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[2016] ZACT 60
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Vukile Property Fund Limited and Others v Protea Glen Shopping Centre (Pty) Limited (LM10APR16) [2016] ZACT 60 (17 September 2016)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No:
LM010Apr16
In
the matter between:
VUKILE
PROPERTY FUND LIMITED & DICEL TRADE
Primary
Acquiring
Firm
&
INVEST (PTY) LTD
and
PROTEA
GLEN
SHOPPING
CENTRE
(PTY)
LIMITED
Primary Target Firm
Panel
: Norman Manoim (Presiding Member)
:
Medi Mokuena (Tribunal Member)
: Andiswa Ndoni (Tribunal
Member)
Heard
on
: 20 July 2016
Order
Issued on
: 20 July 2016
Reasons
Issued on
: 17 August 2016
Reasons
for Decision
Approval
[1]
On 20 July 2016, the Competition Tribunal ("Tribunal")
approved the proposed transaction with conditions between Vukile
Property Fund Limited & Diecel Trade & Invest (Pty) Ltd and
Protea Glen Shopping Centre (Pty) Ltd.
[2]
The reasons for approving the proposed transaction follow.
Parties
to proposed transaction
Primary
acquiring
firm
[3]
The primary acquiring firms are Vukile Property Fund Limited
("Vukile") and Diecel Trade & Invest (Ply) Ltd ("DTI").
[4]
Vukile is a public company registered in accordance with the laws of
the republic of South Africa. Vukile is listed on the Johannesburg
Stock Exchange ("JSE") and is not controlled by any firm.
[5]
Vukile is a property owning company whose property portfolio is
diversified across sectors of the rental property market, including
office property, retail property, industrial property, as well as
land under development and other speciality properties, such
as motor
related outlets, hotels and leisure properties throughout South
Africa.
[6]
DTI is a private company incorporated in accordance with the laws of
the Republic of South Africa. DTI is a wholly-owned subsidiary
of
Operation Network Enterprise Property Holdings (Ply) Ltd ("One
Property Holdings"), a company registered in terms
of the laws
of the Republic of South Africa. DTI, ONE Property Holdings and all
companies controlled by ONE Property Holdings will
collectively be
referred to as ONE Property Holdings Group.
[7]
One Property Holdings Group holds a diverse portfolio of properties
comprising of rentable retail, special retail, industrial
and office
properties in the Free State, Gauteng and Mpumalanga Provinces.
[8]
Vukile and DTI will hereon collectively be referred to as the
Acquiring Firms.
[9]
Relevant to the analysis of this transaction are the Acquiring Firms'
retail properties that are located in the Gauteng Province.
Primary
target
firm
[10]
The primary target firm is Protea Glen Shopping Centre (Ply) Ltd
("PGSC (Ply") Ltd),
in
respect of a letting enterprise known as Protea Glen Shopping Centre
("the Target Property"). PGSC (Ply) Ltd is a private
company incorporated in accordance with the
laws
of the Republic of South Africa
[1]
.
The Target Property does not control any firm.
Proposed
transaction and rationale
[11]
The Acquiring Firms submits that in terms of a series of
inter-related transactions, Vukile intends to acquire 60% undivided
share in the Target Property which will give it control and DTI will
acquire 40% undivided share in the Target Property and will
exercise
control by virtue of veto rights over strategic decisions.
[12]
Post-transaction, the Acquiring Firms will have joint control over
the Target Property.
Impact
on
competition
[13]
The Commission considered the activities of the merging parties and
found that there is a horizontal overlap in the provision
of rentable
space in comparable centres within a 15km radius
[14]
The Commission ("Commission") found that the merged entity
will have an estimated combined post-merger market share
of 7.2% with
an accretion of 4.1% in the provision of rentable space in
comparative centres within a 15km radius of the Target
Property.
Furthermore the Commission found that the merged entity will continue
to face competition from several retail shopping
centres. The
Commission submits that the proposed transaction is unlikely to
substantially prevent or lessen competition in the
market for
provision of retail space in comparative centres within a 15km radius
of the Target Property as the merged entity will
continue to be
constrained by other players.
[15]
Upon analysis of the proposed transaction, the Commission identified
a competition concern relating to potential information
exchange of
competitively sensitive information arising from Co-Ownership
Agreement between the Acquiring Firms in respect of the
Target
Property. The Commission found that the Acquiring Firms compete with
each other in the provision of rentable retail space
in the markets
outside the Target Property.
[16]
The Agreement provides for the creation of a Management Committee
which will be responsible for the budget the overall strategy,
the
monthly management of accounts, marketing activities maintenance
agreement and/or lease agreements entered into with entered
into with
tenants, contractors and suppliers, as well as discussions relating
to future improvements, redevelopments or refurbishments
of the
Target Property.
[17]
In order to allay the abovementioned concern the Commission
recommended that the proposed transaction to be approved subject
to
conditions that would prevent sharing of competitively sensitive
information.
[18]
We concur with the Commission's conclusion.
Public
interest
[19]
The merging parties confirmed that the proposed transaction will have
no negative effect on employment.
[20]
The proposed transaction further raises no other public interest
concerns.
Conclusion
[21]
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 with conditions attached as
Annexure "A".
17
August 2016
DATE
_____________________
Mr.
Norman Manoim
Ms
Medi Mokuena and Ms Andiswa Ndoni concurring
Tribunal
Researcher:
Busisiwe
Masina
For
the merging parties:
Andries Le Grange of Cliffe Dekker
Hofmeyr Inc.
For
the Commission:
Maanda
Lambani
[1]
PGSC
(Ply)
Ltd is controlled
as
to
67%
by Masingitha
Property
Investments
Holdings
("Masingitha").
The remaining
33%
is held by Gold Bid Properties
(Pty)
Ltd
(Gold
Bid Properties).