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[2016] ZACT 78
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Mendo Property Proprietary Limited v Vukile Property Fund Limited (LM037JUN16) [2016] ZACT 78 (6 September 2016)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM037Jun16
In
the matter between:
MENDO
PROPERTY PROPRIETARY
LIMITED
Primary
Acquiring
Firm
and
VUKILE
PROPERTY
F
UND
LIM
I
TED
I
N
RESPECT
Primary
Target
Firm
OF
5 TARGET PROPERTIES
Pa
n
el
:
N
orman
Manoim
(Presiding
Member)
: Andreas
Wessels
(Tribu
n
al
Member)
:
F
i
ona
Tregenna
(Tribu
n
al
Member)
Heard
on
:
10
August
2016
Order
I
ssued
on
:
10
August 2016
Reasons
I
ssued
on
:
06
September
2016
Reasons
for Decision
Approval
[1]
On
10
August
2016,
the
Competition
Tribunal
("Tribunal")
approved
the
proposed
transaction between
M
endo
Properties
Proprietary Limited a
n
d
Vuki
l
e
Property Fund Limited
in
respect of 5 Target
Properties
.
[2]
The reasons for approving the proposed transaction follow
.
Parties
to proposed transaction
Primary
acquiring firm
[3]
The primary acqu
i
ring
firms
is
Mendo Properties (Pty) Limited ("Mendo"), a company
i
ncorporated
i
n
accordance with the
l
aws
of the Republ
i
c
of
South
Africa
.
[4]
Mendo
is
controlled
by
Sl
i
p
Knot
I
nvestments
777
(Pty)
Ltd
("SKl")
.
SKI
is
i
n
turn controlled
by the
JPD
Trust.
The
JPD Trust
and
i
ts
subsidiaries
will
collectively
be referred to as the "Acquiring
Group".
[5]
The Acqu
i
ri
n
g
Group is engaged
i
n
the development and
l
easing
of commercial and
i
ndustrial
i
n
vestment
properties and owns a portfol
i
o
of
1
05
properties throughout South
Africa
.
Of
relevance
to
the
proposed
transaction
i
s
the
office
and
retail
properties owned
by
the
Acquiring
Group
i
n
Pretoria and B
l
oemfontein
.
[
6]
Relevant to the analysis of this transaction
is the office and retail properties
owned by the Acquiring Group in Pretoria and Bloemfontein.
Primary
target firm
[7]
The primary Target Properties are controlled by Vukile Property Fund
Limited ("Vukile").
[8]
The
Target
Properties
comprise
of
office
properties
and
retail
properties
that
are
l
ocated
i
n
the Pretoria CBD and one office property that
i
s
l
ocated
i
n
the B
l
oemfontein
CBD
.
[1]
Proposed
transaction and rationale
[9]
In
terms
of the proposed transaction Mende
i
nte
n
ds
to acqu
i
re
the
Target
Properties from
Vuki
l
e
.
Pos
t
-transaction
M
e
n
do
will
control
the
Target Properties
.
[10]
The Target Properties submit that the offer by the Acquiring Group
presents a commercially viable opportunity for Vukile to
dispose of
the Rental Enterprise and realise its investment.
I
mpact
on competition
[11]
The Commission considered the activities of the merging parties and
found that there is a horizontal overlap in three (3) markets
for the
provision of rentable office property and rentable retail property:
•
Grade
B and C office property in the Pretoria CBD and surrounding node
•
Grade
B
and
C
office
i
n
the
B
l
oemfontein
node
•
Retail
space
i
n
conven
i
ence
centres
with
i
n
a
5km
radius
of
the
merging
parties'
[12]
In all the
markets
i
dentified
above
the
Commis
s
i
on
found
that
the merged entity will have
a
combined
post-merger
market
share
between
the
ranges
of
9-18%
.
Furthermore, in
all
of
the relevant
markets
the
merged
entity
will
continue
to
be
constrained by other market p
l
ayers
.
[13]
In light of the above, the Commission is of the view that the
proposed transaction is unlikely to substantially prevent or
lessen
competition within the relevant market.
[14]
We concur with the Commission's conclusion.
Public
interest
[15]
The
merging
parties
confirmed
that
the
proposed
transaction
will
have
no
negative
effect on employment.
[16]
The proposed transaction further raises no
other p
u
blic
i
nterest
concerns.
Conclusion
[17]
In
l
ight
of the above, we
conclude
that the proposed transaction
is
unl
i
ke
l
y
to substantially
p
revent
or
l
essen
competition
i
n
any re
l
evant
market.
I
n
addition,
n
o
publ
i
c
i
nterest
i
ssues
arise
from
the
proposed
transaction
.
Accordingly
,
we
approve
the proposed transaction
unconditionally
.
06
September 2016
DATE
__________________
Mr.
Norman Manoim
Mr
Andreas Wessels and Prof Fiona Tregenna concurring
Tribunal
Researcher:
Busisiwe
M
asina
For
the merging parties:
Andries Le Grange of Cl
i
ffe
Dekker Hofmeyr Inc.
For
the
Commission:
Nolubabalo Myoli
[1]
The Target Properties are:Bloemfontein Fedsure House, Pretoria
Koedoe Arcade, Pretoria Navarre, Pretoria De Bruyn Park and Pretoria
Arcadia Suncardia.