Commission and the merging parties:
a.
Should
Vukile
elect
to
exercise
the
step-in
rights
within
a
period
of
18
months from
the
date
of
approval
of
the
proposed
transaction
by the
Tribunal,
it
shall
inform the
Commission
of
its
decision
within
20
business
days
of
exercising
its
step-in
rights. Vukile shall notify the Commission of this election by
submitting an affidavit
attested
to
by
a
senior
official
to
the
following
email
address:
mergerconditi
ons@compcom.co.za.
b.
Should Vukile elect to exercise the step-in rights after a period of
18 months from the date
of approval of the proposed transaction by
the Tribunal, it shall notify the exercise of its step-in rights as a
merger in terms
of section 13A of the Competition Act of 1998 (Act
No. 89 of 1998, as amended).
Impact
on competition
[10]
The Commission found that the Thavhani Mall can be classified as a
comparative centre. The Commission further found that there
is
currently no geographic overlap between the activities of the merging
parties. The Commission accordingly concluded that the
proposed
transaction is unlikely to substantially prevent or lessen
competition in any relevant market. We concur with this conclusion.
Public
interest
[11]
The merging parties
confirmed
that
the
proposed
transaction
will not
have
any adverse
effect on employment.
[2]
[12]
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 transaction. As explained above, we
have
however approved the proposed transaction conditionally given
certain future events that may occur which would trigger notification
obligations. The full set of conditions that we have imposed is
attached hereto as
"Annexure
A".
______________________
Andreas
Wessels
Medi
Mokuena and lmraan Valodia concurring
03
December 2015
DATE
Tribunal
Researcher:
Ammara Cachalia
For
the merging parties:
Andries Le Grange of Cliffe Dekker Hofmeyr
For
the Commission:
Prishani Maheeph
ANNEXURE
A
Vukile
Property Fund Limited
And
Thavhani
Property Investments Proprietary Limited in respect of a 1/3 interest
in
the Thavhani Mall Letting Enterprise
Case
number:
2015Sep0520
CONDITIONS
1.
DEFINITIONS
The
following expressions shall bear the meanings assigned to them below
and cognate expressions bear corresponding meanings -
1.1.
"Acquiring
Firm"
means Vukile Property
Fund Limited;
1.2.
"Approval
Date"
means the date
reflected on the Tribunal's Merger Clearance Certificate,
Notice CT 1O;
1.3,
"Commission"
means the Competition Commission of
South Africa;
1.4.
"
Competition Act"
means
the
Competition Act No. 89
of 1998
, as amended;
1.5.
"Conditions"
mean these conditions;
1.6.
"Lender"
means FirstRand Bank Limited (acting
through its Rand Merchant Bank division);
1.7.
"Merger"
means Vukile Property Fund Limited's
acquisition of a 1/3 interest in the Thavhani Mall Letting
Enterprise from Thavhani Property
Investments (Proprietary) Limited;
1.8.
"Merging
Parties"
mean the
Acquiring Firm and the Target Firm;
1.9.
"Step-in
Rights"
mean the
rights referred to in clause 1.66 of the Sale of Letting Enterprise
Agreement;
1.10.
"Target
Firm"
means Thavhani Property
Investments Proprietary Limited in respect of a 1/3 interest in the
Thavhani Mall Letting Enterprise;
1.11.
"Thavhani Mall"
means Erf 233 Thohoyandou -
JK Extension 1 Township, Registration Division MT, Limpopo Province,
measuring 12,7231 and Erf 236 Thohoyandou
- JK Extension 1 Township,
Registration Division M.T, Limpopo Province, measuring 1.0204 (one
comma zero two zero four hectares).
1.12.
"Tribunal"
means the Competition Tribunal of South
Africa; and
1.13.
"Tripartite Agreement"
means the agreement
between the Merging Parties and the Lender in terms of clause 1.66 of
the Sale of Letting Enterprise Agreement.
2.
RECORDAL
2.1.
On 10 September 2015, the Commission received
a notice of a large
merger whereby the Acquiring Firm intends to acquire an interest in
the Target Firm. Following its investigation
of the Merger, the
Commission is of the view that the proposed transaction is unlikely
to substantially prevent or lessen competition
in any market.
2.2.
However, in terms of a Tripartite Agreement to
be concluded between
the Merging Parties and the Lender, the latter funding the
development of the Thavhani Mall, the Acquiring
Firm may be entitled
to exercise Step-in Rights in terms of which it may acquire the
remaining undivided share in the Thavhani
Mall. The possible exercise
of the Step-in Rights may require merger notification.
2.3.
The Commission notes that once the Acquiring Firm
exercises the
Step-in Rights, it will result in a change in control in the Thavhani
Mall and therefore trigger notification in
terms of section of 13A of
the
Competition Act. Considering
that it is not clear when the
Merging Parties will exercise the
Step-in Rights,
the Commission recommends
that the proposed transaction be approved subject to the Conditions
proposed below:
3.
CONDITIONS
TO
THE
APPROVAL
OF
THE
MERGER
3.1.
Should the
Acquiring
Firm elect
to
exercise
the
Step-in
Rights
within
a
period of
18 months
from
the
Approval
Date, the
Acquiring
Firm shall
inform the
Commission
of its
decision
within
20
business
days
of
exercising
its Step-in
Rights.
The
Acquiring
Firm shall
notify the Commission of this election by submitting an affidavit
attested to
by
a senior
official to
the
following
email
address:
mergerconditions@compcom.co.za.
3.2.
Should the Acquiring Firm elect to exercise the Step-in Rights after
a period
of 18 months from the Approval Date, it shall notify the
exercise of its Step-in Rights as a merger in terms of
section 13A
of
the
Competition Act.
[1
]
See
pages
18
and
19
of
the merger
record.
[2]
See
inter
alia
page
10 of the
merger record.