compeUtlon trlbunal
••• , J. .,,,.,_.
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No: LM1980ct17
In the matter between:
Old Mutual Retirement Accommodation Fund (Ply) Ltd Primary Acquiring Firm
And
Fair Cape Life Right Holdings (Pty) Ltd Primary Target Firm
Panel
Heard on
Order Issued on
Reasons Issued on
Approval
Norman Manolm (Presiding Member)
Medi Mokuena (Tribunal Member)
Mondo Mazwai (Tribunal Member)
22 November 2017
22 November 2017
15 December 2017
Reasons for Decision
[1] On 22 November 2017, the Competition Tribunal ("Tribunal") unconditionally
approved the transaction involving Old Mutual Retirement Accommodation
Fund (Pty) Ltd and Fair Cape Life Right Holdings {Pty) Ltd.
[2] The reasons for approving the proposed transaction follows.
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Parties to the proposed transaction
Primary acquiring firm
[3] The primary acquiring firm is Old Mutual Retirement Accommodation Fund
(Pty) Ltd ("OMRAF"), a company incorporated in accordance with the company
laws of the Republic of South Africa. OMRAF is a wholly-owned subsidiary of
Old Mutual Life Assurance Company Limited ("OMLASCSA") which is
ultimately controlled by Old Mutual Pie.
[4] OMRAF is an investment fund that focuses on the growing need for retirement
accommodation by investing in new developments and funding existing
retirement housing projects in South Africa. OMRAF focuses on life right,
sectional title, freehold and rental investments.
[5] OMRAF and its controllers are hereinafter collectively referred to as the
Acquiring Group.
Primary target firms
[6] The primary target firm Is Fair Cape Life Right Holdings (Pty) Ltd ("FLRH"), a
private company Incorporated in accordance with the company laws of the
Republic of South Africa. FLRH is owned and controlled by Faircape
Retirement Holdings Trust {"Faircape Trust"}.
[7] FLHR and its controllers are hereinafter collectively referred to as the Target
Group.
[8] The Target Group owns and operates six (6) retirement accommodation
facilities situated In the Western Cape.
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Proposed transaction and rationale
[9] In terms of the Sale of Shares and Claims Agreement, OMRAF intends to
acquire 50% of the issued share capital of FLRH and 50% of all amounts owing
by FLRH to Faircape Retirement Trust. Post-merger, OMRAF and Faircape
Trust will exercise joint control over FLRH.
[1 O] The Acquiring Group submits that the purchase of FLRH is aligned with its
objective of optimizing risk-and return and building a long-term asset base of
retirement accommodation. The Target Group submits that it has entered into
the proposed transaction in order to become aligned with the Old Mutual Group
and benefit from Old Mutual's brand reputation in the financial sector.
Impact on competition
[11] The Commission considered the activities of the merging parties and found
that the proposed transaction presents a horizontal overlap as the merging
parties are engaged in the provision of retirement accommodation in the
Western Cape through various business models.1 Furthermore, the
Commission found that the merged entity will have a market share of less than
6% and that the merging parties will continue to face competition from its
market counterparts such as Helderberg Villages, Cape Peninsula
Organisation for the Aged (CPOA) and Devmark Property.
[12] As such the Commission submitted that the proposed merger is unlikely to
lessen or prevent competition in the relevant market and recommended that
the proposed merger be approved without conditions
[13] We concur with the Commission's findings.
1 The proposed transaction is assessed in the Western
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Public interest
[14] The merging parties confirmed that the proposed transaction will not have any
negative effect on employment in South Africa.
[15] The proposed transaction further raises no other public interest concerns.
Conclusion
[16] 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
a prove the proposed transaction unconditionally.
15 December 2017
DATE
di Mokuena and Ms Mondo Mazwai concurring
Tribunal Case Manager
For the merging parties
For the Commission
Ms Busisiwe Masina
Ms Suzane Meyer
Ms Nonhlanhla Msiza
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