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[2018] ZACT 17
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Sanlam Life Insurance Limited v The Main Straight (Pty) Ltd in respect of the Main Straight Office Park (LM324Mar18) [2018] ZACT 17 (30 May 2018)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: LM324Mar18
In
the matter between:
Sanlam
Life Insurance
Limited
Primary Acquiring Firm
And
The
Main Straight (Pty) Ltd in respect of
the
Primary Target Firm
Main
Straight Office Park
Panel
: Mr AW Wessels (Presiding Member)
: Mr E Daniels (Tribunal Member)
: Prof F Tregenna (Tribunal Member)
Heard
on
: 9 May 2018
Order
Issued on
: 9 May 2018
Reasons Issued on
: 30 May 2018
REASONS
FOR DECISION
Approval
[1]
On
9 May 2018, the Competition Tribunal ("Tribunal")
unconditionally approved the proposed transaction involving Sanlam
Life Insurance Limited ("Sanlam Life") and The Main
Straight (Pty) Ltd ("Main Straight") in respect of the
The
Main Straight Office Park (hereinafter referred to as "the
target property").
[2]
The
reasons for approving the proposed transaction follow.
Parties
to the proposed transaction
Primary
acquiring firm
[3]
The
primary acquiring firm is Sanlam Life, a wholly owned subsidiary of
Sanlam Limited ("Sanlam"). Sanlam is listed on
the JSE. It
has interests in a range of firms and properties throughout South
Africa. Of relevance to the competition assessment
of the current
transaction is Sanlam's ownership of a number of rentable office
properties in Gauteng.
Primary
target firm
[4]
The
target property, currently owned by Main Straight, is an office park
situated in Bryanston, Johannesburg. The target property
is
classified as a grade P office property.
Proposed
transaction and rationale
[5]
In
terms of the proposed transaction, Sanlam Life intends to acquire the
target property from Main Straight. Post-merger Sanlam
Life will own
and control the target property.
[6]
Sanlam
submitted that it wants to expand its property portfolio in the
Gauteng region. Main Straight stated that it plans to use
the
proceeds from this sale for further developments.
Impact
on competition
[7]
The
Competition Commission ("Commission") analysed the
activities of the merging parties and found a horizontal overlap
between their activities in the provision of rentable Grade P office
space.
[8]
With
regards to the geographic market, as stated above, the target
property is situated in Bryanston, Johannesburg. Sanlam owns
inter
alia
a Grape P office property
situated in lllovo, Johannesburg. The distance between these two
properties is approximately 11 kms.
[9]
Given
the abovementioned distance between the properties, the Commission
concluded that there is no geographic overlap between the
merging
parties' Grade P properties.
[10] However, no
customer information is available in this matter relating to
substitution from a geographic
market perspective. We do not know if
customers, in the hypothetical case of a post-merger small but
significant non- transitory
increase in price, would shift between
the above mentioned geographical areas, i.e. Bryanston and lllovo,
for the rental of Grade
P office property. We therefore leave the
precise delineation of the relevant geographic market open.
[11]
Be that as it may, we have no
reason to believe that the proposed transaction will substantially
prevent or lessen competition in
the market for the provision of
rentable Grade P office space in the affected geographic area since
the acquiring group is a relatively
small player in this geographic
area regardless of the precise parameters of the relevant geographic
market.
[1]
Public
interest
[12]
The
merging parties confirmed that the proposed transaction will have no
adverse effect on employment.
[2]
[13]
Furthermore,
the proposed transaction raises no other public interest concerns.
Conclusion
[14]
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 the proposed transaction does not raise
any public interest issues. Accordingly, we approve the proposed
transaction unconditionally.
Mr
AW Wessels
Mr
Enver Daniels and Prof Fiona Tregenna
30 May 2018
Tribunal Case Manager:
Jonathan Thomson
For the merging parties:
Andries Le Grange of Cliffe Dekker Hofmeyr Inc
For
the Commission:
Rethabile Ncheche
[1]
Also see Merger Record, pages 49 and 50. The merging parties
estimated that the merged entity's market share will be below 5%
in
the provision of Grade P office property in an area described as
"broader Sandton and surrounds" .
[2]
See Merger Record, pages 9 and 51.