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[2016] ZACT 13
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Winter Robin Investment 26 Proprietary Limited v Development Rights (LM215Jan16) [2016] ZACT 13 (16 March 2016)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM215Jan16
In
the matter between:
WINTER
ROBIN INVESTMENT
26 PROPRIETARY
LIMITED
Primary
Acquiring Firm
and
THE
DEVELOPMENT
RIGHTS
SITUATED
AT
POCKET
24
Primary Target Firm
POCKET
3 OF THE WATERFALL BUSINESS ESTATE
Panel
: Norman Manoim (Presiding Member)
: lmraan Valodia
(Tribunal Member)
: Fiona Tregenna
(Tribunal Member)
Heard
: 17 February 2016
Order
Issued on
: 17 February 2016
Reasons
Issued on
: 16 March 2016
Reasons
for Decision
Approval
[1]
On 17 February 2016, the Competition Tribunal ("Tribunal")
approved the proposed transaction between Winter Robin
Investment 26
(Pty) Ltd and the Waterfall Business Estate without conditions.
[2]
The reasons for approving the proposed transaction follow.
Parties
to proposed transaction
Primary
acquiring firm
[3]
The primary acquiring firm is, Winter Robin Investment 26 (Ply) Ltd.
[4]
The merging parties submit that JVCO does not control any firm as it
has been specifically incorporated for the purpose of the
proposed
transaction. JVCO is controlled by Sanlam Properties (Ply) Ltd
(Sanlam Properties). Sanlam is ultimately controlled by
Sanlam
Limited, a public company listed on the Johannesburg Stock Exchange
("JSE") and the Namibian Stock Exchange ("NSE").
[5]
JVCO, Sanlam Properties, Sanlam and all its subsidiaries will
collectively be referred to as the Acquiring Group. Within South
Africa, the Acquiring Group provides Life insurance, short term
insurance, commercial banking, securities trading, retirement
annuities, unit-trust, health insurance and employment benefits. The
Acquiring Group is active in the property market and also in
the
provision of investment and risk management to group funds.
Primary
target
firm
[6]
The
primary
target
firm
consists
of
two
properties
in the
Waterfall
Estate
Business
district
which are currently vacant but
which the
merging parties seek to develop.
[1]
[7]
In respect of the activities of the Development Rights, the Pocket 24
Development Rights entitles the holder to conduct a warehouse
and
distribution centre and the Pocket 3 Development Right is a piece of
land currently zoned for agricultural purposes.
[8]
Pocket 24
Development Rights and Pocket 3 Development Rights will from hereon
be collectively referred to as the Development Rights
[2]
Proposed
transaction and rationale
[9]
Through
a
number
of
interrelated
steps
the
proposed
transaction
will
result
in the
acquiring company JVCO acquiring the Development Rights from the
Sellers
[3]
.
Post
merger,
JVCO
will
have sole control over the Development Rights.
[10]
According to the merging parties the proposed transaction provides an
opportunity to sell the Development Rights in order to
share the risk
and profits of any future industrial or commercial development.
Impact
on competition
[11]
The Commission considered the activities of the merging parties and
found that there is a horizontal overlap in the market
for the
provision of rentable space in industrial warehouse property within a
broader node encompassing Brakfontein/ Midrand/ Cosmosdal/
Lombardi.
[12]
The merged entity will
have a
combined
post-merger
market
share of between 20 - 30% within this node.
[4]
The Commission found that the merged entity will continue to
be
constrained
by
other
industrial
warehouse
properties
within
the
market.
Other
players
in
this
market
are,
inter
alia,
Fortress
Income
Fund,
40
Brakfontein,
HPB
Industrial
Unit, One Highveld, Twenty One, Bell
Crescent
and Redefine Properties.
[13]
The Commission also considered whether there are vacancies in
Brakfontein/ Midrand/ Cosmosdal/ Lombardi. Through a desktop
search,
the Commission found that there are at least 59 209m2 (approximately
8.59%) property vacancies for industrial warehouse
properties in the
identified nodes. The Commission obtained this vacancy data from a
property broker website. Further, there are
new developments within
the identified market.
[14]
Given the availability of alternatives competing properties within
each of the identified markets, the Commission is of the
view that
the proposed transaction is unlikely to prevent or lessen competition
in the relevant market.
[15]
We concur with the Commission's conclusion that the proposed
transaction is unlikely to substantially prevent or
lessen competition in any relevant market. It should be pointed out
that in this transaction existing market shares overstate the
position, as the merger leads to an increase in capacity by
developing assets not yet in the market and thus it grows the market
rather than leading to an increase in concentration.
Public
interest
[16]
The merging parties confirmed that the proposed transaction will not
result in any adverse impact on employment.
[17]
The proposed transaction further raises no other public interest
concerns.
Conclusion
[18]
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.
16
March 2016
DATE
_______________________
Mr
Norman Manoim
Prof lmraan
Valodia and Prof Fiona Tregenna concurring
Tribunal
Researcher:
Busisiwe Masina
For
the merging parties: Edward
Nathan Sonnerbergs Inc
For
the Commission:
Reabetswe Molotsi
[1]
The properties are situated at Pocket 24 of the Waterfall Business
Estate("Pocket 24 Development Rights") and the development
right situated on a portion of Pocket 3 of the Waterfall Business
Estate ("Pocket 3 Development Rights"). Pocket 24
Development Rights is controlled by Attacq Waterfall Investment
Company (Pty) Ltd and Pocket 3 Development Rights by Portmix
(Ply)
Ltd.
[2]
The merging parties submit that an application has been made for
this portion of the Pocket 3 Development Right to be zoned
for
commercial
use.
[3]
The Pocket 24 Development Rights is controlled by Attacq Waterfall
Investment Company Proprietary Limited ("AWIC").
"AWIC"
is controlled by Attacq, a public company listed on tbe JSE. The
Pocket 3
Development
Rights is controlled by Portrnix Proprietary Limited ("Portmix").
Attacq and Portmix will
collectively
be referred to as the "Sellers".
[4]
Confidential
information.