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[2016] ZACT 55
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Firstrand Bank Limited v MMI Group; In re: Property Leeting Enterprise known as 2 and 4 Merchant place and Others (LM028MAY16) [2016] ZACT 55 (4 July 2016)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM028May16
In
the matter between:
FIRSTRAND BANK
LIMITED
Primary Acquiring
Firm
and
MMI
GROUP LIMITED in respect of
the
Primary
Target
Firms
Property
letting enterprise known as
2
and 4 Merchant Place as well as the
related
parking bays held in Merchant
Place
Parkade Share Block Proprietary
Limited
Panel
: Yasmin Carrim (Presiding Member)
: Anton Roskam (Tribunal
Member)
: Medi Mokuena (Tribunal
Member)
Heard
on
: 15 June 2016
Order
Issued on
: 15 June 2016
Reasons
Issued on
: 4 July 2016
Reasons
for Decision
Approval
[
1 ] On 15 June 2016, the Competition Tribunal ("Tribunal")
unconditionally approved the large merger between First Rand
Bank
Limited ("FirstRand Bank") and MMI Group Limited ("MMI
Group") in respect of the property letting enterprise
known as 2
and 4 Merchant Place as well as related parking bays held in Merchant
Place Parkade Share Block Proprietary Limited
("the Target
Properties")
[
2 ] The reasons for approving the proposed transaction follow.
Parties
to transaction
Primary
acquiring firm
[
3 ] The primary acquiring firm, FirstRand Bank, is controlled by
FirstRand Limited ("FirstRand"). FirstRand is listed
on the
Johannesburg Stock Exchange ("JSE") and the Namibian Stock
Exchange ("NSX"). FirstRand Limited and its
group of
subsidiaries will collectively be referred to as the "Acquiring
Group".
[
4 ] The Acquiring Group conducts its business in the financial
services sector which includes retail banking, broking,
assets/investments
management, private client's management, corporate
finance, interest rate management, project finance, risk management,
mortgage
lending as well as other banking solutions.
Primary
target firm
[
5 ] The Target Properties are owned by
MMI
Group. The Target
Properties are classified as Grade A office properties. 2 and 4
Merchant Place is leased to the Acquiring Group.
Proposed
transaction and rationale
[
6 ] The proposed transaction involves FirstRand Bank acquiring the
Target Properties from
MMI
Group. This results in FirstRand
Bank controlling the Target Properties.
[
7 ] The Acquiring Group submitted that they are the current lessees
of the Target Properties. According to FirstRand Bank's policy,
it
must have ownership of all premises it occupies. The proposed
transaction is therefore pursuant to this policy. MMI Group submitted
that it wants to manage its exposure to offices in the Sandton node
and its directions in terms of development includes further
exposure
to Grade A offices in Sandlan CBD. The realisation of these assets
are consistent with the prevailing economic conditions
and MMI
Group's future investment plans in the Sandlan node.
Impact
on competition
[
8 ] The Competition Commission ("the Commission") initially
identified a horizontal overlap in the activities conducted
by the
merging parties. Upon further investigation, however, the Commission
found that there is no horizontal overlap as the Acquiring
Group does
not lease the Target Properties to third parties. The Commission,
adopting a conservative approach found that even if
an overlap was
present, the merging parties would have a minimal market share of 11%
with an accretion of 3% in this market. The
Commission found that the
proposed transaction would not result in a substantial lessening of
competition in the provision of rentable
Grade A office property as
the activities of the merging parties do not overlap.
[
9 ] We concur with the Commission's competition assessment that the
proposed transaction is unlikely to substantially prevent
or lessen
competition in any relevant market as there is no overlap present.
Public
interest
[
10 ] The
merging
parties
confirmed
that
the
proposed
transaction
will
not
result
in an
adverse
impact on
employment.
[1]
The
proposed
transaction further
raises
no other
public
interest
concerns.
Conclusion
[
11 ] 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 transactions. Accordingly, we approve the
proposed
transaction unconditionally.
04
July 2016
DATE
_________________________
Ms
Yasmin Carrim
Anton
Roskam and
Medi Mokuena concurring
Tribunal
Researcher:
Aneesa Raval
For
the merging parties:
Vani Chetty of Baker & McKenzie
For
the Commission:
Boitumelo Makgabo and Xolela Nokele
[1]
Inter
Alia
merger
record page 84