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[2016] ZACT 20
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Ascension Properties Limited v Mutodo Properties Proprietary Limited in respect of Jorissen Place (LM231Feb16) [2016] ZACT 20 (23 March 2016)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM231Feb16
In
the matter between:
ASCENSION
PROPERTIES
LIMITED
Primary Acquiring Firm
and
MUTODO
PROPERTIES PROPRIETARY LIMITED
IN
RESPECT OF JORISSEN
PLACE
Primary Target Firm
Panel
: Andreas Wessels (Presiding Member)
: Fiona Tregenna
(Tribunal Member)
: Andiswa Ndoni (Tribunal
Member)
Heard
on
: 09 March 2016
Order
Issued on
: 09 March 2016
Reasons
Issued on
: 23 March
2016
Reasons
for Decision
Approval
[1]
On 09 March 2016, the Competition Tribunal ("Tribunal"}
approved the proposed transaction involving Ascension Properties
Limited and Mutodo Properties Proprietary Limited in respect of
Jorissen Place.
[2]
The reasons for approving the proposed transaction follow.
Parties
to proposed transaction
Primary
acquiring
firm
[3]
The primary acquiring firm is Ascension Properties Limited
("Ascension Properties"), a firm incorporated in terms
of
the laws of the Republic of South Africa.
[4]
Ascension Properties is listed on the Johannesburg Stock Exchange
Limited ("JSE"). Ascension Properties is controlled
by
Rebosis Property Fund Limited ("Rebosis"), which holds 59%
of the entire issued share capital of Ascension Properties.
The
remainder of the issued share capital of Ascension Properties is held
by a number of shareholders, who do not in any way influence
the
management or business of Ascension Properties.
[5]
Ascension Properties, Rebosis and their subsidiaries will hereinafter
be collectively referred to as the "Acquiring Group".
Primary
target firm
[6]
The primary target firm is Mutodo Properties Proprietary Limited
("Mutodo Properties"), in respect of a letting enterprise
known as Jorissen Place ("Target Property").
[7]
Mutodo Properties is controlled by Simeka Capital Holdings
Proprietary Limited as to 80% of its shares. The remaining 20% of
the
issue share capital in Mutodo Properties is owned by Makhado
Nesengani.
Proposed
transaction and rationale
[8]
The Acquiring Group intends to acquire the Target Property, Jorissen
Place, form Mutodo Properties, as a going concern. Upon
implementation of the proposed transaction, the Acquiring Group will
have sole control of the Target Property.
[9]
Ascension Properties submitted that its strategy is to hold centrally
located commercial office buildings in South Africa with
a strong
focus towards government and other empowerment sensitive tenants. The
Acquiring Group has identified Jorissen Place as
a suitable building
for this purpose.
[10]
Mutodo Properties submitted that it intends to dispose of Jorissen
Place in order to raise capital for future developments
and
acquisitions of assets.
Impact
on competition
[11]
The Competition Commission ("Commission") found that the
Acquiring Group owns rentable Grade A offices in the nodes
identified
as the Johannesburg CBD/Marshalltown and Roodepoort. The Target
Property, Jorissen Place, is located in the Braamfontein
node and
comprises of rentable office and retail space. Thus based only on the
relevant node there is no geographical overlap between
the properties
of the merging parties. The Commission however also considered Grade
A and Grade B office properties in a broader
geographical area
encompassing Braamfontein, the Johannesburg CBD/Marshalltown,
Parktown, Newtown and Milpark.
[12]
With regard to retail space, the Commission considered the market for
rentable space in convenience centres within a 10 km
radius of the
Target Property.
[13]
The Commission found the following in relation to each of the
above-mentioned potential markets:
1.
In the market for the provision of rentable space in Grade A office
properties within the Braamfontein
and surrounding nodes, the merged
entity will have an estimated market share of less than 10%.
2.
In the market for the provision of rentable space in Grade A and
Grade B office properties within
the Braamfontein and surrounding
nodes, the merged entity will have an estimated market share of less
than 10%.
3.
In the market for the provision of rentable space in convenience
centres within a 10 km radius
of the Target Property, the merged
entity will have an estimated market share of less than 5%.
[14]
Within each potential market, the Commission found that the merged
entity is a relatively small player and that it would continue
to
face significant competition constraints from competing properties.
In light of this, the Commission concluded that the proposed
transaction is unlikely to substantially prevent or lessen
competition in any relevant market.
[16]
The
merging
parties
confirmed
that
the
proposed
transaction
will
not
result
in
any adverse
impact
on
employment.
[1]
[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.
23
March 2016
DATE
_______________________
Mr
Anareas Wessels
Prof
Fiona Tregenna and Ms Andiswa Ndoni concurring
Tribunal
Researcher:
Busisiwe Masina
For
the merging parties:
Nick Altini of
Baker & McKenzie
For
the Commission:
Reabetswe Molotsi
[1]
See
merger
record
inter
alia
page
10.