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COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:LM106Sep16
In the matter between:
Growthpoint Healthcare Property Holdings Limited Primary Acquiring Firm
and
Romed Properties Proprietary Limited in respect of the Primary Target Firm
immovable property on which Hillcrest Private Hospital is
located and the immovable property on which Gateway
Private Hospital is located
Panel
Heard on
Order Issued on
Reasons Issued on
Approval
: Mondo Mazwai (Presiding Member)
: lmraan Valodia (Tribunal Member)
: Yasmin Carrim (Tribunal Member)
: 12 October 2016
: 12 October 2016
: 09 November 2016
Reasons for Decision
[1] On 12 October 2016, the Competition Tribunal ("Tribunal") unconditionally
approved a large merger between Growthpoint Healthcare Property Holdings
Limited ("Growthpoint") and Romed Properties Proprietary Limited (''Romed")
in respect of the immovable property on which Hillcrest Private Hospital is
located and the immovable property on which Gateway Private Hospital is
located ('Target Properties"). The reasons for approving the proposed
transaction follow.
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Parties to the transaction
[2] The primary acquiring firm is Growthpoint, a property investment holding
company which is listed as a Real Estate Investment Trust ("REIT") on the
Johannesburg Securities Exchange Limited. Growthpoint's property portfolio
consists of rentable retail, office and industrial space located in the Western
Cape, Eastern Cape, Gauteng and KwaZulu Natal provinces. Growthpoint
also indirectly holds rentable residential space. Of relevance to the proposed
transaction is Growthpoint's hospital property located in Cape Town in the
Western Cape Province.
[3] The Target Properties are letting enterprises located in the KwaZulu Natal
province and owned by Romed. Romed has no subsidiaries and does not
directly or indirectly control any firm.
Proposed transaction
[4] Through a Letting Enterprise Agreement, Growthpoint intends to acquire the
Target properties, such that post-merger Growthpoint will control the Target
Properties. Growthpoint is not acquiring the hospital licences pertaining to the
hospitals, only the properties on which the private hospitals are situated1.
Impact on competition
[5] The proposed transaction gives rise to a horizontal overlap.
[6] The Competition Commission ("the Commission") identified the relevant
product market as the market for the provision of hospital property. The
Commission found that the distance between Growthpoint's hospital property
in Cape Town and the Target Properties in KwaZulu Natal is more than 1000
kilometers apart. The Commission thus concluded that no geographical
overlap occurs as a result of the proposed transaction. The Commission
further concluded that the proposed transaction was unlikely to substantially
prevent or lessen competition in the identified market.
1 The hospital licences are the subject of a separate notification filed with the Commission.
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[7] We agree with the Commission's competition assessment and conclusion.
Public interest
[8] The merging parties submitted that the proposed transaction will not result in
any adverse impact on employment. The proposed transaction further raises
no other public interest concerns.
Conclusion
[9] In light of the above, we conclude that the proposed transaction is unlikely to
substantially prevent or lessen competition in the identified market. In
addition, no public interest issues arise from the proposed transaction.
Accordingly, we approve the proposed transaction unconditionally.
Ms Mondo Mazwai
Prof. lmraan Valodia and Ms Yasmin Carrim concurring
Tribunal Researcher: Caroline Sserufusa
09 November 2016
DATE
For the merging parties: Johan Coetzee of Glyn Marais Inc. Attorneys
For the Commission: Boitumelo Makgabo
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