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[2018] ZACT 20
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Community Property Company (Pty) Ltd v Eyethu Orange Farm Mall (LM267Jan18) [2018] ZACT 20; [2018] 1 CPLR 250 (CT) (9 March 2018)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No:LM267Jan18
In
the matter between
Community
Property Company (Pty) Ltd
Primary Acquiring Firm
And
Eyethu Orange Farm
Mall
Primary Target Firm
Panel
: Norman Manoim (Presiding Member)
:
Enver Daniels (Tribunal Member)
:
Prof. lmraan Valodia (Tribunal Member)
Heard
on
: 16 February 2018
Order
Issued on
: 16 February 2018
Reasons
Issued on
: 9 March 2018
REASONS
FOR DECISION
Approval
[1]
On 16 February 2018, the Tribunal unconditionally approved the large
merger in terms
of which the Community Property Company (Pty) Ltd
("CPC") is acquiring a 90% interest and joint control of a
community
shopping centre known as the Eyethu Orange Farm Mall
("target property").
[2]
The reasons for approval follow.
Parties
to the transaction
Primary
Acquiring Firm
[3]
CPC is a property holding and investment company that primarily
specialises in the
acquisition of new and existing shopping centres
which cater to the needs of underserviced communities throughout
South Africa.
CPC is wholly-owned by Community Property Holdings
(Pty) Ltd ("CPH"), which is in turn ultimately controlled
by Old Mutual
Group Holdings (SA) (Pty) Ltd ("OMSA"). CPC
and its controllers are collectively referred to as the Acquiring
group.
[4]
The Acquiring group owns a number of retail letting properties
throughout South Africa.
Relevant to this transaction are its
properties situated in the Gauteng province.
Primary
Target Firm
[5]
The target property is a 26818m
2
regional shopping centre
that comprises of retail letting and storage space. It is situated in
Orange Farm, Johannesburg (Gauteng).
[6]
The target property is jointly owned and controlled by four entities
(two private
companies and two trusts),
[1]
three of which are selling their undivided share in the target
property. They will be collectively referred to as "the
sellers".
Proposed
transaction and rationale
[7]
In
terms of the Sale Agreements, CPC will acquire each of the sellers'
undivided shareholding (accounting for 90% of the issued
share
capital) in the target property. Post-merger, CPC will jointly own
and control the target property with the remaining shareholder
the
Orange Farm Community Trust which retains a 10% stake and enjoys
sufficient minority protection for the merging parties to
describe
this as joint control.
[2]
Relevant
market and impact on competition
[8]
The
Commission considered the activities of the merging parties and found
a horizontal overlap in the product market for the provision
of
rentable retail space in comparative centres. The horizontal overlap
arises as a result of CPC owning a number of comparative
centres in
Gauteng, which include the Gateway Mall in Carltonville, Heidelberg
Mall in Heidelberg, and Cradock Square in Rosebank.
[9]
The Commission found that there is no geographic overlap between the
activities of
the merging parties as CPC's nearest comparative centre
in Gauteng is located approximately 46km from the target property and
thus
is unlikely to impose a competitive constraint on it.
[10] Due
to the lack of geographic overlap, the Commission concluded that the
proposed transaction is unlikely
to substantially prevent or lessen
competition in any market. We found no reason to disagree with the
Commission.
Public
interest
[11]
The merging parties submitted that the
proposed transaction will not have a negative impact on jobs as the
target property's employees
will be transferred to CPC as
contemplated in
section 197
of the
Labour Relations Act 66 of 1995
.
The Commission concluded that the proposed transaction will not
negatively affect employment. We agreed with the Commission's
findings.
Conclusion
[12]
In
light of the above, we concluded that the proposed transaction is
unlikely to substantially prevent or lessen competition in
any
relevant market. In addition, no adverse public interest issues arise
from the proposed transaction. Accordingly, we unconditionally
approved the proposed transaction.
Mr
Norman Manoim.
Mr
Enver Daniels and Prof. lmraan Valodia concurring.
9 March 2018 Date
Tribunal
Case Manager : Kgothatso Kgobe
For
the Merging Parties : J van Dijk of
Norton Rose Fulbright
For
the Commission
: N Msiza
[1]
Flanagan and Gerard Investments; Mergence Africa Property
Investments Trust; Stretford Land Development (Pty) Ltd; and Orange
Farm Community Trust.
[2]
See Paragraph 4.1(5) of the Merging Parties Competitiveness report,
Record page 33.